The Path Analysis Of Developing Private Banking Business Of Commercial Banks In China

Along with more than three decades of China’s reform and opening up policy, the number of HNWIs in China is growing rapidly. The related research shows that, as of the end of2010, the number of HNWIs in China has more than100million people, expected to reach200million people by2015. Large high net worth population makes our country commercial bank face unprecedented private banking development opportunities. On the other hand, in the face of international competition of commercial Banks and a series of macroeconomic regulation and control measures makes domestic commercial banks deeply feel pressure from traditional business to make a profit, while the form of private banking industry chain and huge profit margins will become the new focus for banks’development. Private banks launched overseas more than100years’history, but the commercial banks in China only developed for a short span of six years, in2007, the Bank of China in the country for the first time opened a private banking division, provides private banking services, followed by the Industrial and Commercial Bank of China, China Merchants Bank, CITIC Bank, the Agricultural Bank of China sequentially established private banking divisions. In2013, as Bank of Beijing sat up a private banking center in be, city commercial banks also began to join the competition in the private banking market. Presently, there have been18Chinese commercial Banks to develop private banking business.In the face of huge private banking market, Chinese commercial banks showed great enthusiasm but suffered many setbacks such as, the problem of a lack of motivation and the path is not clear. The fundamental reason of underpowered development is unable to meet the demand for private banking customers. For one hand, due to the limitations of financial separated operation, commercial banks in china can not provide comprehensive asset management business and can not provide tailored products and services based on customer requirements. As a result, China’s private banking business is still stay in VIP wealth management stage. For another hand, in the private banking market competition, because of the lack of high-quality professionals, customer demand is not fully understand and Product design and innovation ability is not enough. Private banking business development is relatively mature in foreign countries, and using the experience of its development is a shortcut to doing business in China. But our country’s economic and cultural background is quite different with the western developed countries. For organizational model and service model selection, we can not copy foreign experience and need to explore a path suited to China’s commercial banks to develop private banking. Therefore, the theoretical research about the solution to solve the current problems and the path selection e has important practical significance.Currently, domestic scholars for private banking showed great concern and agreed that the opportunity is mature to develop private banking business in China with the enlargement of the wealthy and the urgent needs of the bank transition. Private banking research mainly on qualitative research, the study focuses on the following areas:development of private banking in Switzerland and the United States on behalf of the Western developed countries, as well as Singapore, India, Hong Kong, on behalf of the Asian emerging markets experience; policies and regulations, and other external factors of hindering domestic private Bank development; inadequacies of the bank’s internal development (talents, products and services, organizational models, service models, etc.); development proposals and countermeasures. Due to the privacy of the private banking and the lack of data, the most of research only from the theoretical level analyzed and interpreted the problems in the development.In fact, China’s commercial banks are facing many problems, such as "How can we provide private banking products and services? What are the needs of high net worth individuals? How to meet the needs of high net worth individuals personalized? what kind of organizational model is conducive to development? s what are the future trends of China’s private banking?"these academic research need gradually to solve.This article starts from trying to solve the problems of the development of private banking. Firstly, this article elaborates the products and services of private banking and then analyzes characteristics on the basis of the comparison VIP wealth management services. Secondly, selects represented Switzerland, the United States, Singapore and Hong Kong to analyze these private banks’mature experience such as cultural and economic factors, policy factors and the Banks themselves factors. Then use the SCP analysis to analyze market structure, market behavior and market performance, at the same time to analyze the characteristics and preferences of high net worth individuals and draws customer segmentation based on customer segmentation theory program. Finally, points out that the development of Chinese private banking need to select the road of collectivization and specialization.This article’s innovation point lies in:Firstly, this paper on the basis of previous studies, innovatively uses the SCP paradigm of industrial organization theory to analyze the situation of private banking in china, filled the gaps in the quantitative analysis; Secondly, based on the research reports of CCB, BOC, China Merchants Bank and China Minsheng Banking Corp, analyzes and summarizes the characteristics and financial preferences of HNWIs in China, and proposes a customer segmentation based on career, life cycle, background and personality factors; Third, policies and proposals, innovatively proposes that commercial banks in china should the road of collectivization and specialization.The inadequacies of this article are:Firstly, because of the privacy of the private banking and the limited resources, it is difficult to do questionnaire survey for private banking customers and obtain first-hand data to examine the characteristics of private banking clients. So this article only based on four banks’ private banking report as the secondary data, it is hard to avoid deviation with the actual problem; secondly, because of China’s commercial banks not yet formed the private banking department of assessment systems, private banking data is incomplete. So, when using the SCP analysis, there are no relevant indicators to measure product differentiation and market performance. Finally, I hope that when more data disclosed in the future, be able to use empirical research analysis and draw better research.