Tech upgrade key for commercial lenders

It is imperative that commercial banks conduct digital innovation and transformation, as emerging fintech companies are eroding bank profits in their core business such as payments, consumer lending and wealth management, McKinsey & Company said in its latest banking industry report.

Apart from heightened competition with newcomers to the financial sector, banks are also facing challenges such as narrower net interest margins and financial reforms highlighting the regulatory prohibition of the conduct of multitranche channel business.

"As traditional business models of banks cannot sustain, it is imminent for banks to explore new models and find their way out," said John Qu, senior partner at McKinsey.