Recently, Fund Industry Association released the data on the scale of public funds retained in the second quarter. Among them, the scale of non-bank sales of the Internet and securities companies increased rapidly, and some industry insiders even felt worried about banks. But in fact, looking at the entire China's large asset management market, public funds are still only a small part of them, and banks' dominance in residents' wealth management and sales of various products remains unshakable.
In recent years, inspired by the practice of Internet third-party sales on investor education and companionship, the banking industry has made changes and efforts in the transformation of the net value transformation of the large asset management industry and the innovation of residents' wealth management services, and the results are worthy of recognition. The author also believes that due to historical reasons, the status of banks in the financial system and the characteristics of financial management, banks will continue to play the role of "leader" for a long time in the future, and their leading position in the resident wealth industry is difficult to shake.
1. Looking horizontally, the public fund market is only a small part of China's asset management industry, and banks have unshakable advantages in all categories of channels.
Public funds account for a very low proportion of net value products. By the end of 2020, the net value product scale of the asset management market will be 99 trillion yuan, including 17 trillion yuan in bank wealth management, 20 trillion yuan in insurance asset management, and 20 trillion yuan in public funds (excluding special accounts). Public funds account for only 20% of the entire net worth asset management market products.
When it comes to investment and financial management, most people still think of bank wealth management products first, and bank wealth management products can currently only be sold by banks and bank wealth management subsidiaries. Even if independent third-party sales are qualified for agency sales, it will only be a small proportion. Some private equity products suitable for net worth individuals, such as trust products, in addition to the self-operated direct sales channels of trust company , the scale of bank agency sales also accounts for about 90% of the scale of agency sales.
Even in the single sub-industry of public funds, the advantages of banks are still very obvious. According to data from the Fund Industry Association, banks dominate among the top 20 fund sales institutions, accounting for about 60% of the total fund ownership. Among the total number of holding scales in the top 100, the three types of financial institutions, banks, securities firms and independent sales institutions, have market share of 61%, 16%, and 23% in "stock + mixed" public funds, and 58%, 15%, and 27%, respectively. Banks are better than third-party sales and other institutions in terms of sales capabilities for complex products such as equity and mixed funds.
, banks still firmly occupy the top priority in the overall asset management product retention scale. If we uniformly calculate the scale of bank wealth management and non-monetary public funds from the perspective of net value products, we can find that the overall sales capacity of banks ranks among the top, far exceeding that of third-party institutions. For example, 6 representative institutions were selected for comparison. If you only look at the scale of non-monetary public funds, Industrial and Commercial Bank of China was only 0.5 trillion, ranking third. However, the bank wealth management balance of ICBC is 2.7 trillion yuan. Looking at the total sales scale of bank wealth management products and non-monetary public funds, ICBC is the well-deserved "big brother" with a total scale of 3.2 trillion yuan. At the same time, in addition to net value products, the bank's resident deposits reached 93.4 trillion yuan.
In summary, the bank's product sales and service capabilities are not only reflected in the field of public funds, but in the entire category of products, spanning net value products and non-net value products. From the perspective of residents' wealth management, banks are still the first choice.
2. Banks have not only channel capabilities, but also comprehensive service capabilities
Reference BlackRock, Vanguard and other overseas institutions. Their comprehensive capabilities are the fundamental reason for their becoming a leading asset management institution in the world. Compared with securities companies, third-party wealth management institutions or sales platforms, banks have outstanding advantages in developing comprehensive wealth management services.
, one is that it has a customer resource base and has a high awareness. On the one hand, banks have a long history of selling various asset management products and have a large inventory scale. On the other hand, the bank's customer base is huge, and many customers have become a habit in bank wealth management, and the comprehensive service capabilities of banks recognized by customers.
is the cross-category advantage.Banks are channels that can simultaneously sell multiple asset management products such as deposits, bank wealth management, public funds, trusts, securities companies, insurance, etc. It is precisely because of more comprehensive product coverage that banks can choose products for customers in the entire market based on their needs. Product coverage of different categories is the shortcomings of third-party sales institutions.
is the channel advantage. The advantages of online and offline omni-channel banks are not available to third-party sales institutions. From the perspective of the offline bank outlets. As of the end of 2020, the total number of banking financial institutions nationwide was about 224,400 [1]. It is particularly important to establish trust between people in the financial management field. Especially for top and low-end customers who have contributed a lot to the scale of the financial management market, account managers of bank offline outlets can communicate with them face to face, and have a sense of intimacy and trust. Offline communication also allows banks to better understand customer needs when selling equity and mixed fund complex products. Taking the United States as an example, artificial investment advisors play an important role in helping customers establish account planning, which is something that purely online third-party channels cannot do.
