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Move aims to break banks' reliance on collecting fees

China Daily | Updated: 2017-07-12 07:40
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A bank clerk tells a customer how to use the mobile banking services at a bank in Nantong, Jiangsu province. [Photo/VCG]

FROM AUG 1, banks will no longer be able to collect handling fees, and report-of-loss fees and cost-of-production fees for promissory notes and bills of exchange. Also the handling charge for counter transactions in different branches of the bank that holds a customer's account will be abolished and banks will have to exempt customers from account management fees and an annual account fee if they have only one account with the bank. Beijing News comments:

It is estimated the move will cut about 6.1 billion yuan ($900 million) in fees a year. The reform represents the government's latest efforts to improve the banking environment, which needs to seek new growth points and bid farewell to their outdated profit model in the face of the challenge from new digital banking services.

The central authorities canceled the small account management fee in 2014. But the cancellation is conditional, requiring customers to apply for the fee to be canceled. Many people do not bother to read every word of the lengthy agreement they sign with the banks when they open an account, and banks do not take the initiative to remind the customers of the policy, so many people do not realize they can put a stop to the charge.

The authorities have swept aside all the obstacles this time, stressing that the banks should take the initiative to exempt the fees directly, without laying out any additional conditions.

The rise of internet finance and the fast growth of mobile payments mean it is necessary for banks to change their ways and adapt to the new market environment in the digital era.

The banks actually have no choice but to establish a new profit model as soon as possible. That means they should first discard their old mentality. Their profits can no longer be generated by the arbitrary fees they collect, but rather by the service they provide.

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