Digitisation of Chinese Finance Drives Closure of over 2800 Brick-and-Mortar Bank Branches in 2020


The proliferation of fintech in China has led to the widespread closure of brick-and-mortar bank branches over the past two years.

Data from the China Banking and Insurance Regulatory Commission (CBIRC) indicates that as of 14 December China has seen the closure of over 2,800 banking outlets in 2020, bringing the total number of closures over the past two years to more than 6,000.

Big state-owned banks accounted for the largest share of these branch closures, while rural commercial banks were less represented.

The wave of closures arrives following ongoing gains in the use of mobile and online banking by Chinese finance consumers, particularly since the COVID-19 pandemic.

The “2019 China Banking Sector Services Report” (2019年中国银行业服务报告) released in March by the Chinese Banking Association (CBA) indicates that 2019 saw a total of 163.784 billion online banking transactions, for a YoY rise of 7.42%.

Mobile banking transactions totalled 121.451 billion, and were worth 335.63 trillion yuan, for a YoY rise of 38.88%.

Domestic analysts say the COVID-19 pandemic has led to a further spike in the use of online and mobile banking services.

“Following the development of digital finance, especially since the pandemic this year, many companies and individuals directly use their mobile phones to handle financial operations, and their dependence on the counters at branches has greatly reduced,” said one banking analyst to Diyi Caijing.

“Many big state-owned banks and joint-stock banks also did not give full consideration to demand, and established branches in excess of actual demand.”