Move aims to break banks’ re­liance on col­lect­ing fees

China Daily (Hong Kong) - - COMMENT - FROM AUG 1,

banks will no longer be able to col­lect han­dling fees, and re­port-of-loss fees and cost-of­pro­duc­tion fees for prom­is­sory notes and bills of ex­change. Also the han­dling charge for counter trans­ac­tions in dif­fer­ent branches of the bank that holds a cus­tomer’s ac­count will be abol­ished and banks will have to ex­empt cus­tomers from ac­count management fees and an an­nual ac­count fee if they have only one ac­count with the bank. Beijing News com­ments:

It is es­ti­mated the move will cut about 6.1 bil­lion yuan ($900 mil­lion) in fees a year. The re­form rep­re­sents the govern­ment’s lat­est ef­forts to im­prove the bank­ing en­vi­ron­ment, which needs to seek new growth points and bid farewell to their out­dated profit model in the face of the chal­lenge from new dig­i­tal bank­ing ser­vices.

The cen­tral author­i­ties can­celed the small ac­count management fee in 2014. But the can­cel­la­tion is con­di­tional, re­quir­ing cus­tomers to ap­ply for the fee to be can­celed. Many peo­ple do not bother to read ev­ery word of the lengthy agree­ment they sign with the banks when they open an ac­count, and banks do not take the ini­tia­tive to re­mind the cus­tomers of the pol­icy, so many peo­ple do not re­al­ize they can put a

stop to the charge.

The author­i­ties have swept aside all the ob­sta­cles this time, stress­ing that the banks should take the ini­tia­tive to ex­empt the fees di­rectly, with­out lay­ing out any ad­di­tional con­di­tions.

The rise of in­ter­net finance and the fast growth of mo­bile pay­ments mean it is nec­es­sary for banks to change their ways and adapt to the new mar­ket en­vi­ron­ment in the dig­i­tal era.

The banks ac­tu­ally have no choice but to es­tab­lish a new profit model as soon as pos­si­ble. That means they should first dis­card their old men­tal­ity. Their prof­its can no longer be gen­er­ated by the ar­bi­trary fees they col­lect, but rather by the ser­vice they pro­vide.

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