The impact of the epidemic on the consumer finance industry is staged. In the medium and long term, the industry’s upward trend remains unchanged.

Editor’s note: This article comes from the WeChat public account “Jiugua Financial Circle” (ID: jiuguajinrong) author: Bin.

Author: Bin (Wuhu Branch of Bank of Communications, nine laps Gua financial columnist)

Editor: Yan Shijie

In 2019, China ’s total retail sales of consumer goods was 41.2 trillion, an increase of 8% year-on-year, and consumption contributed 57.8% to economic growth, driving GDP growth by 3.5 percentage points. It has been the first driving force for economic growth for six consecutive years. However, due to the impact of the new coronary pneumonia epidemic, consumption as one of the “troikas” of economic growth has been greatly impacted. The total retail sales of consumer goods in the first quarter of 2020 was 7.86 trillion, a significant decrease of 19.0% year-on-year, which also had a negative impact on the consumer finance industry. deep influence.

As the domestic epidemic prevention and control situation continues to improve, the previously suppressed and frozen consumption is released again. The new consumption and upgraded consumption that have been spawned in the epidemic prevention and control have brought new opportunities for commercial banks to develop consumer finance opportunity.

According to a report released by the Ministry of Commerce, it is expected that by 2020, the scale of China’s consumer finance market will reach 12 trillion yuan, with a market penetration rate of 25.05%. Judging from the penetration rate, the penetration rate of the US consumer finance market exceeds 40%. China’s consumer finance is still in the early stages of development, and there is still room for growth.

Consumption changes in the post-epidemic era

Online consumption has grown significantly

According to statistics, the online retail sales of physical goods accounted for 20.70% of the total retail sales of social consumer goods in 2019, about 8.52 trillion. If online service consumption is added, the scale of online consumption will be even greater. The online retail sales of physical goods are expected to exceed 10 trillion this year. During the epidemic, more commodities were sold through online channels, and the “live broadcast with goods” transaction was hot. Local government officials also joined online live broadcasts to start “Internet celebrities” to promote local specialty commodities and promote consumption recovery.

Consumer consumption, mainly in the healthcare and health industries, has increased substantially

Affected by the epidemic, consumers are paying more attention to health and medical care, and healthy consumption is emerging. Statistics from the National Bureau of Statistics show that in the first quarter of 2020, per capita spending on washing and hygiene products increased by 27.2%, and spending on medical equipment such as masks increased4.2 times longer. In addition to anti-epidemic necessities, from the perspective of e-commerce data, air purifiers, sterilization dishwashers, sterilization dryers and other healthy life appliances are popular, health products and nutrition products are sought after, sports bracelets, health monitoring products and other sales Hot.

Digital economy promotes upgrading of consumption methods

During the epidemic, a large number of service consumption based on big data, artificial intelligence, cloud computing and other digital technologies moved to the cloud. Online consultation, online education, online travel, online fitness, and remote office began to become daily life during the epidemic. In the post-epidemic era, on the one hand, consumers ’online consumption habits have continued; on the other hand, more service consumers are expected to use the Internet platform to guide consumers to use both online and offline channels to change their consumption habits and improve Consumer experience, promotion of consumer upgrades.

Source: National Bureau of Statistics

The impact of the epidemic on consumer finance

In 2010, China ’s first batch of three BOC, Beiyin and Jincheng consumer finance companies were approved by the China Banking Regulatory Commission to prepare for the establishment. After 10 years of development, 25 consumer finance companies have approved the opening of the business. Among them, there are 17 banks whose major shareholders are banks, accounting for 68%, and state-owned large banks, joint stock banks, and city commercial banks all participate. According to the data disclosed in the 2019 annual report, the total assets of the industry are nearly 500 billion yuan, the average revenue is 3 billion yuan, and the average net profit is 300 million yuan. The head effect is beginning to emerge. The impact of the epidemic on the consumer finance industry is staged. In the medium and long term, the industry’s upward trend remains unchanged. In the short term, the impact is mainly reflected in several aspects:

Front-end customer acquisition

Some customers’ income has been reduced due to the epidemic, and even because of unemployment, there is no income, resulting in weak consumption. The demand for durable consumer goods such as automobiles and household appliances in the field of traditional consumer finance has decreased significantly. Due to home segregation, consumer finance demand for cultural tourism is also nearly stagnant. This may force the entire consumer finance industry to migrate to customers with greater risk tolerance and lower pricing.

Mid-end operations

At this stage, consumer finance mainly relies on business personnel to perform a series of tasks from product development to customer marketing to risk identification and loan collection. Traffic control and isolation measures during the epidemic affected the employees of the consumer finance industry to resume work. Therefore, it puts greater pressure on mid-range operations, especially call centersPost-management and other personnel-intensive business continuity is greatly affected.

Back-end risk control

Due to the epidemic, some users ’income, solvency, and repayment willingness will be affected, leading some users to take this opportunity to escape debt. In addition, due to travel restrictions, repayment convenience and other aspects will also be affected to some extent, these factors will raise the industry’s non-performing rate, and bring challenges to consumer finance risk control.

