Chengdu Rural Commercial Bank: 2017 Rural Electronic Research Report

The Internet Finance Department of Chengdu Rural Commercial Bank released the "2017 Rural Electronic Qualitative Research Report" (hereinafter referred to as the report, the full text is available for download at the end of the attachment). The report conducted an in-depth investigation of the eight branches under the bank, surveyed the development of mobile payments in some rural areas, and gave relevant suggestions on how banks can carry out mobile banking business in rural areas in the future. Due to the geographical limitations of the surveyed samples, it may not be generally representative of the whole country, but it also reflects some practical problems more realistically and has certain reference value.

Mobile payment is more popular in rural areas, but QR code payment still needs to be improved

Data shows that 65% of rural residents use mobile payment, which is a high degree of popularity. Among them, 95% of those born in the 1970s and later have used mobile payment, and 75% have formed the habit of using mobile payment and use it frequently. Most of those born in the 1960s have used mobile payment (72%), and 37% use it frequently. 22% of those born in the 1950s and later have used mobile payment.

However, QR code payment, as an important part of mobile payment, still has room for growth in rural areas. Data shows that 34% of rural residents have never used QR code payment, which is nearly twice the number of urban residents (18%).

However, most rural residents born in the 1960s and 1970s have used QR code payment and have the foundation to use online channels.

Data shows that the level of electronicization of those born after 1950 is extremely low. 78% of those born after 1950 have never used QR code payment, and 84% have not opened mobile banking.

Those born in the 1960s and 1970s have a higher degree of electronicization, with only 21% having never used QR code payment and 40% not having opened mobile banking.

People born in the 1980s and 1990s are the most active in using electronic channels, and use QR code payment and mobile banking relatively frequently.

It is worth noting that among rural residents, those born in the 1960s and 1970s are not only the main group of QR code payment users, but also the main customer group of offline bank branches. Data shows that nearly 40% of this age group have not opened mobile banking. The report suggests that offline branches can focus on marketing to this group of customers.

It should be clear that one of the reasons why the development of online banking channels in rural areas is limited is the threat posed by WeChat and Alipay.

Data shows that bank WeChat public accounts are highly accepted among people born in the 1970s and later. More than half of those born in the 1970s and later have followed bank WeChat public accounts and believe that handling business on WeChat public accounts is more convenient than on mobile banking.

Although there is a high level of acceptance for conducting business on WeChat public accounts, most people born in the 1970s and later said that they rarely conduct business at banks, and WeChat and Alipay can already meet financial needs such as payment and transfer.

Banks’ online channels are facing a situation where they are losing both ends and urgently need to explore and establish differentiated core competitive advantages

The data in the report shows that 47% of rural residents only handle business at the counter, and 78% of rural residents have cash business needs. Being close to the bank outlets is the primary reason for rural residents to choose which bank to handle business. This shows that rural residents are highly dependent on offline outlets, especially the middle-aged and elderly. At this stage, bank offline outlets are still important.

Rural residents most frequently handle cash transactions, with 78% of rural residents saying that deposit and withdrawal transactions are one of the most frequently handled banking transactions. Middle-aged and elderly customers have a particularly high demand for cash transactions, with nearly 85% of residents born in the 1960s and before saying that they most frequently handle deposit and withdrawal transactions.

The older you are, the higher your demand for cash and policy-based services; the younger you are, the higher your demand for non-cash services.

The report believes that the bank's online channels are facing a situation where both ends are lost. The middle-aged and elderly (the report refers to people born in 1960 and earlier) are highly dependent on offline outlets and cash, and most of them said they are accustomed to using offline channels to handle business and will not use online channels. On the young people (the report refers to people born in 1970 and later), nearly 80% of residents said that WeChat, Alipay, etc. can already meet their payment, transfer, and financial management needs, and they seldom handle business through the bank's online channels.

Key factors affecting mobile banking activation rate

Despite this, the entry point for opening mobile banking among rural residents is also obvious. Convenience is the most important factor for rural residents to use mobile banking; and the mobile banking opening rate of rural residents who have credit cards, payroll services, etc. is higher.

Data shows that 94% of rural residents open mobile banking accounts because of convenience and speed; 67% of residents consider convenience of operation as the primary factor in choosing which bank to open mobile banking accounts.

Most users surveyed believe that there is no difference between different mobile banking services, while senior users believe that the differences mainly lie in transfer limits and ease of use.

People born between the 1970s and 1990s are relatively sensitive to the differences in mobile banking, and believe that the differences mainly lie in transfer limits and ease of use.

Data shows that the proportion of rural residents opening mobile banking is 52%, the mobile banking activation rate for credit card customers is as high as 80%, and the mobile banking activation rate for salary card, student card, and mortgage card customers is 68%, all of which are higher than the average level. These customers are high-value customers, and banks should first expand their business to this part of customers.

The number of policy-based card-issuing customers is lower than the average level, which may be due to the fact that social security business and food subsidy business are low-frequency businesses.

The report data also shows that 31% of rural residents have never been exposed to financial products and only have life expectancy. Among the rural residents who have not been exposed to financial management, 53% do not understand financial management and 23% have no financial management concept. The report also believes that the financial management habits of rural residents need to be cultivated, and sales by bank personnel are the most effective way of promotion. Sales by bank personnel are the most effective way to promote bank financial management, followed by introductions from relatives and friends and financial management posters in the hall.

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