Business / Markets

Traditional banking perceived as more secure

By Meng Jing (China Daily) Updated: 2014-04-03 14:41

Traditional banks in China are under severe pressure from the fast-growing online finance sector, which combines the convenience and efficiency of the Internet with the sophistication of wealth management products - while also offering rates higher than what bank deposits pay.

But one advantage retained by brick-and-mortar banks is security, according to a telephone survey carried out last month by the Guangzhou-based Canton Public Opinion Research Center, an independent research organization.

Almost 73 percent of the 2,000 respondents said that they're avoiding Internet financial products because of concerns over account security. The survey involved residents of four municipalities and the nation's provincial capitals.

But only about 24 percent of the respondents said that they have already invested in or will invest in online financial products, such as Yu'ebao, which was jointly launched last June by Tian Hong Asset Management and Alipay, a payment arm of Alibaba Group Holding Ltd.

Traditional banking perceived as more secure

The remaining 4 percent said it's "hard to decide".

Out of those who said no to Yu'ebao and its rivals, 72 percent cited concerns over investment safety while 68 percent worried about data breaches.

Some 57 percent of the respondents said they are concerned that they'd lose their capital if the Internet financial organizations or products fail. Another 39 percent said they don't know how to operate online accounts.

What's worth noting is that even among those who are investing online, the majority (66 percent) are still worried about the safety of their money.

Concerns over safety have prompted many people to move cautiously, with 60 percent of those who do invest online having opened small accounts as a test. Only 8 percent said they'd invest all their savings into Internet financial products.

Apart from higher yields than typical bank savings, the convenience of investing online and the flexibility to withdraw investments at any time are the top reasons for supporting online finance.