In the chapter of China's banking reform, direct banking can be described as a bright color. In February 2014, Minsheng Bank took the lead in launching a direct bank in China, opening a new banking operation model in the era of Internet finance, with no physical outlets, no physical card issuance, and completely online operation, providing customers with a more convenient and preferential financial service experience.
Compared with traditional banks, direct banks have lower online operating costs and stronger ability to expand customers, and in line with the principle of "small profits but quick turnover", more domestic banks have followed the trend to build direct banking projects, and the number of direct banks at its peak once exceeded 100.
The bank will place its hopes on direct banking and expand its customer base beyond the bank. However, the practice is not so simple, in the absence of a clear positioning, most direct banks are still in a relatively early stage of development, with a single product system.
First, homogenization has become a "common problem", and the contribution to profitability is naturally minimal.
Under consideration, banks have also made trade-offs, and delisting and integration have become the norm. Ten years is enough for banks to see whether this road of change can be continued, whether it will "exit in bleakness" or "rebirth in nirvana", and where will direct banks go?
Then do the "subtraction".
At the end of the 90s of the 20th century, the creation of direct banks became the biggest driving force for overseas banks, without issuing physical cards, and banking products could be experienced remotely through electronic channels, which once became popular, and the simplified organizational structure and low operating costs also became the focus of the layout of developed economic countries such as Europe.
In years of practice, direct banks have experienced the baptism and experience of financial crises and economic bubbles, and have formed a relatively stable business model on their own, so they have been introduced into China as a "foreign product".
February 28, 2024 is the 10th anniversary of the launch of Minsheng Direct Bank, the first direct bank in China, and just a day ago, the bank announced that it would remove the balance inquiry, instant messaging, account opening, "Rooibos", "Huixuanbao", "Baofu Yi (eBao)" and other functions on the WeChat of Minsheng Bank's direct bank.
As early as mid-January this year, Minsheng Direct Bank announced that it intends to integrate the public offering ** products of the "Hui Xuan Bao" channel into mobile banking, personal online banking "** products and other related channels in 2024, and the "Hui Xuan Bao" channel will also suspend product purchase transactions as early as January 3, 2023.
In the journey of domestic commercial banks to explore the path of direct banking, Minsheng Bank is the first to "eat crabs". On February 28, 2014, Minsheng Direct Bank was officially put into operation, breaking the traditional business model of physical outlets, mainly expanding customers through Internet channels. The "Anytime Saving" savings product has the characteristics of taking it at any time and maximizing interest income, forming an Internet financial service system with the concept of "simple bank".
In that year, the number of customers of Minsheng Direct Bank reached 146810,000 households, and the subscription amount of "Rooibos" reached 2,366With 8.7 billion yuan, Minsheng Bank has innovatively launched products such as "Dinghuo Bao" and its pledged loans, "Minsheng Gold", and built an Internet financial service system integrating "deposits, loans, and foreign exchange".
In the next four years, Minsheng Direct Bank developed rapidly, and by the end of 2018, the number of customers of Minsheng Direct Bank reached 1,917130,000 households, with 1,322 financial assets under management$9.1 billion; However, this data has changed in 2019, and as of the end of 2019, the number of customers of Minsheng Direct Bank is still steady**, reaching 2,920300,000 households, but its financial assets under management have shrunk to 1,098$3.2 billion; In 2020, the financial assets under management of Minsheng Direct Bank rebounded to 11575.2 billion yuan, but it has not returned to the "highlight" moment. In the subsequent annual report, Minsheng Bank did not pay much attention to the data of direct banks, and business integration followed.
Beijing Business Daily reporter noticed that the financial channels of Minsheng Direct Bank APP cover wealth, loans, selection, life, and my five major sectors, in the wealth sector, in addition to "Rooibos" can still be purchased, "Minsheng Gold" has been moved to the Minsheng mobile banking direct banking area on February 29, and "Liduoduo" and "Deposit" products have also been removed from the shelves.
