The number of mobile banking users in China reached 150 million in 2012, accounting for more than 40% of mobile banking users worldwide. Major commercial banks saw more than 100% growth in mobile banking users in 2012, and more than 300% growth in mobile banking transaction value.
According to a report, Mobile Banking Trends in China, Celent examines mobile banking innovations and trends, new business areas that mobile banking will support, and the impact on retail banking.
The strengths of mobile banking compared to online banking include portability, ease in obtaining the geographical location of the user, and the opportunity to analyze user behaviour. Commercial banks are offering innovative services by leveraging the convenience brought about by mobile phones, such as cardless cash payments and withdrawals, branch maps, fund transfers using mobile phone numbers, and contactless payments.
Mobile banking in China is not only growing rapidly, it is enabling new business models, says Hua Zhang, analyst with Celents Asian Financial Services Group and author of the report. Mobile banking provides banks with massive amounts of transaction data, which they can analyze in order to develop new products and strategies.
Key findings of the report include:
- Among the different online payment modes, PCs are the most widely used in China and account for 43% of all transactions, while mobile banking is the fastest growing and accounts for 30% of all transactions.
- The Industrial and Commercial Bank and China Construction Bank have the highest market share in mobile banking at 35.1% and 35.0% respectively. With the popularization of the 3G network, smartphones, increase in the utilization of mobile payments and development of e-commerce, mobile banking has been experiencing rapid growth.
- Celent estimates that mobile shopping in China will reach US$7.4 billion in 2012 and US$40.8 billion in 2015. Moreover, more than 80% of China’s young consumers would like to have their public transport card, bank card, and other payment tools integrated into the mobile phone, and more than 50% of users hope that mobile banking can offer comprehensive mall shopping services.
- The strengths of mobile banking compared to online banking include portability, ease in obtaining the geographical location of the user, and the opportunity to analyze user behavior. Commercial banks are also offering innovative services by leveraging the convenience brought about by mobile phones.
- Cardless cash withdrawal and payment: After setting a certain withdrawal amount in advance via mobile banking, a user can withdraw cash from an ATM at a specified time using the mobile phone number and the one-time password sent by the bank. This service will eventually be used for cash withdrawal across different banks.
- Application of mobile phone features: Through the location function, users can easily search for the nearest branch, ATM, and preferred merchants on the mobile phone map.
- Funds transfer using mobile phone numbers: Funds transfer can be completed easily and quickly by entering the payee’s mobile phone number and full name; a bank card number is not required. In this way, the account number will not need to be disclosed.
- Analysis of Big Data and user behavior: Banks store huge volumes of user data; as banks open online malls, they will be able to accurately analyze the massive amounts of transaction data for every user.
Contactless payment: The financial and policy environment in China is very conducive to the development of contactless payments, and the widespread use of the mobile phone in China has created a huge market. The main vendors will be the mobile operators, China UnionPay, and third party payment vendors entering the market by acquiring banks. These three types of vendors are totally different in their position, strengths, and weaknesses; their strategy of entry into the market will also differ significantly.