Development Strategy of China’s Private Banking Business
- Abstract
Along with more than three decades of China's reform and opening up policy, the number of HNWIs in China is growing rapidly. Large high net worth population makes Chinese commercial bank face unprecedented private banking development opportunities. On the one hand, the stress from foreign banks and non-financial wealth management institutions formed the fierce competition landscape of China’s wealth market; on the other hand, a series of macroeconomic regulation and market controls make domestic commercial banks more difficult to benefit from their traditional deposit-loads spreads profit model, while the form of private banking industry chain and huge profit margins will become the new focus for banks' development.
In the face of huge private banking market, Chinese commercial banks showed great enthusiasm and strength compared with other wealth management institutions but still suffered from many setbacks such as lack of innovation and diversified products. The fundamental reason is unable to meet clients’ demand the the limitation of separate operation and regulation system. Considering the long history and promising brand of foreign banks, how to learn from international leading private banks and maintain our own strength is worth studying.
This paper starts from previous research and analyzes in depth about foreign banks success factors in diversified products, highly personalized services, brand strategy, relatively independent operation model and rich talents pool. In addition, understanding your clients are also important. As the accumulation of wealth, high net worth individuals are becoming more rational and mature, they do not only care about wealth creation, wealth preservation and diversified asset allocation are also getting more attention. Based on authorities reports, the author gives and in-depth analysis about China’s HNWIs, providing foundations for further strategy study. Since most of private banking researches are qualitative analysis so far, The innovation of this paper lies in using data and SCP paradigm explains the current situation about China’s wealth management market from the supply side and build a comprehensive strategic development strategy for Chinese commercial banks.