<article>Citigroup Inc has shrunk its branch network in China and is looking to grow via its digital platform on the back of data which show that 95 percent of its clients&#8217; transactions are not made via a branch.</article>

Citigroup Inc has shrunk its branch network in China and is looking to grow via its digital platform on the back of data which show that 95 percent of its clients&#8217; transactions are not made via a branch.
The move highlights intensified competition between traditional financial firms and technology companies looking to benefit from China&#8217;s overwhelming adoption of mobile Internet to offer loans, fund management and payment services.
With just 2 percent of China&#8217;s banking market open to them, according to <a href="http://www.dealstreetasia.com/?s=Ernst+%26+Young%2C" target="_blank">Ernst &amp; Young,</a> foreigners such as <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=Citigroup" target="_blank">Citigroup</a> and HSBC are seeking cheap and effective ways to reach customers.
Citi, which passed the $1 billion revenue mark in China two years ago, said on Monday it had closed four branches in mainland China over the past 12 months, seeing its current base of 46 branches across 13 main Chinese cities as adequate for now.
&#8220;While the branch network remains important in China, the growth in digital means we are adapting fast: it&#8217;s a bricks and clicks strategy designed to ensure we remain relevant to our clients,&#8221; James Griffiths, a Citigroup spokesman in Hong Kong, told Reuters.
For Western players saddled with rising regulatory costs, digital banking is a cheaper and faster way to grow than the traditional banking channel.
But they are up against fierce competition from local Chinese <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=FinTech" target="_blank">FinTech</a> players &#8212; companies which are not banks but which offer digital platforms for financial services from fund management to credit card processing, peer-to-peer lending and crowdfunding.
&#8220;In China, the big story is that a lot of these FinTech innovators are scaling to such a degree that they&#8217;re the core financial relationship that a lot of particularly young Chinese consumers have,&#8221; said James Lloyd, Asia-Pacific FinTech leader at consulting firm EY.
&#8220;The proposition nowadays for international banks in China and for some of the domestic banks is having to compete with the non-banks that own that customer relationship end to end.&#8221;
HSBC, the largest foreign bank in China, has more than 170 outlets there. The British bank has made its push into China, in particular in the southern Pearl River Delta region, a strategic priority. But it also wants to grow through digital channels.
&#8220;The distribution strategy in the Pearl River Delta will be digitally led &#8212; HSBC is not hampered by large inflexible traditional bank channels,&#8221; HSBC said as it unveiled its Asia Digital strategy on April 1.
Bank of East Asia, the No.2 foreign bank by branches in China, is also considering turning those into more efficient digital outlets after implementing a similar strategy in Hong Kong.
&#8220;It&#8217;s necessary to complement the branch network with a strong online platform as more and more transactions are moving online,&#8221; deputy CEO Brian Li told Reuters.
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Citigroup shrinks China branch network in digital push

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