Yu Fenghui: 50% Layoffs For Banking Sector Not Alarmist

The impetus for Yu Fenghui's latest blog post (未来银行业或裁员50%不是危言耸听) was comments by former Barclays CEO Anthony Jenkins:
Ultimately, those forces will compel large banks to significantly automate their business. I predict that the number of branches and people employed in the financial services sector may decline by as much as 50% over the next 10 years, and even in a less harsh scenario I expect a decline of at least 20%.
China has one of the world's most retrograde banking systems and at the same time, perhaps the most advanced Internet banking in the world.

The financial industry is a perfect microcosm of China's reform efforts and perhaps its most extreme form. The big four banks are not only the largest companies in China, but also the core of the government's old central planning model. The banking system is years behind the developed world. In contrast, Internet banking in China is more advanced thanks to a lack of regulation. While that has allowed a credit bubble to flourish, at the margins it has also allowed Internet businesses to experiment with new forms of financial services.

With the yuan entering the SDR basket and China poised to open its capital account, China could do to financial services what it did to textiles. The catch is that in order to create a globally competitive financial sector that can go head to head with developed nations, China has to eat its own banking system first. Nothing on the reform front suggests China is willing to allow the level of creative destruction required to make the leap.

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