Chinese banks will need to develop sophisticated products if they are to capture market share among the emerging affluent classes in China, ...

Chinese banks will need to develop sophisticated products if they are to capture market share among the emerging affluent classes in China, according BearingPoint, a business consultancy. “The design and development of new products for the burgeoning middle class and the emerging affluent classes of China's society, such as new payments and customized lending services, is key for the development of China's banks,” said Peter Horowitz, a director at BearingPoint. He added: "The key to this will be the development of consumer credit services to arrange for effective distribution of products to the mass market. The focus should also be on developing products and services that can generate service fee revenue, which are currently less than five per cent of current earnings." Mr Horowitz said that China's banks are poised to potentially become some of the most influential financial institutions in the world over the next 10 years, but they first need to know their customers and conduct better segmentation of the market. “The growth of China's mass affluent and high net worth segments will require improved financial planning processes, asset allocation and 'open product' architectures, such as the ability to distribute financial products manufactured by other institutions,” said Mr Horowitz. He added: “In many countries, servicing a client's assets and liabilities, simultaneously, is difficult given the integration needed for legacy systems and platforms. China is positioned to leapfrog these platforms with an approach taking a complete view of a client's needs from the outset.” BearingPoint believes product development is one of the five key areas of development for China's banks. Financial reporting and risk management, digitization, delivery systems, and management development are other areas for banks to focus on as they emerge in the global industry.