Chinese banks could improve their bottom lines with AI adoption, experts say
- AI could lift Chinese banks’ fee-based income to as much as 40 per cent from 30 per cent currently, Asian Banker founder Emmanuel Daniel says
The development and application of artificial intelligence (AI) technology in China’s banking sector could help the nation’s lenders generate new revenue streams, as banks grapple with challenges ranging from a slowing economy to a struggling property sector, according to experts.
“For net interest income, banks are at the mercy of the central bank and the amount of liquidity the central bank allows into the banking system,” Emmanuel Daniel, founder of the Asian Banker, a financial data services provider, said at the Future of Finance China Conference in Beijing on Friday. “To reduce their reliance on net interest income, [banks need to] increase their fee income.”
The real challenge is to increase the amount of fees that banks charge customers, he said, adding that AI could lift banks’ fee-based income to as much as 40 per cent from 30 per cent currently.
The business model of banks will start to resemble software companies with the help of AI, rather than a traditional intermediation business, Daniel added.
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China’s big commercial lenders’ interest margins are under downward pressure as they respond to Beijing’s call to make borrowing easier and inject liquidity into the broader economy amid a property downturn.
