| In order to gain or enhance competitive advantage, enterprises are making constantly move, such as defining operational field, relocating essential resource, and reshaping business network. So is true regarding to banking. China’s economy has achieved rapid development. The competition is escalated by economic reconstruction, interest rate marketization and application of information technology. Thus, it is important for bankers to access situation external and internal and make appropriate management strategy.Zunyi is undergoing huge transformation. As the second largest city in Guizhou Province, Zunyi, with7.71million populations, is a modern industrial city and agricultural production base. Per capita GDP exceeds20000RMB in2012, and GDP137billion RMB.In order to adapt to rapid economic and social development, Zunyi Municipal implemented strategies to promote banking, and many financial institutions have entered Zunyi, such as Shanghai Pudong Development Bank, China Merchants Bank, Bank of Chongqing, and CITIC Bank. More are on their way. At present,16banking institutions,10loan companies and3rural banks started business in Zunyi. Furthermore, the network with865outlets promotes fierce competition, and many institutions have started to lay out in the countryside, especially Industrial and Commercial Bank of China and China Construction Bank. By the end of December2012, the total balance has exceeded160billion RMB with93.195billion RMB deposit balance and92.763billion RMB loan balance.In order to adapt to the development of competition, it is important to determine the direction of Zunyi Branch’s development so as to better allocate resource and manage team. The study is based on comprehensive sources, including books, journals, magazines, textbooks and data. The structure of the study includes background, purpose, brief of transformation models, current social demands, challenges to traditional financial service, specific challenges Zunyi Branch faces and the corresponding measures.Banking in China has made huge development since the Reform and Opening-up30years ago. Modern banking system is established, and booming banking promotes economic development. However, traditional mode and the extensive expansion still prevail. First, credit and investment expand in extensive way. The average annual growth rate of credit has reached22%since1978, compared with9.92%of the average economic growth. The total asset of banking was37.47trillion RMB in2005, which was tripled to113.28trillion RMB within6years. The State Council determined4trillion RMB of economic stimulus plan and cancelled limit on credit in face of2008economic crisis. Ultra-loose regulations spurred credit expansion. The economic growth depends on credit expansion. Banking expanded in search of profit, and credit bloomed wildly. Banking development relied on the margin caused by deposit and lending rates, and the margin long existed. For instance, the one-year deposit rate was3.5%, while one-year to three-year medium-term loan interest rate was6.65%, which ensured the3%margin space. Meanwhile, the capital requirement increased to support the increasing credit, and banks increased financing accordingly. The financing in A-share market had reached753.5billion RMB since2002, and another575.3billion since banks were listed in2008.Long-term extensive management cause high operational cost and low efficiency, lagging behind international advanced level. On one hand, the overreliance on large enterprises and projects compromised banks’ bargain power. Credit expanded at the expense of the lower interest rates and irrational competition further narrowed the profit space. On the other hand, large financing encouraged blind developments and irrational expansions, and risks accumulated. Meanwhile, small enterprises and rural market lacked credit for a long time.Under the new economic and social situation, traditional development model is outdated. Banking is facing with complex economic situation and great changes. China accelerates the transformation of developing mode and structure readjustment, and steadily promotes interest rate marketization. Financial reform advances and financial disintermediation furthers and competition escalates. Banking transformation is imperative to sustainable development.Subprime crisis in the U.S. generated "Basel agreement Ⅲ". In order to adapt to the development of international regulation, China Banking Regulatory Commission set and formally implemented "Capital Management Approaches of Commercial Bank" on January1st,2013, which further enhanced the requirement for capital adequacy and imposed pressure upon banking business and capital supplement. In addition, China Banking Regulatory Commission created regulatory model called CARPALs in early2010, which put forward new requirements for banking development.Effective strategic transformation is necessary for ABC’s own development in face of capital constraints and macro-control, the quality and quantity requirements of endogenous development, and the creation of stable value. It is necessary for Zunyi Branch to adapt to the competition and promote local economy.Strategic transformation of Zunyi Branch faces difficulties. First, the limitation of economy limits business development; Second, the external competition environment and the operational mechanism of market economy are yet to be perfected; Third, contribution factors and geographical factors compromise business evaluation, and resources fall short compared to developed eastern regions. Strategic transformation of Zunyi Branch also has advantages, such as the widespread service network in urban and rural areas, the service ability and human resources advantage.The next step of ABC’s strategic transformation is to accelerate the transformation toward investment bank. Corporate banking is still dominant. Corporate deposit accounts to about25%of the total deposit, and corporate loan61%, which is, as the pillar of resource and profit, playing an indispensable role in maintaining business stability and sustained growth.In the face of the profound change in operation, increasingly fierce market competition and higher customer demand, traditional development mode is unsustainable, therefore corporate banking must be well maintained. With the rapid development of capital market and reform of interest rate marketization, traditional corporate business faces challenge. The "disintermediation" of high-quality companies is inexorable, which made the transformation inevitable. The transformation toward retail banking is also a strategic move. Retail banking covers many fields. Retail asset and financing are two key businesses among nearly1000kinds of retail products. Compared to corporate banking, retail asset has higher cost due to thousands of individuals. But it does have advantages:weak individual game ability, high price, tied-in sale, dispersed risk, and strong resistance against economic cycle. Financing has become a key business in modern banking, reflecting social wealth growth. |
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