Online Banking’s Popularity in China Prompts Closure of Community Sub-branches

The increasing popularity of online and mobile banking has prompted Chinese banks to shut down their community sub-branches(社区支行)  in some of the country’s biggest cities.

Analysts point out that the surging popularity of online or mobile banking in China is prompting the closure of community sub-branches, whose functions can be almost completely replaced by electronic banking.

While the presence of community sub-branches provides convenience to local residents, rent, labour costs and utilities fees severely impedes their profitability compared to electronic banking or mobile payments channels.

Staff at the community sub-branches of Chinese banks further report that the popularity of fintech channels has left many of them redundant.

“Most of the time each day we’re idle,” said one member of staff at a bank community sub-branch to Securities Daily.

“Following the expansion of online operations by the banks, what were previously the core operations of community sub-branches, such as the purchase of wealth management products and the payment of utilities fees, no longer need to be performed at the community sub-branches themselves, but can instead  be completed directly via mobile banking or online banking.

“For this reason the number of customers coming to community sub-branches has fallen.”

Data compiled by Securities Daily indicates that regulators gave their approval to the closure of 22 community sub-branches in Beijing this year as of 25 June, including ten in the current month alone.

Other parts of China have seen a similar wave of closures, with the Guangdong province banking regulator approving the closure of 25 community sub-branches, the Shenzhen regulator approving 17, and the Shanghai regulator giving the green light to 3 closures.

While Chinese banks are opening new sub-branches in some areas, many lenders are seeing a net reduction in the number of community outlets.

As of the end of 2017 China Minsheng Bank had a total of 1622 community sub-branches, for a reduction of 72 compared to the preceding year, while Industrial Bank and Huaxia Bank operate a total of just 981 and 211 community or micro sub-branches respectively.

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