From Processing Centers to Retail Shops

Transforming Bank Outlets in China

Focus

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From Processing Centers to Retail Shops 1

From Processing Centers to Retail Shops

Transforming Bank Outlets in China

Most banks in China, despite being thought of as part of the retail bank-ing industry, do not

operate their outlets like retail stores. Bank outlets in China are more like places where customers simply queue up, conduct their business, and leave. There is, in fact, very little “retailing” going on.

Yet as China’s economy continues to develop and become more accessible to the rest of the world, the structure of its banking industry will necessar-ily move into closer alignment with that of mature banking markets. A key consequence will be stronger emphasis on retail revenues, which currently represent only about one-third of total annual banking reve-nues in China—compared with roughly half in many developed mar-kets. Two trends will drive this change.

First, retail banking customers will gain more prominence as corporate clients look increasingly to equity and bond markets to secure financ-ing. Bank credit may still account for the majority of corporate borrowing in China today, but financing through capital markets is gaining strong mo-mentum. Second, as China’s econom-

ic engine shifts into higher gear, the average consumer will become in-creasingly sophisticated financially—a phenomenon that is already well under way. Incomes are rising in Chi-nese cities, and the number of the middle-class and higher-segment banking clients is growing fast. (See Exhibit 1.) One result of these trends is heavier demand for loans (to fi-nance new homes and cars, for ex-ample), insurance and investment products, and sophisticated financial advice. For these and other reasons, Chinese banks may someday secure more profits from the retail segment than from the wholesale segment.

What’s more, from the viewpoint of shareholder value, investors place a premium on banks that have a rela-tively high percentage of retail cus-tomers. Analysis by The Boston Con-sulting Group reveals that price-to- earnings (P/E) ratios for the retail businesses of global banks are typi-cally significantly higher than P/E ra-tios for corporate and investment banking businesses. Since most of China’s largest banks are publicly traded, this is an important consider-ation. Indeed, the retail side already dominates for many leading global banks. Citigroup’s retail-banking and wealth-management customers ac-counted for 76 percent of its loans

and 64 percent of its profits in 2006, to cite just one example.1

Now is the time for Chinese banks to begin serving retail customers more effectively and profitably. But exactly how can they accomplish that goal? In our view, the most critical initia-tive for Chinese banks will be to thoroughly transform their outlet networks. That means changing out-lets from what are often sluggish, drab places that feel more like proc-essing centers into bright, dynamic retail shops. In this report, we discuss how Chinese banks can achieve this goal and how the transformation will position them not only to attract and retain the most valuable customers but also to increase revenues, boost market share, improve staff morale, enhance customer satisfaction, and reduce costs.

A Clear Need for Change

Despite technological advances, par-ticularly those brought on by the ad-vent of the online channel, outlet networks will remain critical to banks’ efforts to deepen customer relationships and raise profitability. Online banking may offer greater convenience, but most consumers

1. Citigroup Annual Report 2006.

2 The Boston Consulting Group

still cite human contact—especially the ability to ask questions and ob-tain personalized advice—as an im-portant element of their banking ac-tivities. Moreover, the appearance, location, and geographic density of outlets help shape consumers’ over-all perceptions of banks even before they set foot inside an outlet. True outlet-network transformation there-fore involves significantly upgrading external as well as internal value propositions.

The problem in China is that outlet networks are rarely managed opti-mally. According to a recent BCG study, nearly two-thirds of surveyed customers were generally dissatisfied with the level of service provided by their bank. This is not surprising, since it is common in China to see long queues inside banks that force

customers to wait for 45 minutes—and often much longer—before re-ceiving any attention. Also, and per-haps most important, outlets are often ineffective at meeting custom-er needs through pure selling. Why is this so?

In truth, many performance issues stem from the fact that bank outlets in China have traditionally been managed as standalone “minibanks” that attempt both to serve customers and to carry out extensive processing activities on site. This structure has resulted in inefficient resource allo-cation. For example, in a typical Chi-nese bank outlet, only 10 percent of staff is dedicated mostly to selling, with more than 50 percent dedicated to non-customer-facing activities. Many employees must complete nu-merous diverse tasks, including back-

office processing chores, teller trans-actions, and risk management activities. They may also do some selling—provided there is time and an available space in which to sit down and talk with a customer.

