China's Salaried-Class-Oriented Bank Personal Finance Product Design Study

As a new source of banks' profits Personal Financial Services have been developing rapidly in our country during these years. According to the statistics of Industrial and Commercial Bank of China, during 2002 ,the banks' profit of personal finance service is about 25 billion constituting less than 10 per cent of total profits and the annual growth rate is 16.5% .In developed countries, personal financial services have become an important and stable source of profit and bring 40 to 70 percent of total profit for the bank. Obviously, there is an intense competition for the potential customers between domestic and foreign banks when they are also allowed in this area in the future. During the past, banks have always been emphasizing the "28 rules" ,which means pay attention to cultivating and maintaining 20% of the VIP clients. However even this 20 percent has become the target of the foreign banks, and our banks will perhaps lose them in this competition. So in such a situation, on the one hand, we have to make an effort to maintain the 20 percent we already have and on the other hand to develop more new customers from the potential remaining 80%, especially cultivating more and more loyal and trustworthy ones for our banks through good services.According to "China's 2007 report on Investors of personal financial products " ,the main investors in this area are the group of people with a salary lower than 100,000 Yuan which means the personal financial business is attracting more and more salaried class to join in . This group of people are sure to be the core target for profit in the future.As a result, this paper Focuses on the salaried class as a main object of study, we will analyze the need of the salaried class for personal finance products, contrast it with actual conditions and also point out the bottlenecks confronted by the customers when entering personal financial markets . Then we design new methods for personal financial business based on the actual need of the salaried class . we advocate the Perspective proposed by Personal / family life cycle theory rather than that by simple personal life-cycle theory commonly advocated in previous studies .we find out that our banks must pay attention to some key elements in the provision of personal financial services for the salaried class. Apart from ascertaining the risk preference types of its customers, the banks should also consider the families' life stages, because the families' affordability will not simply decreases linearly with the increase of its members' ages in different stages. The banks should provide Suitable personal financial services mainly on the aspects of fundamental Financial and investment planning for the salaried class according to Specific goals and families' affordability in different stages. In this paper, both in theory and technique we have re-designed some new methods and also tested the feasibility by the some cases. we find out that developing personal finance services will not only meet the financial needs of the salaried class, bring financial benefits for them but also bring more and more new customers and realize a higher growth rate of profit for the banks by provision of better services and management . in a word ,it will benefit both sides. Finally this paper gives some suggestions for the banks to perfect its personal financial services in for the salaried class.