Non-bank competitors seeking to enter a sufficiently large market, with healthy margins, increasingly digital savvy consumers and a fluid market landscape providing opportunities to gain market share, should look no further than China.The higher net interest margins in China, relative to regional peers, offers room for non-bank entrants to undercut the prices of the incumbents and still make a profit, or a least break even. In contrast, the wafer-thin margins being made by Taiwanese incumbents would make profits significantly harder to come by.
This is helpful to non-banks because it will lower customer acquisition costs. Moreover, it will make persuading new customers to trust and switch to non-bank brands easier due to their growing familiarity with digital-only platforms.
In addition, the amount of market share transfer indicates that the Chinese market is relatively fluid, with customers used to switching providers. Some of the market transfers will be down to M&A activity, but nonetheless it still indicates that there is the opportunity to gain market share.
READ NEXT: The superpower that is China
– This article is reproduced with kind permission from Verdict Financial. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Photo by estherpoon, Shutterstock.com