The McKinsey Quarterly 2004 special edition: China today
for 18 percent of all customers and for 40 to 50 percent of retail-banking profits, while the 80 percent of customers in the mass-market segment are largely unprofitable.
Affluent customers are highly concentrated geographically: three-quarters of them live in Beijing and in major coastal cities such as Shanghai and Guangzhou. Domestic banks can’t serve this segment effectively, because they lack risk-assessment skills in retail lending and a sales-and-service culture in their operations, which focus primarily on processing deposit account transactions. Some of the large institutions don’t even know who their affluent customers are, since they have little integrated informa- tion about the people who bank with them. McKinsey’s surveys of Asian banking consumers show that affluent Chinese are less satisfied with the level of service they receive than are their counterparts elsewhere in the region and that they would switch to banks providing better service even at the cost of higher fees or interest rates. Foreign banks, with their greater experience of serving the affluent market, are thus well positioned to capture this opportunity, for they will have to provide only a relatively small number of branches in a few big cities.