Internet finance is in, but is banking out?

At the start of the century, Microsoft founder Bill Gates predicted that traditional commercial banks could be the "last dinosaurs standing”. The recent rise of online financial businesses in China is making it seem more likely that he will be proved right (more).

But not so fast! Banks won't be easily reconciled to seeing a cloud over their future prospects (more). Many are striking back by establishing online shopping malls and offering mobile-device payment services in an attempt to strengthen their bonds with clients (more).

After the Chinese government sent a strong signal at the recently concluded two sessions on streamlining the Internet finance industry (more), the country's "Big Four" banks cannot wait to show their teeth.

On March 22, China Construction Bank brought down its upper limit of single online payment - via Alipay's quick payment channel - by 90 percent to 5,000 yuan, on the heels of moves made by other three banks a week earlier when Bank of China and Agricultural Bank of China cut the limit of single payment by 80 percent while Industrial and Commercial Bank of China not only cut the upper limit by 90 percent, but reduced the aggregate amount per month by 75 percent - from 200,000 yuan to 50,000 yuan.

	China's banks must evolve or perish In the short term, banks might face cash problems due to the competition from Internet finance. This may serve as a wake-up call that there are no more easy profits for banks in China, solely on deposits, loans and remittances. Present conditions suggest they must promote intermediary business and wealth management and provide all-round service to clients (more). In fact, many banks are now trying to claw back their lost deposits (more) by:
	Adding online payment services
	Increasing interest rates
	Launching wealth management products with an expected annualized yield up to 6.35%.
	Strengthening their business transformation efforts
	Cutting the upper limit of single online payment via Alipay
	......