The Study On Pricing Of Intermediate Business In China's Commercial Banks

Along with economic flourish and financial reforms deep turning, society's request to the function of bank has changed greatly. Banking also face a lot of problems in the thin profit age, such as the competition turns worse, risks increase, gap between deposit and loan interest contracted, scope of business is limited. The single method of payoff has hindered its healthy development.After joining in the WTO, all kinds of banking business with the permitting of our government has gradually open to foreign banks. Foreign banks seize our intermediate business market by using their influence in the international arena, wider electronic network and information technology, while intermediate business in our country is still in the development of phase. Compared to the advanced management, standardized operation and sophisticated pricing mechanism of foreign banks, intermediate business in our country has developed slowly. On the one hand, the revenue of intermediate business in most of the domestic commercial banks is about in proportion to 10% of total revenue, which is far lower than the U.S. and Europe, even lower than other mature markets in Asia, such as Japan, Singapore and so on. On the other hand, the varieties of intermediate business in domestic is small, which focusing on the traditional account, exchange, collection and payment,credit card, letter of credit, documentary bills and other products. In recent years, with booming development of capital market in our country, a large numbers of funds go into to the capital market directly escaping from the commercial bank. The margin of traditional deposit and lending business has been squeezed after the interest rate marketization. Face to such internal and external situation, the only choice to our commercial banks is to develop intermediate businesses actively and strive to improve their competitiveness.In recent years, the revenue of intermediate business has become the main source of income in western commercial banks. Financial services of commercial banks in our country have made a great progress in present stage and great potential, but there are many problems in the development of intermediate business. Especially the confusion in issue of fees and lack of price mechanism severely hampered the development of our Commercial Banks businesses. As the specific expression of products' life, commercial banks' fees and pricing issues directly affect their future survival and development of intermediate business. For a long time, as the accessories of traditional business, intermediate business of commercial banks in our country has been treated as a means which was used to improve service levels and attract customers. Low-cost or free in intermediate business is not only a waste of resource, but also a violation of market operation principles.Now, commercial banks have the right of charging for their services, which was vested by the Provisional Regulation for Charging Standards of Services by commercial banks. Thus the pricing of the intermediate business, which relates to the supply, becomes more and more important. So research on the intermediate business and its pricing system is significant.At present, works about pricing of intermediate business have high value, but there are also some shortcomings. Follow the pricing of deposit and loan products, intermediate products of high value-added features have been ignored and the profitability also been cut down. Those works did not distinguish between different products in the pricing methods and strategies. Uniform standard for different products is not scientific. In this situation, with previous research, the writer analyzed the shortcomings and scope of application of traditional pricing methods in this paper, and also proposed a more comprehensive integrated pricing model. As for research methodology, the writer used a combination of theory and case study approach, comparative analysis, empirical analysis and case studies and so on.In the first chapter of this paper, the writer introduced of the meaning of the article in brief, a list of literature review of the article and some innovations. ChapterⅡto ChapterⅥis the main body of this article. The second chapter introduced the intermediate business of commercial banks, and then introduced the pricing system from the pricing principles, pricing objectives and the factors that affect the pricing the intermediate service product. The writer chose some relate dates from Shenzhen Development Bank to analyze the pricing problems of intermediate business in China's commercial banks. Ineffectiveness of government pricing and commercial banks need for independent pricing have been demonstrated in the third chapter. Single product pricing models and comprehensive pricing model have been introduced in ChapterⅣ. The writer also compared the scope of application of these models. In chapterⅤ, three examples, that's to online banking pricing, credit card charges and combination products, have been used to analyze the specific application of demand-oriented pricing model, cost-plus pricing model and comprehensive pricing model. Finally, the ATM fee has been used to demonstrate how to adjust the price. ChapterⅥis the conclusion of the article.