Traditional banks should not overlook their advantages in battle with online rivals

By Li Qiaoyi Source:Global Times Published: 2017/8/27 21:58:40

A look inside DBS Bank's flagship branch at the Marina Bay Financial Center in Singapore Photo: Li Qiaoyi/GT

The huge success of Alibaba's Alipay and Tencent's WeChat Pay in the online payment arena appears to have inspired China's various traditional financial service providers to formulate their own digital transformation plans.

But it seems that they've devoted so much to learning from the Internet titans' experiences that they have missed out on the chance of figuring out their own formula that leverages their traditional advantages. Working out how to stay competitive in a technology-powered age will involve thinking beyond the current online obsession.

It's true that the Internet has fundamentally altered what the average Chinese consumer wants from banking, insurance and capital market services. All these services have become much more user-friendly and the prevalence of mobile payment has amazed foreign visitors and technology gurus such as Apple CEO Tim Cook.

Traditional Chinese banks that have lost out to mobile payment platforms certainly need to reflect on what they might have missed.

Speaking at a forum in Beijing on Friday, Cyrus Daruwala, managing director for Asia-Pacific at IDC Financial Insights, said "we have started moving toward an ecosystem that has nothing to do with banking," urging a rethink by traditional financial service providers on how to reach out to average users in an Internet- and technology-savvy fashion.

IDC found out that the average Chinese consumer is now watching more videos online, according to Daruwala, but few banks here equip themselves with a video-on-demand capability to cater to people's video preference. Also, the country has yet to tap into lifestyle banking opportunities that address individual needs, such as developing a real-time banking platform.

But these efforts shouldn't be accompanied by neglect of one's own advantages or even self-denial. The mobile payment setback traditional Chinese banks have suffered is not only down to the banks' slowness in terms of innovation. It has much more to do with their inertia in failing to put consumers first. As a consequence, they have been old-fashioned not only in the online battlefield, but also in their brick-and-mortar outlets.

Having recently visited two branches of DBS Bank in Singapore where the fashionable décor and availability of state-of-the-art technologies such as video teller machines and virtual reality headsets set them instantly apart from the usual scene of long queues and old-school interiors at Chinese banks, I would argue that traditional banks could actually take advantage of their physical presence and translate it into an edge over their Internet rivals.

It could be that a balance between online and offline turf is difficult to strike. In the case of Singapore, the impressive physical branches can't mask the city state's lack of progress in mobile payments.

But for China's traditional financial service providers, remaking their physical presence could help them stage a counterattack against their high-flying online competitors.

The author is a reporter with the Global Times.

Posted in: INSIDER'S EYE

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