麦肯锡－案例库Understanding Personal Financial Services Consumers in China (21606) Oct01 2

Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,PFS010212HK-misc,*,*Footnote,Source:Sources,Unit of measure,CONFIDENTIAL,Discussion document,February, 2001,UNDERSTANDING PERSONAL FINANCIAL SERVICES CONSUMERS IN CHINA,This report contains information that is confidential and proprietary to McKinsey & Company and is solely for the use of McKinsey & Company personnel. No part of it may be used, circulated, quoted, or reproduced for distribution outside McKinsey & Company. If you are not the intended recipient of this report, you are hereby notified that the use, circulation, quoting, or reproducing of this report is strictly prohibited and may be unlawful.,EM FIG Practice,AP Marketing Practice,MARKET COVERAGE OF PFS 2000 SURVEY,New Zealand,Korea,Taiwan,China,Australia,Singapore,Hong Kong,Philippines,Thailand,India,Indonesia,Malaysia,14 countries across Asia-Pacific, Turkey, Brazil,5,733 households,Approximately 400 samples per country,Upper and middle income urban households (those active users of PFS products & services),Content,Purchase behavior,Product holdings,Channel usage,Attitudes,Demographics,3 years (1998, 1999, 2000),Japan*,Turkey,Brazil,1,PFS010212HK-misc,CHINA PERSONAL FINANCIAL SERVICES SURVEY SAMPLE DESCRIPTION,Representative sample across demographics of 4 big cities in China,Beijing,Shanghai,Guangzhou,Wuhan,Age: 21-64 with financial decision making power,Income cut-off,3 top cities with annual household income RMB $30,000 or above,1 inland city with annual household RMB25,000 or above,Filters,45-min interviews with questions covering financial needs, buying behaviour, preferences, attitudes, product usage, etc.,Main interview,Source:team a,nalysis, government statistics,2,PFS010212HK-misc,1. Market is attractive with many opportunities,2. PFS survey findings,3. Customer segmentation,4. Implication,CONTENT,3,PFS010212HK-misc,Large population base of 1.2 billion of which only 15% reside in urban areas; pockets of affluence exist in cities,Rapid GDP growth at 17% CAGR (1992-1999) at driving emergence of middle and upper income segments,Increasing per capita income driving demand for financial products beyond bank deposits,High savings rate estimated at 45% of GDP,Aging population with over 65 segment estimated to reach 7% by 2000,Very limited range of consumer savings and investment products, supported by very backward services,Mortgage and consumer loan market created only at the end of 1995,Other consumer loan products are severely restricted by PBOC,Market infrastructure very unsophisticated, e.g., most bank branches are not able to share data,Traditional channels dominate, i.e. branches for banks,Foreign entrants have recently introduced commissioned-agents, and professionally run agency system,Slow development of alternative and remote channels; still largely a cash-based society,Lack of local expertise and professional advice to educate customers,Market largely closed off to foreign players,Highly political license approval process,Government under increasing pressure to liberalize, to facilitate WTO entry,Reform of state owned enterprises,SOEs,resulting in reduction of welfare benefits,Reform of welfare system resulting in shift of pension and health care responsibilities to companies and individuals,Weak regulatory framework that is also poorly implemented, resulting in a lack of transparency,RMB business can be attractive with wider spreads given the latent demand for, but lack of alternative savings and investment products, and unsecured consumer credit lines,Profits in some customer segments will become increasingly squeezed as a result of government regulations and competition,Market dominated by state-owned, or affiliated financial institutions,Emerging local and foreign entrants are aggressively penetrating and expanding