Retail and commercial banking

Overview

Over the last decade, the retail banking industry in Hong Kong has faced a series of challenges ranging from:

• intensified competition, in particular through aggressive pricing on traditional and new market segments;
• dealing with escalated asset prices and constraints on expanding into higher yielding, but also higher risk customer segments and products;
• regulatory expectations on fair and ethical dealings with customers in different product segments;
• customers, armed with improved mobility, information access and their positive experience from other industries, demanding improvements in bank services;
• developments in global regulations that change the way the banks have traditionally managed their sales of retail and wealth products; 
• stringent but often unclear and sometimes even conflicting KYC requirements for banks operating in multiple countries;
• cost increases in salaries and infrastructure;
• availability and use of big data and social analytics to compliment country business decision and model.

At the same time, in commercial banking, the disintermediation effects have driven the need for banks to focus more on capturing a greater share of the trade flow value chain of corporate customers. In order to improve yields, commercial banks are competing more intensively on SME credits where credit assessment techniques are still evolving in a fairly benign credit environment but is increasingly influenced by economic conditions not only in China, but the major trading blocks.