Chinese banks need to move from their traditional, inefficient outlet model to one that treats the outlet like a retail shop that is expressly de-signed for selling and providing high-ly personalized service. A number of leading international banks have un-dergone such transformations over the past 10 to 15 years, many with excellent and lasting results. Success-ful transformation projects can lead to the following benefits:

Higher sales revenues generated ◊ by outlet staff who are more cus-tomer centric, sales oriented, and adept at cross-selling

Better coverage of customer ac-◊ cess points and increased market share through a restructured network

Lower processing costs—usually ◊ an initial 20 percent annual reduc-tion through centralization and simple reengineering, and an ad-ditional 15 to 25 percent through advanced reengineering

A significant reduction in error ◊ rates and turnaround times

Higher staff morale and job satis-◊ faction, leading to an improved ability to attract and retain high-quality employees

An enhanced brand image and ◊ greater customer loyalty resulting from a better client experience and more professional operations

2

7

16

25

51

4

19

28

33

27

26

Urban household income distribution, 2005

Urban household income distribution, 2015

(estimated)

Number of households (millions)

Affluent1 >200

Number of households (millions)

Household income(RMB thousands)

Mass affluent 100–200

Middle class 60–100

Emerging middle class 40–60

Aspirants 25–40

Poor <25

Fiy-one million households will be at least middle class by 2015

Exhibit 1. China’s Urban Middle Class Is Growing Rapidly

Source: BCG 2008 Urban Income Forecast Model. Note: Assuming RMB 7 = $1, the mass affluent segment begins at $14,285 per household and the middle class segment begins at $8,571 per household.1The affluent segment in 2005 contained fewer than 500,000 households.

From Processing Centers to Retail Shops 3

Indeed, successful outlet-network transformation could help Chinese banks acquire and retain the most attractive retail customers—the mass affluent segment, with between RMB 100,000 and RMB 200,000 in annual household income. Some foreign and local banks are already trying to pro-mote priority-banking services in or-der to capture this segment in China, but the game is still young.

Fortunately, there are specific steps that Chinese banks can take to trans-form their outlets, capture this valu-able segment, and move forcefully toward market leadership.

Four Steps to Successful Outlet- Network Transformation

Our experience working with leading multinational banks reveals that there are four critical steps for achieving a meaningful outlet-net-work transformation: fortify the front office, streamline the back office, re-

design the physical network, and or-ganize for success. (See Exhibit 2.) Banks need to take all four steps in order to ensure success; there can be no picking and choosing. Let’s take a look at each step in detail.

Fortify the front office. Despite the rapid development and increasing sophistication of alternative chan-nels, outlets still serve as the primary sales-and-service venue for retail banking customers. This fact high-lights the importance of the front office, which can be strengthened through the following three ini- tiatives.

Sharpen sales effectiveness. Most Chi-nese banks lack a sales culture that includes tried and true methods for stimulating purchases and fostering customer loyalty. Yet a few basic ac-tions can put them on the road to improvement. For example, in large, high-traffic outlets, a “greeter” can be put in place to direct customer traffic and generate referrals to sales

staff. Banks can also adopt a custom-er-relationship-management system that enables staff to view past spend-ing behavior, predict future product needs, and better understand cus-tomer profiles. Such a move will help banks identify high-potential clients more systematically in order both to serve them better and to target them for the cross-selling of high-margin products.

Significant improvements in sales volumes can be further aided through promotional sales cam-paigns and innovative product bun-dles. Of course, outlet staff needs to be equipped with adequate sales- training and support tools. Some-thing as simple as a standard sales script can go a long way toward greater effectiveness. Setting sales targets and establishing incentive systems are also critical—a topic we will address in detail later.

Facilitate channel migration. Simple transactions should be migrated

Outlet Transformation

Fortify the front office Streamline the back office

Organize for success

Redesign the physical network1 2 3

4

◊ Sharpen sales effectiveness

◊ Facilitate channel migration

◊ Write a customer service charter

◊ Eliminate redundant and unnecessary processes

◊ Centralize non-customer-facing tasks

◊ Reengineer the remaining outlet processes

◊ Automate wherever possible

◊ Redesign the outlet network configuration

◊ Redesign the outlet layout

◊ Get lean and specialized ◊ Manage performance tightly

Exhibit 2. There Are Four Components to Successful Outlet Transformation

Source: BCG analysis.

4 The Boston Consulting Group

from tellers to automated channels, such as ATMs, automatic passbook machines, and the Internet. This can partly be facilitated by simply install-ing ATMs in convenient locations and by providing incentives and comprehensive support to customers. In addition, customers should be seg-mented so that premium clients with more sophisticated banking needs are migrated to higher service levels. The steeper cost of providing priority services needs to be carefully man-aged to ensure the best return on in-vestment.