Opportunities for Commercial Bank Consumer Finance in the Post-epidemic Times

Bank consumer finance has developed rapidly in recent years, especially Internet banking, urban commercial banks, and rural commercial banks. Overall, with the help of platform-based outreach channels, high-speed growth has been maintained. However, market differentiation has also begun to emerge, and there are also a few city commercial banks that shrink the scale of consumer finance business; at the same time, as the business scale continues to expand, the non-performing loan ratio continues to rise.

According to the recent annual report disclosed by the bank, from the perspective of growth rate, the personal consumption loan balance of 5 banks in 25 city commercial banks and rural commercial banks increased by more than 100% in 2019, of which Shengjing Bank directly from the end of 2018 China ’s 3.1 billion yuan jumped directly to 17.3 billion yuan, an increase of more than four times. The personal consumption loan balances of Bank of Shanghai, Bank of Jiangsu and Bank of Ningbo increased by 11%, 54% and 23% respectively.

In addition, the industry differentiation has also begun to show. There are five urban commercial banks and rural commercial banks with negative growth in personal consumption loan balances.

In the later stage of the epidemic, consumption is gradually picking up. Where are the consumer finance opportunities for banks? The author believes that it mainly lies in the following aspects:

First, consumer finance will shrink in the short term due to the epidemic situation, and the non-performing rate may also increase, but in the medium to long term, it will continue the general trend of continuous growth before the epidemic. With the gradual recovery of economic activity in most parts of the country and the guidance of the China Banking and Insurance Regulatory Commission on March 15 “supporting new consumption and consumption recovery through consumer credit in due course”, new consumption patterns and consumer financial demand are gaining momentum. No matter from the perspective of expanding domestic demand or financial product innovation, the development of consumer finance has positive significance. The development of consumer finance plays an important role in stimulating consumption and optimizing consumption structure.

Second, as the regulatory agencies increase their governance in the field of consumer finance, the consumer finance market is gradually being regulated. Since the “Administrative Measures for Pilot Consumer Finance Companies” was formally issued in August 2009, domestic professional licensed consumer finance companies have gone through 10 years. After 10 years of development, violent collection and loan sharking by some non-licensed institutions have led to many social chaos. Regulators have stepped up governance, and online lending represented by P2P is basically cleared. At this stage, a total of 25 licensed consumer finance companies across the country have been approved to open, and manyCommercial banks plan to invest in the establishment of consumer finance companies, or increase consumer finance funds and personnel input.

The third is that the regulatory authorities will further release the policy dividend to provide policy support for commercial banks to develop Internet loans. In recent years, commercial banks have cooperated with external institutions such as Internet platforms and small loan companies to use Internet technology and big data to develop Internet loans to satisfy borrowers’ consumption. On May 9, the China Banking and Insurance Regulatory Commission announced the latest version of “Interim Measures for the Administration of Commercial Banks ‘Internet Loans (Draft for Comment)” to further regulate the behavior of commercial banks’ Internet loans. The “Measures” for commercial banks to carry out Internet loan business in accordance with laws and regulations, clarify the limits of consumer personal loans (not more than 200,000 yuan), strengthen risk management, and standardize cooperation with third parties.

Fourth, the rise of new consumption methods has provided wider demand for consumer finance. In-depth changes in the consumption structure of residents have profoundly changed consumer financial service scenarios and business content. Data show that currently, users obtain the most consumer credit to purchase home appliances, accounting for about 30%, while consumer loans for home renovation, education and training, tourism and non-automobile transportation have grown rapidly. After the epidemic, consumers have paid more attention to health and medical care, and the demand for healthy consumption has also shown a substantial increase. Diversified forms of consumption provide opportunities for commercial banks to develop consumer financial products suitable for different consumption scenarios.

In addition to self-operated marketing channels such as QR codes, mobile banking, and WeChat banking that have been basically formed, banks are expanding external channels and cooperating extensively with consumer shopping platforms and Internet financial platforms. For example, Baixin Bank has recently upgraded its consumer credit product “Haihuihua”, which is a regular bank microcredit loan product launched by Baixin Bank for individual users. The maximum loan limit is 300,000. Compared with other credit loan platforms, the annual interest rate will be as low as 7.2%. And cooperate with some platforms such as Baidu, 360, Yunfun, iQiyi and Didi. The Bank of Jiangsu cooperates with Jiebai, Du Xiaoman, Jingdong Gold Bar and Ping An Pratt & Whitney.

Five is that big data, artificial intelligence, cloud computing and other financial technologies have greatly improved the convenience and controllability of consumer finance. Fintech is deeply integrated with traditional financial businesses and scenarios. Through process transformation and tool innovation, it has profoundly changed the product form and business model of financial transactions. The technology and talent advantages of commercial banks will promote the digital transformation of consumer finance. The combination of artificial intelligence identification, big data risk control, and offline business online will further accelerate the deep integration of consumer finance and fintech, which can achieve 7 * 24 hours. Provide users with online financial services, help optimize business decisions, risk control management, etc.