Su Xiaorui, a veteran observer of the banking industry, said that traditional banks can accelerate the digital transformation of traditional banks through direct banking licenses. However, in the process of development, direct banks have also encountered bottlenecks such as unclear positioning and unclear development, which overlap with the business of traditional banks, and measures such as delisting and adjustment are a typical microcosm of this. In the future, it is expected that Minsheng Bank will continue to pay attention to the direct banking business, and may choose to abandon the direct banking business if it continues to fail to meet expectations.
In recent years, some banks have taken their direct banking products off the shelves and integrated them. On December 18, 2021, China Guangfa Bank ceased the APP service of GF Direct Banking; On June 18, 2022, Hengfeng Bank took down the APP of the consistent platform and closed the relevant service functions of the platform. On September 26, 2022, Guangzhou Rural Commercial Bank offline the Pearl River Direct Bank APP; On September 26, 2023, the Yellow River Rural Commercial Bank shut down the bank's Golden Magpie Direct Bank App and removed it from the shelves; On October 8, 2023, Zijin Rural Commercial Bank fully integrated, optimized and upgraded the mobile banking app and the direct banking app, ......
Embarrassing status quo.
The focus of direct banking is on direct sales, which means that the sales of products on the electronic channel side are particularly important. A reporter from Beijing Business Daily searched for "direct bank" as a keyword and found that in the Android mobile phone application, the number of direct bank apps currently existing is 18, and city commercial banks are the main force of direct banks, but the quality of the platform is also uneven.
A reporter from Beijing Business Daily tested the direct bank APP of 18 banks, including Minsheng Bank, Bank of Ningbo, Jinshang Bank, Chouzhou Bank, Huihe Bank, Langfang Bank, Mintai Bank, Bank of Ningxia, Tieling Bank, Yibin Bank, Hankou Bank, Zigong Bank, Hunan Bank, Bank of Dongguan, Chongqing Rural Commercial Bank, Qingdao Rural Commercial Bank, Qinghai Rural Credit Cooperative, and Zunyi Xinpu Changzheng Village Bank.
From the perspective of interface design, the interface settings of these 18 direct banks are relatively friendly, and the bottom column is usually divided into three or four major sections, covering deposits, wealth management, insurance, loans, and life services. In addition to the integrated functions, the five direct banks of Langfang Bank, Hankou Bank, Hunan Bank, Qingdao Rural Commercial Bank and Chongqing Rural Commercial Bank have launched a richer range of products.
Taking the direct banking app of Langfang Bank as an example, the bank has set up special areas for large-value treasures, time deposits, and wealth management products, and classified them according to 7-day notice deposits, 3 months, 6 months, 1 year, 2 years, 3 years, and 5 years to match the needs of different customers. In the wealth management sector, two wealth management products launched by IB Wealth Management are sold on behalf of IB Wealth Management, and the annualized rate of return of the "Stable Profit and Hengying L12 Months" product in the past year is 436%, the seven-day annualized rate of return of "Xingyin Tianli No. 10C" product reached 226%。In the APP, the bank has also opened up a special area for new customers, and after clicking to enter, it will be directed to the direct bank applet, where customers can purchase special large-amount certificate of deposit products, with a minimum deposit of 200,000 yuan and an interest of 295%—2.99%。
Hunan Bank's direct banking app has set up a number of sections such as "wealth management +", "change +", "deposit +", "supermarket" and "loan +", in the "wealth management +" section, the bank has more products online, including 7 self-operated products, and the product category is mainly medium and low risk, with the highest annualized rate of return of 6 since its establishment71%；There are a total of 17 wealth management products distributed by the issuers, covering a number of wealth management companies such as Ningbo Wealth Management, Qingyin Wealth Management, Hangzhou Bank Wealth Management and Nanyin Wealth Management. In the ** supermarket, there are also "Bohai Huijin Hui Tian Jin Currency A", "Invesco Great Wall Jingyi Zhaoli 6 Months Holding Bonds" and so on. However, it is worth noting that on December 14, 2023, Hunan Bank has stopped the subscription and regular investment business of the direct banking app "** Supermarket".
In addition to the more conventional wealth management and first-class products, the direct bank app of Qingdao Rural Commercial Bank has launched the first-class investment section, and the first-class ETF and physical products are on sale; The direct bank app of Chongqing Rural Commercial Bank has set up a variety of products such as "Yuyue Loan" and "Guaranteed e-Loan" for customers to choose from.
