China: A New Paradigm in Branchless Banking

This paper describes the branchless banking landscape in China. It highlights key accomplishments and remaining challenges to advance financial inclusion and provides a basis for additional research and policy considerations. In particular, the paper focuses on transformational services that can serve clients who might not be reached by traditional, branch-based financial services, highlighting a potentially new paradigm for branchless banking driven by digital payments through innovative channels such as agents and e-commerce. The paper suggests that the following preconditions may be developing in China for branchless banking to increase financial inclusion:

• Rapid adoption of mobile and internet technology across rural and urban populations and all income groups;
• High uptake of bank accounts with growing accessibility for the poor through branchless banking innovation, although issues of low account use may require attention;
• Strong government policy and regulatory focus on financial inclusion linked to social transfers made through bank accounts already reaching more than 900 million people;
• Quickly developing banking and payments infrastructure with key players such as China Union Pay (CUP) promoting interoperability;
• Highly competitive and innovative third-party payment industry reaching hundreds of millions of people and leveraging digital data to expand the services on offer.