Chinese customers aren't getting what they want from banks
When it comes to digital wallet usage, China is far ahead of the curve, outpacing the combined digital wallet usage of customers in the U.S., Spain, Germany and Argentina, Gallup reports.
And with the latest world-record sales reported by e-commerce giant Alibaba on China's Singles' Day holiday, one of the largest online shopping days in the world, digital payments in China are expected to soar even higher.
Chinese banking customers' extensive adoption of digital channels is largely related to the rise of financial technology - or "fintech" - companies.
Across the globe, fintech is shaking up the banking industry, disrupting everything from mobile payments and loans to fundraising and asset management. In the Chinese market, Alibaba and Tencent are key fintech players, leading banks to try to ramp up their digitalization efforts.
The trouble is, rapid digitalization is damaging banks' customer relationships and brand differentiation, as many Chinese banks lose sight of what their customers want most.
A majority of Chinese customers are not experiencing the meaningful financial relationships they desire from their banks.
In fact, 23% of Chinese banking customers are fully engaged - significantly lower than in the U.S. and other Asian countries.
Fully engaged banking customers are attitudinally loyal and emotionally attached to their bank - and, consequently, purchase more products and act as brand ambassadors.
Most Chinese banking customers lack emotional attachment to their bank, seeing it merely as a tool to accomplish tasks. Eight percent of Chinese banking customers consider their primary bank "the best" compared with other banks - and almost half (46%) feel their primary bank is about the same as other banks.
Because of this low customer engagement, Chinese banks can expect diminished revenues and customer loyalty, with customers ready and willing to leave for a better deal or for a more convenient fintech company such as WeChat or Alipay.
This is no small problem: According to a recent study from Goldman Sachs, the fintech sector is positioned to steal up to $4.7 trillion worth of business from banks. ■