Zhaocai Bao was designed to connect the investment activities of 300 million individual investors in China with the financing needs of 1 million small and medium-sized enterprises. Its annual sales volume is expected to reach 1 trillion yuan in the next two to three years. [Photo / China Daily]

Banks are battling the triple threat of technology, shifting consumer demand and a fleet of new online rivals, reports Jiang Xueqing.

Commercial banks in China are racing to keep pace with fast-changing consumer demand, an explosion of smart and mobile technologies and nimble Internet companies that are upending the financial world through innovative services.

Most listed banks' profit growth slid to a single-digit range last year as the economy slowed and interest rates were further liberalized, cutting lenders' margins. But another key factor was Internet-driven financial disintermediation, a process that reduces or removes the role of the middleman that banks have traditionally played.

Top banking executives are making strenuous efforts to identify new profit drivers, and Internet finance is seen as having huge potential.

According to Jiang Jianqing, chairman of Industrial and Commercial Bank of China Ltd, Internet finance is an "inevitable choice" for the bank, which is the largest State-owned commercial lender by assets.

"Internet finance is a vibrant area with great potential for growth. It will become a major part of the Chinese economy," Jiang said. "The real challenge for ICBC won't come from our traditional competitors, but whether we can adapt to the Internet-based financial ecosystem and changes in customer demand.

"We need an innovative and enterprising mindset to embrace these changes."

ICBC will rely on big data to build its new online world. The bank has established three platforms covering e-commerce, instant messaging and direct banking. It has also developed three product lines: e-payments, online financing and Internet-based investment and wealth management.

The bank launched a business-to-consumer e-commerce platform 14 months ago that now has 16 million registered users. Transactions have exceeded 100 billion yuan ($16.12 billion), said ICBC President Yi Huiman.

Yu Liang, president of developer China Vanke Co Ltd, said that his company's transactions on the platform reached 120 million yuan within just a month.