Write a customer service charter. Many customers view banking as an un-pleasant necessity. In Chinese banks, long queues, inefficient processes, and unhelpful staff are common complaints. Yet bank managers often find it difficult to improve service quality because of long-entrenched policies and procedures that hinder positive change.

Chinese banks can take a page from the books of some leading global banks by writing a customer service charter. In such a document, banks can formally state their intentions to resolve complaints, strengthen staff accountability, shorten queues and waiting times (through higher staff-ing at busy times of the day), and en-hance accessibility (often by extend-ing opening hours). The charter should be publicly communicated to all customers, and compliance should be measured by an external party—which can, for example, send inspectors posing as customers into outlets to gauge service quality. Staff should be penalized or rewarded on the basis of their performance.

Streamline the back office. Many managers of Chinese banks com-

plain that they do not have suf- ficient resources to enhance front- office capabilities. They are often right. The root cause is that too high a percentage of the typical outlet’s total staff is occupied in the back office.

Traditionally run Chinese banks can and must drastically reduce the amount of back-office processing work done in their outlets—as well as improve the effectiveness of the processes that remain—in order to upgrade their overall offerings. Our experience with clients demonstrates clearly that significant streamlining can give managers and tellers far more time for sales and referrals—and at the same time reduce the out-let’s cost base significantly. On the basis of our work with a leading Chi-nese bank, we have identified four basic initiatives involved in slimming down the back office and bringing its efficiency up to speed.

Eliminate redundant and unnecessary processes. Banks need to develop an in-depth understanding of all activi-ties conducted in every outlet and question whether each activity is ab-solutely necessary. Such an exercise typically uncovers some tasks that can easily be eliminated, even if they have been part of the outlet’s daily operations for many years.

Centralize non-customer-facing tasks. Once the total number of activities has been reduced, banks should ag-

gressively migrate the vast majority of non-customer-facing processing work out of the outlet and into a cen-tralized processing center. Banks must ask themselves, Is there any compelling reason for this activity not to be conducted outside the out-let? Centralizing most back-office processes can not only liberate staff for more selling but also help achieve economies of scale—which in turn can reduce costs. One of our clients, by centralizing most of its op-erations functions, has reduced the number of managers and staff re-quired in each outlet and enabled employees to concentrate more on sales and service.

Reengineer the remaining outlet process-es. Processes that remain in the outlet should be reengineered to achieve greater efficiency. Typically, banks can refine processes by segregating duties among different functions, simplifying work flows, minimizing human intervention, and standardiz-ing key tasks and service levels. Good process reengineering not only helps improve efficiency but also reduces errors and achieves better controls, such as for risk management.

Automate wherever possible. Banks in China still have far more manual processes than do leading banks in mature markets. This must change if Chinese banks are to compete more effectively at home and on the inter-national stage. Because processes that have already been streamlined are easier to automate, this initiative should come toward the end of the overall back-office upgrading pro-gram. On a broader level, sweeping IT improvements, such as renewing core banking IT systems, can be one of the most effective levers in achiev-ing process efficiency.

Chinese banks must

reduce the amount

of back-office

processing done in

their outlets.

From Processing Centers to Retail Shops 5

Redesign the physical network. In addition to front- and back-office im-provements, it is important to get the “hardware” right—in other words, the physical network, or the configu-ration and layout of the outlets. Re-designing and optimizing these ele-ments, which have a strong and distinct effect on how customers per-ceive banks, allow institutions to al-locate resources more efficiently and improve overall performance. Let’s take a closer look at each of these initiatives.

Redesign the outlet network configura-tion. First, banks need to carefully re-view their existing outlets and de-cide which ones to retain in their present form—and which ones to re-format, relocate, or even close.

Our work with major banks has dem-onstrated that leveraging different formats can greatly enhance an insti-tution’s overall footprint. In the Unit-ed States, for example, several suc-cessful domestic banks have effectively used a variety of outlet formats, ranging from comprehen-sive, full-service outlets at one end of the spectrum to standalone ATMs at the other. This approach has helped these banks expand their brand awareness and reduce costs at the same time.

Location, of course, is critical. But the attractiveness of any location can change over time—a dynamic that banks must track vigilantly. We have observed that by strategically posi-tioning outlets in the right locations, a bank can create the impression of having broader geographic coverage than it actually has. Obviously, relo-cating outlets to high-traffic areas can enhance this perception—as well as generate extra revenues to

cover higher rental costs. What’s more, if an outlet’s high performance level is the result primarily of a pre-mium location, the bank should con-sider reformatting the outlet to of- fer a broader range of products and services.

