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China’s SME treasurers ‘slow to embrace technological change’

Mobile banking has received an enthusiastic take-up in China’s retail market but hasn’t yet gained the same traction for corporate and business transactions, according to the 2018 Treasury Review undertaken by Asset Benchmark Research,

The research suggests many treasury departments in Chinese firms remain uncertain about adopting technology solutions and mobile banking promotions haven’t yet convinced treasury professionals. Only 49.6% of Chinese treasurers and CFOs surveyed indicated they are using or plan to use corporate mobile banking services over the next six months.

According to The Asset, this reluctance stems partly from a lack of technology resources, exacerbated by cost considerations. For many treasury professionals employed by SMEs the outlay of resources to develop an internal treasury management system or purchase from external technology providers remains prohibitive. As a result, they may have to rely on software or mobile applications offered by their banking partners.

As best practice in treasury management evolves in China, IT capability and agility have become decisive factors when clients are choosing transaction banking partners. While customised solutions are appreciated by clients, standardised technology offerings such as mobile collection products help banks to grow their customer base more quickly.

Growth potential

“In recent years, with the popularity of online payment, people from all walks of life need banks to provide financial services that match their business needs,” Zhiyong Zheng, deputy general manager of the corporate business department of Bank of Communications head office, tells The Asset.

“At present, the domestic business-to-consumer (B2C) market has surpassed online product sales and has continuously penetrated into various personal consumer service scenarios. The growth potential of the business-to business (B2B) transaction field is something to watch closely.”

Recent bids to raise market awareness of technological options as well as engage new SME customers include Shanghai Pudong Development Bank’s free SME treasury management mobile banking application, launched in 2017. The application offers comprehensive treasury management functions such as account balance inquiry and inventory management.

For large corporations the landscape is different, as treasury management systems (TMSs) often requiring a higher level of customisation and complexity. This provides an opportunity for transaction banks with cutting-edge technology.

In 2018, China Merchants Bank offered a unified online tailor-made TMS to COSCO Shipping, a Shanghai-based state-owned enterprise, to facilitate the merger of China Ocean Shipping Company and China Shipping Company. Now, over 50 billion yuan (US$74.4 billion) of assets from 679 subsidiaries of COSCO Shipping are managed on the new TMS.

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