With the implementation of a package of policies to stabilize the economy, a series of measures to promote consumption have been introduced.

According to data released by the central bank, personal consumption loan data turned positive in May. To a certain extent, it shows that the cut in interest rates has played a role in boosting the growth of consumer loans.

Industry insiders said the effect of making loans may be lagging. With the epidemic prevention and control and stable growth policies to stabilize, will further stimulate the recovery of consumer demand. Meanwhile, McKinsey global managing partner Ji Xiang called on banks and other financial institutions to take this opportunity to focus on customer needs so as to better meet them and stimulate spending power.

Low interest rates to stimulate consumption

This is not the only bank that has lowered its lending rates. For example, a state-owned bank in Henan Province launched a provident fund consumer loans, the minimum annual interest rate of 3.7%, the maximum loan of 300,000 yuan; another state-owned bank launched a consumer loan, the minimum interest rate of 3.85%, you can enjoy 28 days full interest-free, second by second disbursement of funds, with the loan repayment.

Not only that, some banks have also launched a variety of promotional activities, such as China Merchants Bank's flash loans, June 2 to June 16 to enjoy 7.8% discount coupon, the lowest annual interest rate of 3.95%. For example, Guangfa Bank provides customers with loan interest rate coupons and other services through "group", "lucky draw" and "targeted invitation" to further reduce customers' financing costs.

Data released by the central bank showed that in March, the interest rate on new household other consumer loans was 7.68 percent, down 67 and 41 basis points from the beginning of the year and the same period last year, respectively. Rong360 Digital Technology Research Institute monitoring data show that in the first quarter of 2023, the state-owned banks personal consumption loan products in March the average interest rate was 4.20%, 17BP lower than the level at the end of December last year; joint-stock banks in the first quarter of the personal consumption loan products interest rates first fell and then rose, the average level in March was 4.92%, down 3BP from the end of last year.

It can be seen that recently some of the consumer loan interest rates introduced by banks are significantly lower.

The central bank released a set of data show that in May, personal consumption loan data "turned positive", short-term loans to the household sector increased by 184 billion yuan. It can be seen, after the interest rate cut, the growth of consumer loans played a certain role in promoting.

Wang Qing, chief macro analyst at Oriental Jincheng, pointed out that with the easing of the epidemic, residents' consumption and business activities have resumed, and the regulator has asked for more financial support for self-employed businessmen and women. in May, short-term loans for residents, mainly consumer and business loans, increased by 369.6 billion yuan, or 3.4 billion yuan less than the same period last year. This shows that the current residents' consumption is recovering, but the recovery is weak.

Expansion of loan demand or lagging

While the cut in interest rates for consumer loans has boosted spending power to a certain extent, the account manager of the above joint-stock bank admitted that many banks have hit a wall in promoting consumer loans through proactive marketing methods such as phone calls. "When communicating with customers, we also learned that some customers were troubled by the salary cut. Some customers also said that their consumption demand is not as strong as before, and their original consumption plans have been put on hold for the time being."

Recently, data released by the National Bureau of Statistics (NBS) showed that total retail sales of consumer goods fell 6.7 percent year-on-year in May, narrowing the decline by 4.4 percentage points. Wen Bin, chief researcher at China Minsheng Bank, pointed out that this data has fallen for the third consecutive month due to the impact of the epidemic. At present, the rate of decline in consumption is still not small, consumption recovery is difficult.

From the specific categories of consumer goods, grain, oil and foodstuffs maintained growth, up 12.3 percent, an increase of 2.3 percentage points; Chinese and Western medicines increased by 10.8 percent, an increase of 2.9 percentage points; petroleum products increased

Central Pacific Securities analyzes that, judging from the high-frequency data since June, there was a limited improvement in consumption during the Dragon Boat Festival holiday, while the recovery of production is still significantly faster than demand, and that the recovery of consumption, especially offline consumption, is still significantly faster than demand. Consumption, especially the recovery of offline consumption lags. If the epidemic is no longer expanding, you can be moderately optimistic about the improvement of consumption, supported by a series of measures to promote consumption, demand for the economy is expected to increase.

