Nielsen has identified three key consumer trends that are reshaping China’s financial market: online banking, digital payments and meeting the needs of aging consumers.
Online banking was a popular buzzword within China’s financial industry last year. Today, while Chinese consumers are given more choices than ever to pay and to manage their banking accounts, the traditional players in China’s financial market are facing big challenges. However, these shifts in banking also bring big opportunities for future growth.
Since the first launch of Yu’e Bao (an internet-based wealth management product owned by Alibaba) in 2013, the number of registered users had gone beyond 149 million by the third quarter of last year. According to Nielsen’s Financial Tracking Report, around 45% of online respondents claimed that they have invested in any internet-based wealth management products (including P2P, Yu’e Bao and WeChat-based wealth management products). Meanwhile, among those who have invested in Internet-based wealth management products such as Yu’e Bao, around 40% check earnings on daily basis, and about eight in 10 check earnings at least once every week.
When it comes to online payments, Nielsen’s survey shows that half of respondents are willing to use “WeChat Bank,” which is still regarded as an innovative internet financing concept for now. Consumers said they were hoping to try the functions of payment recharging (56%), bank transfer (56%), detailed billing information (47%), customer service (46%) and credit card payment reminders (43%) via WeChat Bank.
“Instead of technology, internet financing’s rapid growth is due to its innovative products and services, which truly put consumer-experiences at the center,” said Yu. “For the traditional banking industry, improving customer experience through emerging technology and channels, as well as simplifying other cumbersome wealth management procedures will be crucial to ensure success in the mobile internet era.”
According to Nielsen’s research, among Internet users from 20 cities across China, 94% of them have used an online payment platform.
“Over the past couple of years, China sees increasing innovation in digital payment via a variety of methods, including QR-codes, mobile-payments, etc. Chinese consumers have more payment choices for products and services than ever, while digital payment will continue to win over more Chinese consumers due to its convenient nature,” Yu said.
“The momentum of digital payment in today’s China brings daunting challenges to China’s credit card market, but also opportunities,” Yu said. “The big data behind consumers’ digital payments make it possible for the financial industry to further understand its consumer from different perspectives, thus realizing a win/win situation for both the credit card and wealth management market.”
Nielsen’s survey shows that over the past decade, the elderly population has become more financially independent and secure. According to Nielsen’s China Financial Tracking Report, 70% of surveyed people over the age of 55 claimed to have purchased investment or wealth management products. Additionally, more than half of the older respondents had life insurance, while 45% have at least one credit card.
Senior Chinese consumers present a real opportunity for the financial industry. “It’s definitely a segment that will grow in the future. However, China’s financial industry has traditionally not attached great importance to the aging consumer market,” said Yu. “More research needs to be conducted for a thorough understanding of the needs of today’s aging consumer. This will help China’s financial industry leverage innovative products and services to really satisfy unmet demands of the elderly demographic.