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Economics, geopolitics

depress value growth

New initiatives focus on digital banking, customer experience

Following two successive years of value increases, economic and geopolitical pressure, intensified by the repercussions of COVID-19 produced a 3 percent value decline in the banks category, and one

bank dropped from the BrandZ™ China Top 100.

Consumer attitudes shaped by the pandemic are expected to influence banking practices during the post-pandemic period. Because of the potential health risk from touching surfaces in public settings, 76 percent of people in China reported an increase in their use of non-cash payment systems, according to the Kantar COVID-19 Barometer China Report.

Even prior to the pandemic, China’s slower economic growth and trade tensions created consumer uncertainty. To stimulate spending, the government reduced taxes and kept key interests low, which hurt banks’ margins and earnings.  Authorities are also planning a pilot program that will initially permit two state-owned banks to offer investment products, eroding China’s long-established separation of banking and investment services.

Half of the eight brands in the BrandZ™ China banks ranking declined in value. Two of the four largest state-owned banks, Agricultural Bank of China and Bank of China, increased slightly in value. The other large state-owned banks are ICBC (Industrial and Commercial Bank of China) and China Construction Bank.

China Merchants Bank increased the most in value, 16 percent. Centered around some of China’s most active commercial centers, the share-holding commercial bank increased its loan portfolio and reduced the number of non-performing loans. It also expanded its use of blockchain.

In addition, China Merchants Bank focused on developing its digital capabilities and improving customer experience. In an effort to acquire new Monthly Active Users for its apps, the bank implemented advertising and social media campaigns. It also enabled branches to customize local services on the app. China Minsheng Bank also rose in value.

Banks will expand their support of the Belt and Road Initiative, small businesses, and technology companies, according to the China Banking Association.