Business Development And Transformation Of Commercial Banks In Light Of Ascending Direct Financing

Ever since the 1980s. enterprises and individuals in China have been raising funds via indirect financing that is mediated by the banks. Over the past few years, however, there is a growing trend of direct financing as the financial market is on its full swing. Thus, direct financing is becoming a bigger and bigger slice in the pie of social financing. The current economic climate on the global scale is very hard to predict. The economy needs more time for profound reforms to really get out of the downturn. The China economy is also in its new phase, with gloomy prospects for growth and growing pressure for restructuring. Economic development with more innovations shall pave the way for the relief of financing difficulties especially for the high-tech enterprises. In this economic climate, the commercial banks in China have to face the challenges from direct financing of enterprises, which would result in financial disintermediation that is apparently unfavorable for the banks. To win in the domestic and overseas markets that are full of competitions, the commercial banks in China have to get out of the comfort zones, change the business models and explore for new growth patterns.This paper aims to raise four points that might be useful for the business transformation of commercial banks in China.Focus on customer demands. Map resources to market needs in flexible and smart ways, and look for sustainable business models.Provide financial services that not just differ but also add value to the brand.Borrow ideas from e-commerce and build business channels on the Internet.Keep in mind quality of assets and risk management.