China: A New Paradigm in Branchless Banking

Examining key factors contributing to evolution of retail branchless banking in China

This paper describes the branchless banking landscape in China. It highlights key accomplishments and remaining challenges to advance financial inclusion and provides a basis for additional research and policy considerations. In particular, the paper focuses on transformational services that can serve clients who might not be reached by traditional, branch-based financial services, highlighting a potentially new paradigm for branchless banking driven by digital payments through innovative channels such as agents and e-commerce. The paper suggests that the following preconditions may be developing in China for branchless banking to increase financial inclusion:

  • Rapid adoption of mobile and internet technology across rural and urban populations and all income groups;
  • High uptake of bank accounts with growing accessibility for the poor through branchless banking innovation, although issues of low account use may require attention;
  • Strong government policy and regulatory focus on financial inclusion linked to social transfers made through bank accounts already reaching more than 900 million people;
  • Quickly developing banking and payments infrastructure with key players such as China Union Pay (CUP) promoting interoperability;
  • Highly competitive and innovative third-party payment industry reaching hundreds of millions of people and leveraging digital data to expand the services on offer.

About this Publication

By Shrader, L. , Duflos, E.