And, painful as it may be, banks sometimes need to close outlets in areas that are saturated or that have limited business potential. As has been shown in highly developed markets, closings can translate into substantial cost savings. Also, staff from outlets that are being shut down can often be put to work more productively in new outlets or in those that are being expanded.

In order to determine which type of action may be needed for each out-let, banks need to review perfor-mance based on both volume (trans-action traffic) and profit contribution. With this approach, banks can clear-ly separate positive, negative, high-volume, and low-volume contribu-tors, and develop a specific “retain,” “reformat,” “relocate,” or “close” rec-ommendation for each outlet. (See Exhibit 3.) It is worth noting that high transaction volume does not necessarily lead to high marginal contribution.

A further step in reconfiguring the network involves opening new out-lets in underpenetrated locations. In China, as the country’s engine of eco-nomic growth gains more momen-

tum, new commercial and residential areas with strong revenue potential are cropping up rapidly. When ana-lyzing potential locations for outlets, banks can use three basic criteria: the demographic profile (number of affluent and middle-income house-holds, and average education level); the retail profile (including number of shopping malls, supermarkets, and restaurants); and the commercial profile (including number of office buildings, average occupancy rate, types of companies present, and traf-fic conditions). By measuring such criteria, banks can estimate business potential, prioritize locations, and determine timelines for possible openings of new outlets.

Redesign the outlet layout. All it takes is a glance inside most bank outlets in China to see that there is more processing going on than selling. Back-office functions account for the majority of floor space. But by rede-signing layouts in tandem with cen-tralizing back-office processes, banks can free up floor space that can then be dedicated to customer-centric ac-tivities.

Best-practice banks tend to leverage multiple outlet formats and layouts to fit the needs of different regions and locations. For example, one bank in Southeast Asia has introduced six different outlet formats—supermar-ket kiosk, kiosk, cash outlet, spoke, retail outlet, and community outlet, each with a different layout. The su-permarket kiosks and the kiosks, requiring fewer staff members and less space, provide only basic trans-actions and services through self- service terminals. The retail and community outlets, needing more staff and space, provide a full range of services. The cash-outlet and

Each outlet must

be analyzed to

determine its

optimal format and

location.

6 The Boston Consulting Group

spoke formats fall somewhere in the middle.

In our view, banks can benefit by us-ing a modular layout approach. Such an approach involves creating a number of standardized modules—such as for tellers, self-service ma-chines, retail sales and advising, small-to-medium-size-enterprise (SME) banking, and priority banking (wealth management)—that serve as a pool of components from which banks can choose when constructing different outlet formats.

For example, an outlet in a high-traf-fic location might have both a teller module and a self-service-machine module but no priority-banking module. Conversely, an outlet in an upscale commercial area might have

a priority-banking module coupled with only a sales-and-advising mod-ule. (See Exhibit 4.) Any combination of modules should convey a consis-tent brand image of cleanliness, mo-dernity, friendliness, attractiveness, accessibility, and professionalism.

Organize for success. Organization-al change is always the most sensi-tive part of an outlet-network trans-formation process, and it plays a central role in providing the right platform for achieving the desired results. The above initiatives—which center on achieving an optimal struc-ture that helps make outlets efficient channels that focus on sales and ser-vice—are all integral parts of organ-izing for success. Yet on a more mac-ro level, the entire organization for most Chinese banks needs to be

leaner and more specialized, and sales performance must be closely tracked. Let’s take a closer look at these actions.

Get lean and specialized. Chinese banks often have multiple organiza-tional layers, with outlets managed by several different departments de-pending on their region. By contrast, most leading banks in developed markets have a single retail-banking organizational unit that enables all outlets to be managed in a consistent and holistic fashion. Some banks in China are gradually shifting in this direction. In our view, this is a neces-sary move toward optimal network organization. What’s more, careful delayering can help reduce manage-ment head count and shorten proc-essing times. A leading bank in Tai-

Underutilized outlets High-performing outlets

Low-performing outlets Transactional outlets

◊ Reformat into priority banking or SME banking center

◊ Retain◊ Reformat to expand overall offering◊ Open another outlet nearby

◊ Relocate◊ Close

◊ Reformat into simplified, low-cost outlets◊ Close

= 100 outlets

Marginal profit contribution

Monthly tellertransaction volume

>0

<0

<x >x

Potential actions at different types of outlets

Exhibit 3. Network Optimization Is Driven by Profit Contribution and Transaction Traffic

Sources: BCG case example; BCG analysis.

