China’s army of tellers retreats as bank payments move online
Total head count at China’s four largest banks fell in 2016 for the first time in six years, as the lenders cut costs and tried to adapt their massive branch networks in the face of competition from online payment giants Ant Financial and Tencent Holdings Ltd.
Industrial & Commercial Bank of China Ltd, China Construction Bank Corp., Agricultural Bank of China Ltd and Bank of China Ltd. employed 17,824 fewer people at the end of 2016, the first such drop since at least 2011, an analysis of their earnings filings last week showed. The drop reflected in part the way the nation’s banks are trying to trim the estimated three million people who work in their branch networks.
“The banks no longer need so many employees working at branches because customers are no longer using that many banknotes for transactions and Internet banking is so developed now,” Li Bin, a Shanghai-based analyst at Capital Securities Corp., said by phone Wednesday. “People are expecting different services from banks nowadays.”
Even so, the banks are struggling to keep pace with the rapid changes in China’s financial system, as Tencent and Zhejiang Ant Small & Micro Financial Services Group, an affiliate of Alibaba Group Holding Ltd., have eaten into their traditional businesses by providing more user-friendly payment services on mobile phones.
More than 84 per cent of banking transactions in China were completed outside brick-and-mortar branches in 2016, compared with about 63 per cent in 2013, according to the China Banking Association.
About 3.8 million people work for China’s banks, according to the banking regulator. Some 80 per cent of them are bank tellers in the branches, according to an estimate in an April 1 report by Zhou Kunping and Li Ying, Shanghai-based analysts at Bank of Communications Co.
The army of tellers contrasts with the staff deployment at overseas banks, where about 60 to 80 per cent of employees work in marketing and sales, the Bocom analysts said. Most Chinese banks deploy only 20 to 30 per cent of their staff in those functions, they added.
ICBC, the world’s largest lender with more than 16,000 outlets, reduced its number of branch tellers by 14,090 last year, the banking association said. The figures reflect staff reductions as well as redeployment of workers to other functions. Teller numbers fell by 30,007 at Construction Bank and 10,842 at Agricultural Bank, the association said. Continued redeployment will help Chinese banks reduce the number of their tellers by another 20 per cent over the coming decade, the Bocom analyst report said.
ICBC plans to control the total number of its physical outlets and switch to more ATMs, online banking and services that rely on artificial intelligence, the Beijing-based lender said in its annual report.
Chinese banks are also reducing staff at a time of pressure on their earnings.