Fourth, the comprehensive capabilities of the asset side. Although according to regulatory requirements, there is a firewall on the capital side (product sales) and asset side (asset investment), because the bank itself has asset investment capabilities, its understanding of asset management products is higher than that of third-party sales institutions. The asset investment capacity is reflected in these areas, including the bank itself being responsible for bank wealth management investment, the bank conducts corporate credit business with enterprises, and the bank being an important participant in the fixed income market. The comprehensive capabilities of
banks are also indirectly reflected in their higher pricing capabilities. Compared with third-party sales institutions that need to attract customers by recognizing subscription fee discount discounts, banks can price normally due to their comprehensive capabilities. For example, in 2020, , China Merchants Bank's annual report disclosed that China Merchants Bank's retail wealth management fee and commission income was 25.84 billion yuan, of which the revenue of agency funds was 9.4 billion yuan. If the agency sales revenue was included, the total sales revenue of agency trust products and bank wealth management products was about 20 billion yuan. It can be seen that China Merchants Bank's pricing power exceeds the sum of all third-party Internet platforms, and its profits are incomparable. In the future, the overall bank's fee rate may also decline, but because the overall pricing capacity of banks is strong, the fee rate will still be higher than that of Internet third-party institutions.
3. Banks are also continuing to transform and innovate in product sales and wealth management
From the actual situation in China, the practice of Internet third-party sales has inspired banks to do a good job in investor education and companionship. Unlike the traditional impression of "elephants", excellent banks have begun to actively "make up for shortcomings and give full play to their advantages." For example, institutions such as China Merchants Bank and Ping An have integrated their forces and gradually become continuous breakthroughs and self-innovation in multiple dimensions.
First, concept innovation. There have been some chaos in the industry before, which infringed on the long-term interests of customers. For example, some agency agencies have experienced "channel priority" behavior, including moving sand (let customers subscribe and redemption multiple times, high turnover rate, customers themselves do not make money, and agency agencies charge multiple subscription fees), "1 yuan redemption" (let customers redeem the net value of fund 1 yuan, resulting in a sharp decline in fund size and a decrease in investment returns), "reversal scale" (let customers redeem funds with low agency fees, and then subscribe for funds with high agency fees) and other industry bad behaviors. However, in recent years, banks such as China Merchants Bank have established wealth banking strategies, established the "customer first concept", and from the reform of "channel priority" to "customer first", gradually establishing buyer culture and Concept. Taking China Merchants Bank as an example, its sales in 2020 accounted for 86% of the holding amount in 1Q21, and the turnover rate was significantly lower than before, reflecting the sales philosophy of China Merchants Bank encouraging customers to hold funds for a longer period of time. For example, Ping An Bank reduced the front-end fee of the subscription fund to 10% discount, and achieved its own income through holding instead of sales, realizing the consistency between channel interests and customer interests.
second is to embrace digital technology. Bank digital transformation has been transformed from slogans to practice. For example, in 2020, ICBC fintech invested 23.819 billion yuan, accounting for 2.70% of its operating income.There are 35,400 fintech workers, accounting for 8.1% of the bank's employees. For example, banks have built their own APPs. As an important position to reach customers, marketing customers and accompany customers, the number of active users of bank Apps has entered the era of billions of levels. Among the large state-owned banks, CCB mobile banking has the largest number of monthly active users (MAU). According to the financial report of CCB, as of the end of 2020, there were 388 million individual mobile banking users, an increase of 10.60% over the previous year, and the average monthly active users throughout the year reached 128 million.
The third is to create an open ecosystem. On the asset side, China Merchants Bank opens its customers to asset management institutions. In May 2021, China Merchants Bank officially announced the Wealth Open Platform, and nearly 40 asset management institutions including E Fund Fund , China Europe Fund , CCF, Bank of Communications Wealth Management, China Merchants Xinnuo , Taikang Online have entered the first batch. On the scene side, as early as 2019, China Merchants Bank App began to explore the full opening of life scenarios, widely linking industry-leading companies such as Didi, Hema, Yum , and create a wonderful wealth life circle for customers.
4. Looking to the future, banks will continue to play a core role in the wealth management industry
public funds and other net value products are currently small in scale. Compared with mature markets, my country's securitization rate of and the proportion of professional investors is far lower than that of the United States. At present, the scale of about 20 trillion yuan of public funds is not large but small, and it may grow into a 100 trillion-level industry in the future.
In the process of the development of the wealth industry, the author believes that banks, as the main sales channel, will continue to play a core role, and their leading position will be difficult to shake in the short term.
First, banks can continue to do a good job in digital transformation . One of the values of banks lies in the combination of online and offline, and financial technology and wealth management will accelerate the integration, helping banks to form a product service system with orderly layers, complete varieties and high digitalization.
Second, banks can deepen customers as their core concept. Banks can meet the wealth management needs of customers at different levels, continue to transform from "seller-first" to "buyer-first", and provide refined financial management services covering the entire life cycle of customers.
Third, the comprehensive advantages of banks are difficult for Internet platforms to catch up. With banks as the hub, we can link the asset side, channel side and client side to continuously create an open industry ecosystem and lead the industry to win-win development.
Therefore, banks are the leader of this era in the domestic financial management field, and their status is difficult to be truly challenged in a short period of time. At the same time, it is necessary to see that my country's wealth management market still has many popular customers, and has not yet effectively met the asset's preservation and appreciation needs through wealth management institutions. This still requires the joint cooperation of the entire market and diversified institutions.
text/Deputy Director of the Institute of International Monetary Studies of Renmin University of China Songke
This article comes from the Financial Network