From Processing Centers to Retail Shops 7

wan, for example, through delayering and expanding managerial roles, shortened the number of staff inter-ventions required for a mortgage ap-plication from five to two—signifi-cantly improving efficiency without compromising risk or quality.

Creating more specialized staff func-tions is also critical. A best-practice outlet organization typically includes relationship managers, customer ser-vice representatives, tellers, supervi-sors, and financial advisors—a far more specialized offering than those of traditional outlets in China, where just about everyone is forced to do just about everything. Enhancing staff specialization reduces the com-plexity of individual jobs and en-ables employees to focus on deliver-ing top-quality expertise in their specific function. In many cases, ad-

ditional sales staff should be hired. In developed markets, for example, the ratio of sales staff to tellers is typ-ically two to one or higher. In China, many bank outlets do not have even one person fully dedicated to selling.

Manage performance tightly. Perfor-mance management in bank outlets is largely a matter of setting sales tar-gets and providing incentives. Setting targets is important because, as the adage goes, “what gets measured gets done.” Yet targets should not be uni-formly applied across all outlets, nor should they be unrealistic or arbi-trary. Rather, they should stem from a careful assessment of each outlet’s potential. An outlet in an upmarket residential area will generate higher sales—and therefore should be as-signed a higher target—than an out-let in a middle-class neighborhood.

Moreover, in order to motivate sales staff, it is critical to adopt a perfor-mance-driven compensation scheme. BCG advocates using a sales credit scheme in which each banking prod-uct is assigned a certain monetary value—for example, RMB 1,000 for every approved credit-card applica-tion. The value is assigned to each product on the basis of its profit con-tribution to the bank, and each out-let is given a monthly target for the total value of sales credits to be achieved. This approach is useful be-cause it ensures high transparency in measuring profit contributions, is easy to understand, and gives outlet management the flexibility to adjust the sales credit in order to reflect changes in priorities and in sales strategy. It also allows for a quick comparison of overall sales perfor-mance among outlets.

Examples of modules Examples of modular outlet types

Full-service retail & SME outlet(in commercial business district)

Priority-banking outlet(in wealthy district)

Simplified sales outlet(in shopping center)

1

2 3

Self-servicemachines

ATM

Tellercounters

Priority-bankingcenter

Sales and advising

SME bankingcenter

Self-servicemachines

Greeter

Transaction oriented

◊ Teller counters

◊ ATMs

◊ Self-service machines

Sales oriented

◊ Retail sales and advising staff

◊ Priority-banking center

◊ SME banking center

Combination based on local

market opportunities in

each outlet

Priority-bankingcenter

Sales andadvising

Exhibit 4. A Modular Approach Allows Banks to Better Serve Local Customers’ Needs

Source: BCG analysis.

8 The Boston Consulting Group

An alternative method is to adopt a sales-scoring scheme, which is simi-lar to the sales credit approach but uses a score (instead of a monetary value) based on the profitability of different products. A score also pro-vides flexibility for management and is easy to implement for banks that lack robust capabilities for measur-ing product profitability in monetary terms. This approach, however, pro-vides less transparency in gauging how much profit each salesperson, or each individual outlet, contributes to the bank.

Once metrics and targets have been determined, management should make sure that rewards for reaching targets are attractive. We have found that incentives must represent at least an additional 15 percent of base salary in order to drive sales be-havior. Other peer- and recognition-related incentives such as reward trips and published sales standings can also be effective at motivating staff to reach—and even surpass—their targets.

Challenges and Opportunities

Transforming a large outlet network is not an easy task. It takes time, cre-ativity, thorough planning, crisp exe-cution, and strong commitment from senior management. Many leading foreign banks have taken several years to fully convert their networks into dynamic sales and service appa-ratuses. Naturally, major changes in the way day-to-day business is con-ducted will inevitably cause some level of disruption throughout the organization.

Management can expect challenges in areas such as the following:

Customer Mix. The outlets of many Chinese banks still serve both corpo-rate and retail customers—segments that require fundamentally different sales approaches. Management should thus decide on the appropri-ate customer mix for each outlet. If

an outlet is best suited to serving in-dividuals and SME businesses, for ex-ample, it may be advisable to shift its relationship-management team for corporate customers to a regional center or even to the head office. Re-gardless of the mix, all outlets should be operated under a consistent set of standards and procedures.