market share,Large number of foreign players intent on maintaining a presence/toehold despite strong entry barriers,Competitive environment,Regulatory environment,Chinas PFS market evolution,Consumer demand,Distribution,Products,Profitability,CHINA PFS MARKET IS UNDERGOING SIGNIFICANT CHANGES,4,PFS010212HK-misc,HISTORICALLY FAST GROWING PERSONAL FINANCIAL SERVICES MARKETS IN CHINA,Source: China Statistical yearbook, China Bank Card office, McKinsey analysis,Mutual funds,Securities,Deposit,100% =,$5,351,Market size and growth, RMB billions,100% =,$5,359,$6,833,$4.2,$33.4,$75,Mortgages,1997,1998,CAGR 100%,1999,PFS assets,Life insurance,Pension,$3,100,ESTIMATE,1994,PFS Liabilities,Consumer,loans,1997,1998,1999,1994,$133,1997,1998,1999,1996,1995,Payment,Quasi-credit & credit card outstanding,(RMB billion),100%=,14,21,22,23,24,CAGR 17%,CAGR 11%,1,1,1,1,0,0,0.2,1,5,PFS010212HK-misc,BUT PENETRATION OF PERSONAL FINANCIAL PRODUCTS REMAINS COMPARATIVELY LOW, MONEY IS IN BASIC DEPOSIT,Source: EIU, literature search, McKinsey analysis,Outstanding balances as percent of GDP 1999,China,US,Mortgage,Stockbrokering,Credit card,Deposit,China,Consumer finance,China,73%,35%,China,3%,27%,China,US,US,US,US,6,PFS010212HK-misc,LOW PENETRATION IS EXPLAINED BY LACK OF SUPPLY RATHER THAN LACK OF DEMAND AS DEMONSTRATED IN CREDIT CARD CASE,Supply of credit hindered by.,PBOC set tight limit on overdraft to avoid credit explosion,Lack of integrated payment network to facilitate efficient transaction processing,Slow speed in data transmission through underdeveloped,tele,-lines,No personal credit history in China,Banks are conservative about overdraft as potential risk is high due to poor control and risk management system,Chinese culture is not necessarily debt adverse,Revolving credit percent of card spend,US,Taiwan,Hong Kong,China,7,PFS010212HK-misc,Product,Current market size,(1999),RMB Billions,ROA before tax,Pre-tax profit pool,RMB Billions,Est. growth rate,Compe-tition,Regulation,Favorable,Neutral,Unfavorable,MORTGAGES AND CREDIT CARDS ARE,THE MOST ATTRACTIVE PFS PRODUCTS,Deposit,Mortgage,Credit Card,Stockbroking*,Life insurance/pension,5,962,126,120,2118,1,640,0.5,1.5,2 5,0.2,2.5,2.9,2,24,3.5,41,15 20,40 - 60,32 - 40,18 25,25 - 30,*,Currently banks dont directly provide investment and insurance products,Source:China Information Bank, McKinsey analysis,x,=,ESTIMATE,8,PFS010212HK-misc,Source:China Finance Year Book; China Bank Cards Office; Lafferty Report,CARD AND MORTGAGE MARKETS HAVE ENJOYED PHENOMENAL GROWTH IN THE 1990s,Growth rate of cards in circulation, 1999,Millions,0.0,0.0,0.01,0.08,Credit cards,Quasi-cards,Debit cards,95,9,152,CAGR,Percent,Mortgage total,balance,RMB Billions,CAGR,105%,1994,1995,1996,1997,1998,1999,9,PFS010212HK-misc,1. Overall opportunity,2. PFS Survey findings,3. Customer segmentation,4. Implication,CONTENT,10,PFS010212HK-misc,CHINA PFS CUSTOMER TRENDS,Consumers showed increased satisfaction towards their provider,Big four banks customers have lower satisfaction than other private banks,However, relative to other embryonic countries, China has lower satisfaction level,Are they satisfied?,How loyal are they?,Although the decreasing annual attrition rate, Chinese consumers are reticent about consolidating all of their financial services relationships with one institution They are relatively price sensitive,Hence, disloyalty likely to increase as they grow richer,Where are the opportunities?,What are the key success factors in products and services delivery?,Investment products are likely to take off as consumers worry about retirement,Pent-up demand in credit product due to lack of supply,Convenience and competitive pricing are the key criteria for success,Easy access and fast turnaround are the key success factor for credit products in China,Brand/reputation is the key for investment product providers,Alliance with local bank is critical