The banking industry has undergone dramatic shifts over the past few years, particularly with the digital transformation that has heavily emphasized mobile applications. However, recent trends suggest that the mobile banking apps, once celebrated as the frontline for banks to engage with customers, are now facing a decline in user activity.

Recent quarterly and annual reports from several commercial banks indicate a troubling trend in the monthly active users (MAUs) of their mobile banking applications. Notably, credit card apps seem to be suffering more significantly than their bank app counterparts. For instance, the monthly active users for China Merchants Bank's credit card app "Zhangshang Sh生活" fell to approximately 39.07 million in the second half of 2023, down from 41.96 million at the end of the previous year. Over the past year, this app has experienced its sharpest decline, losing around 2.9 million users in just six months.

Moreover, the bank has long promoted the peak daily active users of the "Zhangshang Sh生活" app, yet the user engagement has plummeted from a peak of approximately 9.04 million in 2019 to just over 6.79 million at the close of 2023. Furthermore, the bank did not even provide this data in their mid-year report for 2024, which is unusual considering its historical significance.

While other major banks like Shanghai Pudong Development Bank, Bank of Communications, and Citic Bank have managed to maintain a slight increase in their credit card apps' MAUs, these figures are markedly lagging compared to the robust performance of their respective mobile banking apps. This disparity raises questions about the effectiveness and appeal of these credit card apps in the current market landscape.

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Interestingly, several insiders in the credit card divisions of these banks have noted a discernible decline in the leadership's focus on app user metrics, suggesting that the time for aggressive spending to enhance the user ecosystem has passed. One banker even commented, “It’s not the time to pour money into building an ecosystem anymore.”

The plummet in mobile active users particularly affects the leading banks in the sector. Within the cohort of eighteen national commercial banks, four of them do not even possess dedicated credit card apps. Generally, only a select few banks—including the previously mentioned—report having substantial active user figures for their apps.

The various metrics reported by these banks can be quite confusing due to inconsistencies in definitions. Some report month-end active users while others utilize average MAUs or peak figures. When examining the performance of China Merchants Bank's app, which traditionally leads the market, one can see a clear downward trajectory. The monthly active user count has decreased from around 45.93 million in 2021 to 39.07 million in 2024, with the fall becoming progressively steeper each year.

The peak daily active user count has likewise decreased, reporting figures lower than before, raising further concerns about the app's declining engagement. In a contrasting scenario, Ping An Bank’s “Pocket Bank” app reported a significant decline, dropping from 51.94 million at year-end to just over 41.81 million, losing more than a million users in the process. Though it lacks a standalone credit card app, its long-standing position as a top competitor in the credit card industry means that its app activity can still indicate broader industry trends.

Meanwhile, some banks have reported modest increases in their credit card app MAUs, while others have seen a mild decline. Nevertheless, the growth of mobile banking apps remains far superior to that of credit card apps, with Citic Bank seeing impressive year-on-year growth with numbers jumping by over 13% in user engagement.

In earlier reports, China Construction Bank claimed to have approximately 15 million active users on its credit card app, but has since ceased providing updates on that front. ICBC has also avoided any mention of its credit card app, only revealing the number of users intermittently, which appeared in the 2023 reports showing 1.48 million in mid-year, decreasing slightly by year-end. Yet, this important metric has also disappeared in the latest mid-year updates in 2024.

As less focus is given to credit card apps, the overall performance of credit card businesses is also on a downward trend. Recent developments in the Chinese credit card market during the first half of 2024 paint a concerning picture, characterized by a reduction in circulating cards, a decrease in transaction volumes, and a worrying rise in non-performing loan rates.

For instance, many banks have seen their total credit cards diminish compared to the start of the year. The Industrial and Commercial Bank of China (ICBC) and China Construction Bank both reported a drop of approximately 1 million cards each. Alongside this, Bank of Communications and Postal Savings Bank have documented steep declines of about 6.44 million and roughly 2.82 million cards respectively.

Trends suggest that even among the joint-stock banks, Ping An Bank reported a drop of over 233,000 credit card holders since the beginning of the year. Both SPDB and China Merchants Bank also recorded declines of 192,000 and 45,000 respectively. However, it's worth noting some entities like Citic Bank and China Bank have continued to expand their credit card issuance, indicating that growth is still viable through strategic market initiatives.

Amidst falling transaction volumes, the negative performance extends to overall credit transactions. In terms of value, various banks, such as Ping An Bank, saw a dip of approximately 35.32 billion yuan or 22.9%, with noticeable reductions seen across other banks in similar industries, with reductions exceeding 28% for Everbright Bank and about 17% for SPDB.

As challenges mount, banks are actively reassessing their strategies regarding both the allocation of resources and the operational frameworks surrounding credit card services. Several institutions are beginning to scale back on credit card investments sharply as they confront the increasing risks associated with slowing growth.

In this challenging environment, several banks have initiated restructuring efforts, including redundancies among several banking divisions. According to an insider from Guangfa Bank, management changes have swept through the leads of credit card divisions and varying projects have been merged. With budgets slashed to almost negligible levels, the focus on business development becomes increasingly constrained.

Previous strategies to stabilize credit card operations through major investments into apps and digital infrastructure have turned into caution. For instance, teams in several banks explored promoting their products through social media platforms such as Douyin, but results were lackluster. An insider revealed, “If the ROI on any investment isn’t justifiable, we simply won’t invest any more capital.”

Gone are the days where frivolous spending was the norm; every penny invested must have concrete justification. Consequently, with reduced focus on MAUs for apps like credit cards, banks are now pivoting toward metrics that directly correlate with performance outcomes.

As the landscape continues to evolve, the importance of offline channels is reinfirmed, with many banks now reporting that an increasing portion of their credit card growth is reliant on traditional face-to-face methods rather than online transactions. The industry now sees a shift in the balance with some banks reporting a ratio of online to offline acquisition as 40% to 60%.

This transformative period for banking appears poised to reshape the digital banking environment as stakeholders adapt to the current realities facing credit card operations. It will be intriguing to observe how these institutions navigate these challenges and what adaptations may signify a new era in banking altogether.