Ft: Why did the two private banks stop offering cash deposits and withdrawals?

Source: Financial Times original title: why did these two private banks stop doing cash deposit and withdrawal business?In January this year, two private banks have announced that they will stop operating cash deposits and withdrawals.Beijing Zhongguancun Bank will stop cash receipt and payment services from April 1, including counter branches and ATM self-service channels.Liaoning Zhenxing Bank will stop cash deposits or withdrawals at the counter, change, damaged coins and self-help equipment deposits or withdrawals from March 1.This means that customers of both banks will not be able to withdraw and deposit cash at their branch counters or atMs.If a customer really needs cash, he or she can transfer the money electronically or over the counter to a debit card at another bank and withdraw the cash at another bank.Some people question whether a bank that cannot deposit or withdraw cash is still a bank.Others see it as part of a broader digital transformation of banks.The reason behind the withdrawal of cash deposits and withdrawals is that both banks point to “strengthening digital transformation”.In a statement, Beijing Zhongguancun Bank said it was suspending cash payments “in order to provide customers with more convenient and efficient financial services as our bank accelerates its digital transformation and continues to strengthen online business development”.Liaoning Zhenxing Bank said it was closing the service to “concentrate resources on improving the service capacity of e-banking”.”The competition pattern of banks is undergoing significant changes, some small banks cash business costs and income ‘inverted contradiction’ continues to rise, they have a strong desire to reduce branches, close self-help equipment, cancel cash business.”Li Peijia, a senior researcher in charge of the Bank of China Research Institute, told the Financial Times in an interview.A private bank insider said that only cash escort costs are likely to be more than cash escort.For many private banks, the cash business whose cost is higher than income has been reduced to “losing business”.Private banks have their own particularity consumers generally care about, will other banks follow suit?”Under the background of accelerating the development of China’s digital economy and the further promotion of digital RMB, the problem of high cost of bank cash business has become increasingly prominent.But at the same time, consumers still need cash in many situations in their daily life, especially the elderly, who have difficulty operating smartphones, still rely heavily on cash.”‘What banks need to think about is how to balance the low cost performance of cash with the still-real demand for services,’ Mr. Li said in an interview.Most experts say it is unlikely that a large number of banks will follow suit any time soon, especially for large and medium-sized banks.Private bank cancels cash deposit and deposit business has its own particularity.According to the regulations, private banks can only have one offline branch at most, and the customer radiation area is greatly limited.”Digital ability is the most important” has become the consensus of private banks.However, experts believe that for private banks, the suspension of cash withdrawal business is also a “double-edged sword”, may reduce customer trust to a certain extent.For now, consumers still generally view banks with brick-and-mortar stores and a wide range of businesses as more trustworthy.Many analysts believe that the two banks are paving the way for the transformation of the Internet bank.Internet banking refers to the seamless, fast, safe and efficient Internet financial services institutions that provide customers with deposits, loans, payment, settlement, remittance transfer, e-bills and e-credit online through cloud computing, big data and other means.At present, four private banks, Webank, MyBank, Xinwang Bank and Yilian Bank, have obtained Internet qualifications that allow them to expand their businesses in other places, while the rest are under the jurisdiction of local regulatory authorities.”For private banks, the establishment of Internet banking is conducive to the realization of business curve overtaking.”According to the Notice on Further regulating Commercial banks’ Internet loan business, banks are not allowed to conduct Internet loan business across the jurisdiction where they are registered, and some banks hope to expand their business nationwide by obtaining Internet banking licenses to break through the restrictions of regional operation, Said Li Peijia.In February 2021, the People’s Bank of China issued the Report on The Implementation of China’s Monetary Policy in the Fourth Quarter of 2020, stating that local incorporated banks were forbidden to open deposits in other places through various channels, and the existing stock deposits would be settled when due.Since then, Internet deposits in different places have been “suspended”, and private banks that rely heavily on online business have also entered the adjustment stage.It is understood that, at present, some private banks are applying to the regulatory authorities for the transformation of the Internet bank, hoping to take this transformation, to achieve the curve overtaking.But experts suggest that the access to Internet banking, supervision is generally tending to be steady and prudent, not all banks can be qualified to become Internet banks.What is at the heart of digital transformation? Is eliminating cash withdrawal equivalent to digital transformation?What if this transition increases costs and convenience for consumers?What is the relationship between “digital transformation” and “customer focus”?”The digital transformation of banks is a means rather than an end in itself.”Li Pei yoga emphasized that the era of big data, the bank is the core of the digital transformation of data as the important carrier, in order to enhance customer satisfaction as a fundamental, through technical means accurate docking customer demand, customer risk, optimize the credit process, to create new ways of financing support, etc., so as to realize the timely response to customer’s financial needs and accurate support, this is the bank of the essential characteristics of the digital.In this sense, the ability to acquire information channels and to process, process and analyze information data will become the core competitiveness of banks in digital transformation.Those banks with more “entrances”, more “scenarios” and more “accounts” will have more competitive advantages in digital transformation.

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