to gain customers as they prefer local to foreign banks,Face-to-face still best way to access customers, but newer channels start to emerge and will be important to retain customers,PFS trends,11,PFS010212HK-misc,CONSUMERS SHOWED INCREASED SATISFACTIONTOWARDS THEIR PROVIDER OVER THE YEARS,I am highly satisfied with my current financial institutions,I can get good service from my existing financial institutions,1998,1999,2000,CAGR 12%,1998,1999,2000,CAGR 3%,China,Asia,Source:McKinseys proprietary PFS Survey 1998 - 2000 (based on high & middle income groups),Percent strongly/somewhat agree,12,PFS010212HK-misc,MOST OF THE BIG FOUR BANKS CUSTOMERS HAVE LOWER SATISFACTION THAN AVERAGE CONSUMERS IN CHINA,I am highly satisfied with my current financial institutions,I can get good service from my existing financial institutions,* Big four banks,Source:McKinseys proprietary PFS Survey 1998-2000 (based on high & middle income groups),Percent strongly/somewhat agree,Pudong Development Bank (n=6),Bank of Communication (n=10),Industrial Commercial Bank of China* (n=255),China Construction Bank* (n= 84),Agriculture Bank of China* (n= 25),Other domestic bank (n= 10),Bank of China Group*(n= 20),China Merchant Bank (n= 2),China average (71%),China average (69%),13,PFS010212HK-misc,HOWEVER, CHINA HAS LOWER SATISFACTION LEVELRELATIVE TO OTHER EMBRYONIC COUNTRIES,Percent strongly/somewhat agree; N = 4,088,I am highly satisfied with my current financial institutions,India,Indonesia,Thailand,Malaysia,Philippines,Singapore,China,Korea,Hong Kong,Taiwan,I am very loyal to existing financial institutions,I can get good service from my existing financial institutions,*Arithmetic average of Asian countries surveyed,Source:McKinseys proprietary PFS 2000 Survey (based on high & middle income groups),Asia average* (75%),Asia average* (72%),Asia average* (70%),14,PFS010212HK-misc,ALTHOUGH ANNUAL ATTRITION RATE HAS BEENDECREASING.,Proportion of new account openers over the last 12 months,Percent of respondents; N = 416,With new institutions,Source: McKinseys proprietary PFS 2000 Survey (based on high & middle income groups),31%,Annual attrition rate,26%,21%,With existing institution,1998,1999,2000,15,PFS010212HK-misc,.CONSUMERS ARE RETICENT ABOUT CONSOLIDATING ALL OF THEIR FINANCIAL SERVICES RELATIONSHIPS WITH ONE INSTITUTION,Number of banking relationship,One,Multiple,Source:McKinsey Proprietary Asia PFS Survey, 2000,Percent of respondents agree/strongly agree,I believe consolidating,all accounts would be,to my benefit,I prefer to deal with,one institution for,all my financial needs,India,Indonesia,Thailand,Malaysia,Philippines,Singapore,China,Korea,Hong Kong,Taiwan,Asia average 47%,Asia average 53%,16,PFS010212HK-misc,AND CONSUMERS IN CHINA ARE PRICE SENSITIVE AND WILLING TO SHOP AROUND,Percent strongly/somewhat agree; N = 4,088,Shopping around for financial product is worth the effort,If I had to choose, I would prefer to use a financial institution that gave one or two percent more return on my money rather than high level personal service,Asia average 61%,Asia average (50%),Source:McKinseys proprietary PFS 2000 Survey (based on high & middle income groups),Indonesia,China,Taiwan,Malaysia,Thailand,Philippines,India,Korea,Singapore,Hong Kong,17,PFS010212HK-misc,AS A RESULT, CONSUMERS ARE EXPECTED TO BECOME EVEN MORE DISLOYAL AS THE GROW RICHER,*1999 figures,Source:EIU Viewswire, McKinseys proprietary PFS 2000 survey (based on high & middle income groups),Percent strongly/somewhat agree; N = 4,088,Proportion of respondents loyal to current institutions,GDP/capita*,US$,India,Indonesia,Thailand,Malaysia,Philippines,China,Korea,Singapore,Hong Kong,Taiwan,Customer demand for more to stay loyal,Greater competitive intensity,Artificially high due to:,Limitations on foreign banks,Smaller number of major local banks,18,PFS010212HK-misc,1999,AGING POPULATION CONCERNED