BEIJING, June 24 (Xinhua) -- The balance of China's consumer credit in narrow sense will double from about 15 trillion yuan to about 29 trillion yuan in 2025, and China's consumer credit market will gradually shift to a standardized and mature business model, according to a report recently released by the global management consulting company McKinsey, reported Chinanews.com on Wednesday.
China's consumer finance business has maintained an average annual growth rate of about 20 percent from 2015 to 2019. However, in 2020, China's consumer credit market faced three major challenges of narrowing profit margins under a low interest rate environment, increasing market competition, and rapid growth of non-performing assets which will lead a transition to a standardized and mature business model, said Qu Xiangjun, a senior global managing partner at McKinsey & Co.
According to the report, five major development trends will emerge in China's consumer credit market in the next five years. For example, the overall scale of the market will double, the structure of the Internet micro credit market will be optimized, the young generation will become an important consumer group and financial technology will fully empower the consumer value chain.
In the next five years, the growth of China's consumer credit market will mainly come from the increase in per capita disposable income driven by the development of the macro economy, the further increase in the proportion of consumer spending in GDP, the continuous decline in the savings rate, and the change in the concept of group consumption and borrowing brought by the young generation.
In China, the consumption power of Generation Z is gradually growing, and online loans are gradually replacing credit cards as a major way of consumer credit for the young generation. The consumer credit customer base of banks is becoming more inclusive, further serving the real economy and satisfying the credit needs of sinking customers.
In addition, the industry should actively embrace technology. Various technologies such as artificial intelligence, big data, and blockchain will be widely used in the entire value chain of consumer finance to empower financial institutions to improve customer operations, operational efficiency and risk management, said Rong Juesheng, a global managing partner at McKinsey & Co.
(Edited by Gao Jingyan with Xinhua Silk Road, gaojingyan@xinhua.org)
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