HR Support. The migration of staff to different functions and responsi-bilities can create anxiety, at times causing employees to resist change efforts. It is thus important to put in place a support system for address-ing and managing this sort of transi-tion-related disruption. Such support should be offered with care and sen-sitivity—but should not cause unnec-essary delays in carrying out the overall transformation process.

Costs. The costs involved in compre-hensive outlet transformation can be significant. Senior management should therefore execute a rigorous cost-benefit analysis to determine ex-actly where the needed funds are channeled. For example, careful pre-liminary planning must guard against errors such as building out-lets in undesirable locations or in for-

mats that are not suited to their sur-roundings.

Decision Making. Numerous busi-ness decisions need to be made when transforming an outlet net-work. How many sales staff and tell-ers will each outlet require? How can each outlet reduce the number of manual tasks to achieve higher proc-essing efficiency, while still ensuring proper risk control? Exactly which targets and incentive schemes should be put in place? Should an outlet be relocated when it is making a profit? Best-practice banks do not make these decisions subjectively, nor do they necessarily copy the competi-tion. Rather, they conduct strict quantitative analyses to derive the right answer for each question.

Change Management. There will be many operational challenges in the initial stages of any outlet-network transformation project. To ensure proper change management, dedi-cated professional resources should be on hand to deal with difficulties that will likely arise from time to time. Also, given China’s vast geo-graphic expanse and the large num-ber of outlets that many banks have, it is advisable to establish a program office to centrally coordinate the transformation effort. Best-practice banks typically pilot the changes on a small, regional scale before rolling them out more extensively. In our ex-perience, banks typically see clear and concrete benefits in the pilot outlets—in revenues, cost efficiency, and customer and employee satisfac-tion—within a few months of launching the changes to the public. Furthermore, pilots are critical to fos-tering internal support for broad-based outlet-network transformation efforts.

Comprehensive

outlet transformation

can take years, but

benefits are typically

huge.

From Processing Centers to Retail Shops 9

Ultimately, there is no question that Chinese banks need to transform their outlet networks. If they fail to do so, the evolving competitive land-scape, coupled with a more demand-ing customer base, will force their hands—or leave them behind.

BCG’s experience in helping leading banks through outlet-network trans-formation projects has shown that no change program should be under-

taken in a piecemeal fashion. A high-ly concentrated and integrated effort is required. This can be a massive un-dertaking for large Chinese banks—some of which have tens of thou-sands of outlets—and can take a number of years to complete.

But the results are typically more than worth the effort and expense required. Although substantive change is never completely smooth

and painless, those banks in mature markets that have undertaken such projects have proved that dramatic gains can be achieved. By transform-ing bank outlets from places that are principally for processing and record-ing transactions to venues that are specifically designed for proactive sales and top-quality service, Chinese banks will reap major and long-last-ing benefits.

10 The Boston Consulting Group

About the AuthorsTjun Tang is a partner and manag-ing director in the Hong Kong office of The Boston Consulting Group. You may contact him by e-mail at tang.tjun@bcg.com.

Alain Le Couédic is a partner and managing director in the firm’s Hong Kong office. You may contact him by e-mail at lecouedic.alain@bcg.com.

Frankie Leung is a partner and managing director in BCG’s Hong Kong office. You may contact him by e-mail at leung.frankie@bcg.com.

Douglas Beal is a partner and managing director in the firm’s Hong Kong office. You may contact him by e-mail at beal.douglas@bcg.com.

Holger Michaelis is a partner and managing director in BCG’s Beijing office. You may contact him by e-mail at michaelis.holger@bcg.com.

William Yin is a partner and manag-ing director in the firm’s Hong Kong office. You may contact him by e-mail at yin.william@bcg.com.

AcknowledgmentsThe authors would like to thank their colleagues Gu Li, Knut Stor-holm, Eddy Tamboto, and Cindy Tsai. In addition, grateful thanks go to Philip Crawford for his editorial guidance, as well as to other mem-bers of the editorial and production teams, including Katherine Andrews, Gary Callahan, and Kim Friedman.

For Further ContactFor additional information about this report or about BCG’s Financial Institutions practice, please contact one of the authors.

For a complete list of BCG publications and information about how to obtain copies, please visit our Web site at www.bcg.com/publications.

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© The Boston Consulting Group, Inc. 2008. All rights reserved.7/08

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