ABOUT LONG TERM RETIREMENT,2005E,1995,65+,1990,40-64,Changing population composition profile in China 1990-2005,Millions of people,20-39,CAGR,Percent,+4,+4,+1,“,I am concerned about having enough money for retirement”,Percent of respondents,N = 411,1,131,1,211,1,259,Source:1999 McKinsey Asia PFS survey; government statistics, McKinsey analysis,22-29,30-39,40-49,50-59,Age,Strong Agree/agree,1,328,19,PFS010212HK-misc,Company sponsored retirement plan,CONSUMERS WORRIES JUSTIFIES SINCE CURRENT PORTFOLIOS TOO CONSERVATIVE AND RELY ON OTHERS,Source: McKinseys proprietary PFS 2000 Survey (based on high & middle income groups), MAS,Taiwan,China,Hong Kong,Main vehicle for long-term retirement investment,Equities,Government retirement plan,Property investment,Life insurance,Mutual funds,Bank deposits,High,growth vehicle,Group venture,20,PFS010212HK-misc,LOW CREDIT PENETRATION IS EXPLAINED BY LACK OF SUPPLY RATHER THAN LACK OF DEMAND,Supply of credit hindered by.,PBOC set tight limit on overdraft to avoid credit explosion,Lack of integrated payment network to facilitate efficient transaction processing,Slow speed in data transmission through underdeveloped,tele,-lines,No personal credit history in China,Banks are conservative about overdraft as potential risk is high due to poor control and risk management system,Credit product penetration,Mortgage loan,China,US,Credit card,Personal loan,Overdraft,Car loan,21,PFS010212HK-misc,MENTALITY ON CREDIT WOULD NOT BE A OBSTACLE FOR FURTHER GROWTH,Chinese people said they are not willing to borrow .,Percent of respondents agree,“,I believe it is unwise to borrow money except for a house”, in fact, both mortgage market and personal loan market have been growing rapidly,Agree,Neutral,Disagree,100%,100%,1998,1999,Source:Asia PFS Survey 1998-2000,2000,100%,Mortgage balance,RMB millions,1998,1999,1997,1996,1995,1994,Growth rate of total transaction volume and cards in circulation,RMB 2,422 billions 180 million cards,Transactions,Cards,5 yearCAGR 99%,22,PFS010212HK-misc,TO BOOST PRODUCT USAGE, BANKS SHOULD ADDRESS CONSUMERS PRODUCT-SPECIFIC KEY BUYING FACTORS . . .,Percent or mean score* of product holders,*5 = very important; 1 = not important,Source:McKinseys proprietary PFS 2000 Survey (based on high & middle income groups),Top 3 reasons for choosing financial products in China,Securities,A trusted well-established company,Best services,Convenience,Investment products,Mutual funds,Company reputation,Ability to switch funds within the family,Access to representatives,Car/personal loan,Competitive interest rates,Quick turnaround on loan approval,Good customer services and professional staff,Credit products,Mortgage loan criteria,Competitive interest rates,Quick turnaround on loan approval,Flexible repayment term and methods,Quick loan turnaround key for,credit product,Brand/reputation,key for investment,23,PFS010212HK-misc,.AND INCREASE CONSUMER EDUCATION WILL BE KEYTO BOOST TRIAL AND USAGE OF INVESTMENT PRODUCTS,Percent; N = 251,Reasons for not investing in mutual funds/securities,I do not have enough money to invest in stock/mutual funds,I am afraid of investment risks,I am not familiar with stock market/investment funds and do not know what to invest,The financial institutions that I use do not offer stock trading/mutual funds,Low returns on mutual funds/stocks,Educate customers to have better understanding of risk return profile, and ways to employ products to achieve long term financial goals,Set initial investment requirement at a level that encourage trial,Actions to be taken by banks,Source:McKinseys proprietary PFS 2000 Survey (based on high & middle income groups),Primary Importance,24,PFS010212HK-misc,How good do you think the return is for PFS product?,BECAUSE CONSUMERS SHOW A WEAK UNDERSTANDINGOF RISK-RETURN RELATIONSHIPS,1.00,2.00,3.00,4.00,5.00,1.00,2.00,3.00,4.00,5.00,How risky do you think the PFS