More direct banking apps lack basic financial management, and online products are still relatively simple. Only one "Caisheng No. 2" wealth management product has been launched on the homepage of the direct banking app of Chouzhou Bank, with an annualized rate of return of 2 on the 7th201%；Qinghai Provincial Rural Credit Cooperative, Zunyi Xinpu Changzheng Village Bank Direct Bank Investment Zone has no products for sale; The wealth management sector of Tieling Bank's direct banking app has also been temporarily closed ......During the evaluation process, there are also some direct banking apps that have problems such as flashbacks and inability to open.
The competitive landscape is changing.
From expansion to ebb and flow, what has direct banking experienced?
Originally, direct banking was understood as an open channel with the ability to expand customers through the Internet, which could optimize bank resources while reducing intermediaries and costs, but because it mostly existed as a subordinate department of the parent bank, problems such as awkward identity and poor coordination of various departments also followed. At the same time, the maturity of remote authentication technology and the implementation of regulations such as the classification management of personal bank accounts have weakened the functional positioning of direct banks.
Some bankers commented that the focus of direct banking is on direct sales rather than banks, in order to liberate customers from the cumbersome account management process, but the establishment of business units does not really solve this problem. In addition, China's banks themselves do not have a traffic advantage, from this point of view, it has become a more realistic choice for traditional banks to cooperate with Internet giants to develop direct banks.
Banks are also aware of this problem, and independent corporate direct banks have come into being. In November 2017, Baixin Bank, the first independent legal person direct bank in China, opened, which was jointly established by China CITIC Bank and others. On March 23, 2018, the board of directors of China Merchants Bank issued an announcement agreeing to jointly invest with its strategic partner JD Digital Technology in accordance with the ratio of 7:3 to establish an independent legal person direct bank, China Merchants Topology Bank, but the direct bank has not been launched for a long time, and in 2022, the board meeting of China Merchants Bank withdrew the application for opening of China Merchants Topology Bank and terminated the preparatory work. At the end of 2021, the regulator approved the opening of Post Hui Wanjia Bank, a direct banking subsidiary of PSBC, becoming the second independent legal person direct bank in China.
Bacera Bank is positioned to serve individuals and small and micro users, that is, inclusive finance, so its business includes wealth management, consumer finance, small and micro finance, auto finance, etc. It can be seen in the Baixin Bank APP that compared with other direct banks, the bank's product system construction is relatively complete, and the annual interest rate of the main 5-year time deposit is 345%, which has a certain advantage of high interest rates; In the wealth management sector, products from 25 institutions, including Hangzhou Bank Wealth Management, Nanyin Wealth Management, Minsheng Wealth Management and IB Wealth Management, have been launched, with a wide range of products; The loan products are mainly "good will spend", with an annualized interest rate of 486%-24% (simple interest).
Although Bacera Bank, which has independent decision-making power, has more flexibility in business development and technological innovation, from the perspective of performance, Bacera Bank has lost money many times, and from 2017 to 2021, Bacera Bank achieved revenue of 4190370,000 yuan, 129.5 billion yuan, 237.3 billion yuan, 172.3 billion and 299.8 billion yuan, and the net profit in the same period was -29.3 billion yuan, -48.4 billion yuan, 1976050,000 yuan, -38.8 billion and 26.3 billion yuan.
At that time, the management of Bacera Bank mentioned that the main focus in the early stage was to explore the innovation of retail finance, and profitability was not the core goal. It wasn't until 2021 that Bacera Bank got on the right track, turned losses into profits, and ushered in an explosion of performance in 2022. In 2022, the bank achieved a net operating income of 396.8 billion yuan, a year-on-year increase of 3235%, net profit 65.6 billion yuan, a year-on-year increase of 1494%。The asset size reached 9692.2 billion yuan, a year-on-year increase of 2206%。
Different from the equity structure of "bank + Internet" of Baixin Bank, Postal Hui Wanjia Bank was established solely by the Postal Savings Bank. On June 30, 2022, the opening kick-off meeting of Youhui Wanjia Bank was held, announcing the official opening and launching the first batch of products. "The biggest difference between Posthui Wanjia Bank and other direct banks is that it has a huge offline physical network. Online intelligent services and offline warm face-to-face services are the biggest features and core competitiveness of this direct bank. This is the positioning of the management of the Postal Savings Bank as a direct bank.
