China’s bank branches, ATMs dwindle amid e-payments and cashless shift
- Banks cut costs by employing fewer branch workers and embracing digital, so when cash is needed it can be harder to come by
Once abundantly dispersed across China to serve the banking needs of more than a billion people, physical bank branches and ATMs have seen their numbers dwindling as the public embraces e-payment platforms and financial institutions cut costs.
And as most of the public can use their phones to conduct banking and monetary transactions, closures have gradually outpaced new installations.
In the first half of this year, 1,126 bank branches closed while just 968 new ones were approved, the Shanghai-based news media Cailian Press reported on Monday, citing figures from the National Financial Regulatory Administration.
That is compared with the January to June period last year, it said, when 1,600 bank branches shuttered while 850 were established.
The number of ATMs in China declined by 8,358 in the first quarter of the year to 837,100, according to data released by the People’s Bank of China last week.
The rise of e-payment platforms over the past 20 years, to where most transactions are cashless, explains much of the decline, according to analysts. That trend has allowed banks to cut costs on physical property and staffing, they said.
“The banks have found it unnecessary to add branches as they reduce costs,” said Chen Zhiwu, chair professor of finance at the University of Hong Kong. A refocus on mobile payments among other online transactions, he said, “has in effect served to reduce face-to-face services at banks”.
China’s mobile payment penetration rate was leading that of every other country as of December, state broadcaster CCTV reported. The government’s China Internet Network Information Centre placed the national penetration rate at 87.3 per cent in the second half of 2023.
Street vendors and taxi drivers, as well as China’s biggest retailers, accept mobile payments. Mobile payment accounts are linked electronically to users’ bank accounts, eliminating any need to visit branches or ATMs for cash refuels.
Some bank customers have been warned about withdrawing too much cash – for example, the allowed daily limit of 20,000 yuan – without making an appointment to ensure that their branch has the cash on hand, an analyst said.
Physical branch operation costs, meanwhile, are “not low”, and some banks consider whether they have missed business targets when deciding the fate of their brick-and-mortar outlets, Cailian Press reported, citing bank analysts.
Regulators still encourage banks to establish new branches or remake old ones as “technology” centres, it added – a possible reason for the number of new approvals.
“Taking into account the consolidation in the banking industry, the trend of shrinking bank branches will continue in the future,” it added.
