21 October 2016
MInsheng Bank intends to remodel its business to become client driven, its chief executive says.  Photo: China Daily
MInsheng Bank intends to remodel its business to become client driven, its chief executive says. Photo: China Daily

How banks can survive in the internet era

The financial industry will undergo a restructuring amid the rise of internet technology, against the backdrop of digital information and globalization.

More and more banks that focus on specific sectors will emerge, such as specialized credit card firms, mortgage loan banks and mortgage loan securitization banks, as well as clearing banks that serve financial institutions.

Internet finance will centre on the core of finance withonline-to-offline financial services, coordination between banks and companies, as well as database integration and integrating the industrial and financial sectors.

The biggest threat will come from competitors outside the industry.

Various sectors face a shake-up when internet giants try to expand their footprint into those sectors.

On one hand, traditional businesses are more aware of the cross-over between industry and finance.

Real economic sectors can take advantage of their data on the supply chain and upstream and downstream industry chain and boost their overall competitiveness utilizing internet technology.

That could pose a challenge for traditional financial institutions.

On the other hand, the internet finance business covers demand research, standardized online service, data collection, procedure approval and risk management.

Internet platforms are good at the first three areas, whereas banks have an offline edge in the other two.

So, both parties have complementary advantages in venturing into each other’s traditional field of operation.

Meanwhile, the internet, finance and real industry can forge a mutually beneficial model instead of competing with one another.

The internet network can realize the integration of financial networks, logistics networks and business networks.

The different parties can form an alliance to complement each other and outsource various areas, like data management, credit cards and loan investigation.

All parties should focus on their core strengths and utilize the alliance to create the most value.

China Minsheng Bank has established a financial service platform for serving its more than 10,000 trading finance clients.

If e-commerce starts to take off in banks, transactional capital will stay in banks, which could lower debt costs.

Minsheng intends to remodel its business to become client driven.

And it intends to focus on specific products in specific areas and provide a better solution for clients.

That would differentiate the bank from its competitors.

Internet Plus has already injected new life for various industries, and internet giants, traditional financial firms as well as industrial players are all trying to rebuild their business models and value chains.

From the banks’ perspective, we have to fully utilize our resources and capabilities and offer products and services using the accurate information offered by big data.

That would give us an edge in future market competition.

This article, published in the Hong Kong Economic Journal on June 17, was contributed by Lin Zhihong, chief executive for Hong Kong of China Minsheng Banking Corp.

Translation by Julie Zhu

[Chinese version中文版]

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