"Overall, the recent epidemic has generally improved and the restrictions on economic activity have weakened. The real economy is also showing some signs of improvement with the implementation of the package of measures to stabilize the economy. However, we should also see that uncertainty about the prospects for global economic development is on the rise. In the next stage, we should implement the package of measures to stabilize the economy, continue to do a good job of epidemic prevention and control, step up efforts to boost domestic demand, do a good job of rescuing areas, industries and people in difficulty, and increase support for employment, so as to enable market players to reverse their expectations, enhance their confidence, and keep the economy running in a reasonable range as soon as possible." Wen said.

Return to the source of customer demand

In this case, as a financial institution, how can we better stimulate spending power?

Ji Xiang believes that banks, consumer finance companies and other institutions should be called upon to focus on something right and difficult, that is, to return to the level of customer demand, through grouping, hierarchical management, data use and other measures to stimulate the vitality of the consumer market.

McKinsey's analysis report concluded that in the future, the entire consumer finance market will shift from a localized incremental market to an incremental market superimposed on the stock market, and that the rough line stratification based only on risk performance will be increasingly difficult to cope with the current fierce competition. In this case, the establishment of a systematic customer base and scene play, systematic matching of business strategies and supporting capabilities will gradually become a mandatory course for practitioners.

Specifically, for the C-end customer base, leading financial institutions in the future should, on the basis of fine-grained stratification of customers according to the dimensions of frequency of use, credit utilization, wallet share, consumption potential, and installment potential, carry out multi-dimensional refinement and Cutting. Form a focused customer portrait (e.g., intellectual women who periodically consume large quantities of goods, young hipsters who pursue the latest consumer trends, blue-collar workers in the first line of jobs in third- and fourth-tier cities, etc.) , and use this as the basis for designing differentiated marketing campaigns. For example, it can provide consumer credit product marketing for the cyclical high-unit-price consumption of migrant workers in first-tier cities (e.g., changing cell phones).

Yang Li, deputy general manager and secretary of the board of directors of China Post Consumer Finance Co Ltd, said financial technology is the core competitiveness of consumer finance, and the consumer finance industry should deepen the use of financial technology, use Internet thinking as well as scientific and technological innovations to create a link with consumers, and use innovation and science and technology to provide customers with convenient consumer credit services.

The relevant person in charge of the Bank of Jiangsu also believes that financial institutions should increase technology-enabled efforts to accelerate the industry breakout. "First of all, the future service, from customer capture, identification, to strategy development, service push, effect assessment, behavioral improvement will be automated throughout the whole process, precision, service behavior will become data-driven. Second, machine arithmetic will become the main character of operation. Through the cultivation of intelligent talents such as robot trainers and big data analysts, machines will autonomously drive various operational behaviors, and future credit card business operations will be more quantitative and efficient. Finally, the data-driven intelligent risk control system will run through the entire credit card life cycle, and the traditional pre-credit, credit, and post-credit risk control processes will become digital, intelligent, automated, and visualized throughout the entire process, which will ultimately promote risk insight, risk prediction, and risk decision-making in a more global and real-time manner."

Related Q&A: related Q&A: is people's purchasing power in third-tier cities declining because of mortgages?

In fact, it's not just Tier 3 cities whose purchasing power is affected by housing prices; the phenomenon is prevalent across all cities.

High house prices, the money to buy a house is actually tied to the savings and income of two generations

Currently, house prices are so high that many families buying a house are not only buying money from their fathers' savings, but also tied to their children's future incomes. Some even add the income and savings of their grandparents, meaning that because they buy a house they spend the savings of two to three generations and the future of one generation.

The pressure of mortgages in fact limits people's spending power.

Many people are in a state of scrimping and saving when it comes to consumption because of the pressure of mortgages. Consumption as a whole has been shrinking and is in a slump. This can be seen very clearly in the overall CPI figures.

The impact of mortgages on overall consumption is actually not short-term, but long-term

Most mortgages are for more than 10 years, and many are for between 20 and 30 years. The overall level of income, however, hasn't grown much over the years. That is to say, the impact of home loans on the entire consumer market is not short-term, but long-term, and this impact, even to extend to 10 years and 20 years later.

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