product is?,China,Source:McKinseys proprietary PFS 2000 Survey (based on high & middle income groups),China,Hong Kong,Very high,Very low,Very low,Very high,HK,Desired,Mutual funds,Insurance,Securities,Bank deposits,Bonds,25,PFS010212HK-misc,OVERALL, TO ATTRACT CHINESE CONSUMERS, CONVENIENCE AND COMPETITIVE PRICE ARE KEY,Main criteria when choosing a primary bank,By income and age,Percent of respondents,Others,Extensive,branch/ATM,network,Convenience,Middle income,Upper income,Below,39,Above,39,Importance of competitive price when,choosing a bank,By income and age,Percent strongly agree/somewhat agree,Middle income,Upper income,Below,39,Above,39,Question,If I had to choose, I would prefer to use a financial institution that gave one or two percent return on my money than high level personal service?,Income,Age,26,PFS010212HK-misc,ALLIANCE WITH LOCAL BANKS IS ALSO CRITICAL TO GAIN CHINESE CONSUMERS AS THEY PREFER LOCAL OVER FOREIGN BANKS,Percent strongly/somewhat agree; N = 4,088,Most consumers consider it important to deal with local institution .,Malaysia,China,Taiwan,Singapore,Indonesia,India,Korea,Thailand,Philippines,Hong Kong, they dont see the benefit of foreign bank,Asia average (68%),Asia average (33%),Source:McKinseys proprietary PFS 2000 Survey (based on high & middle income groups),Question,: Dealing with a local institution is important,Question,: Entry of foreign buyers will benefit me,27,PFS010212HK-misc,BRANCH REMAIN KEY AS THEY VALUE PERSONAL INTERACTION,Percent of the respondents strongly agree/agree, China N = 416, Asia N = 4,088,Source:McKinsey Proprietary Asia PFS Survey, 2000,I prefer to deal with a live person at branch or on phone rather than machines,Malaysia,Indonesia,Taiwan,India,Philippines,Thailand,Hong Kong,Singapore,China,Korea,I am usually the first to try a new technology,I try new technologies when they have proven at least short track of record,I try new technologies when they have become widely accepted,I avoid trying new technologies until absolutely necessary,Receptive to technology,Asia average = 62%,28,PFS010212HK-misc,BUT THEY ARE OPEN TO INNOVATIVE CHANNELS,I intend to use internet banking,Percent of respondents strongly agree/agree,Source:McKinsey Proprietary Asia PFS Survey, 2000,I would open my banking account with my local supermarket if it offers banking services supported by a well known and respected local/international bank,China,Philippines,India,Malaysia,Indonesia,Singapore,Taiwan,Hong Kong,Korea,Thailand,Asia average =,Asia average = 38%,29,PFS010212HK-misc,Compared to other Asian countries, ATM usage in China is low.,*Banking customers who use ATM at least once a month,Source:McKinsey 1999 PFS survey,ATM usage in Asia,Possible reasons for under utilization,Limited availability of ATMs,No integration of individual banks networks,Lack of functionality,Customer attitudes (e.g., resistance to making cash deposits),USAGE OF MORE ADVANCED CHANNELS SUCH AS ATM IS STILL VERY LOW ,Percent of respondents,Once a week,Once a month,Hong Kong,Taiwan,China,India,Asia average =,48%,12%,30,PFS010212HK-misc,.BUT A HIGHER PENETRATION OF ATM WILL BOOST THE USAGE,Source:Central Bank report; government statistics,Penetration of ATM in Asia,People per ATM 1999,US,India,China,Philippines,Indonesia,Thailand,Malaysia,Singapore,Taiwan,Hong Kong,Korea,CAGR of total number of ATMs 1993 - 99,15,N.A.,66,7,24,62,7,16,14,10,N.A.,Opportunity to build more ATMs especially given the high demand for 24 x 7 availability,31,PFS010212HK-misc,PHONE BANKING COULD PROVIDE NEAR-TERM MIGRATION OPPORTUNITY,Source:McKinsey 1999 PFS Survey; International Data Corporation,Hong Kong,Philippines,Taiwan,China,Singapore,Percentage using phone-banking more than once a month,Chinese consumers indicate willingness to use phone banking .,Korea,Malaysia,Indonesia,Thailand,Phone line penetration, it has sufficient infrastructure in place for