Up to now, the distribution loan of Youhui Wanjia Bank, Wanjia Express Loan, wealth management supermarket and deposit products have been launched, and 12 wealth management companies have carried out cooperation with Huaxia Wealth Management, CNCBI Wealth Management, IB Wealth Management, China Post Wealth Management and Hangzhou Bank Wealth Management. In October last year, the bank's one-stop integrated consumption platform "Huiyoupin" was newly launched, bringing together the rights and interests of e-commerce, live broadcasting, travel, and cleaning and care for a full range of life services. At present, the bank is in its infancy, and the focus in the initial stage of opening is to lay the foundation, and in the whole year of 2022, the bank will achieve an operating income of 10.1 billion yuan, net profit -16.2 billion yuan.
In the future, it remains to be seen whether the Post Hui Wanjia Bank can turn losses into profits and whether Baixin Bank can continue to break out. As Wang Pengbo, a senior analyst in the financial industry at Broadcom Analysis, said that if independent legal person direct banks want to stand out, it is not enough to have independent legal personality, and how to provide customers with more valuable products and services in the future is an important factor affecting whether direct banks can gain a foothold. The biggest difference between the operation of an independent legal person in a direct bank and the development path of the departmental model is that it operates independently, and realizes the real isolation of management, business, personnel and other aspects from the parent bank, so as to truly achieve independence and pure online, instead of becoming a channel for the original banking business.
In view of the future development path of direct banks, a reporter from Beijing Business Daily sent an interview outline to Minsheng Bank, Baixin Bank, and Postal Savings Bank respectively, but did not receive a reply as of press time.
Is there a future?
Whether it exists independently as a subsidiary or as a business unit, differentiated strategic positioning is the key for direct banks to establish a reasonable competitive and cooperative relationship.
From the perspective of overseas experience, the differentiated competition model of direct banks in Western countries lies in their clear positioning, and some banks take "customers' second choice bank" as their strategic positioning to meet customers' simple financial needs; Some banks only conduct business for digital elites, becoming the innovation test ground of the customer's host bank and parent bank; Other banks rely on the asset management capabilities of their parent banks to build high-end direct banking brands.
Throughout China, most direct banks still lack the ability to build Internet platforms and scenarios. An industry insider admits that "in recent years, the position of direct banks has been marginalized, and the reason for this situation is that domestic direct banks have not completely separated from the parent bank system and launched truly competitive products, attracting most of the customers of the parent bank, without small profits and no oversales."
In today's increasingly developed e-banking, the convenience of direct banking does not have any advantages, and banks also hope to concentrate the user entrance and pay more attention to the centralized operation of mobile banking as the main platform under the condition that the input and output are relatively low. In addition, direct banks can only open Type II and III accounts, and the functional authority is less than that of Type I accounts opened on-site, which has also become a major factor restricting their development.
First of all, the types and quantities of financial products provided by direct banks are limited, most of them are deposits, loans and wealth management products, and the financial products of various banks have the problem of homogeneity, and compared with other channels, the interest rate or advantage of financial products of direct banks is not obvious; Secondly, compared with other electronic channels of banks, direct banking has no obvious advantages in terms of cost and convenience, and customers are more inclined to use mobile banking with complete functions and high convenience.
Looking forward to the development direction of direct banking, Su Xiaorui suggested that direct banking can improve the user experience in aspects such as customer service, design and layout, and functional settings. In addition, it is necessary to do a good job in content, to have differentiation, and to monetize traffic through cross-marketing to achieve profitability; Set up a reasonable user hierarchy and incentives to improve user stickiness, etc. At the same time, on the one hand, it is necessary to make full use of the resources of the parent bank, find out the correct positioning, and create synergies with the parent bank; On the other hand, explore the characteristic and differentiated development model and product development, and form dislocation competition with the market.
In the Internet era, "winner takes all", after the big waves, there may be a number of excellent direct banks that will eventually succeed, but the widespread replication will eventually cease to exist.
Beijing Business Daily reporter Song Yitong.