As the sales channels for wealth management products of large and medium-sized banks become saturated, bank wealth management subsidiaries are accelerating their efforts to penetrate the lower-tier markets of small and medium-sized banks such as city commercial banks and rural commercial banks, and continuously expanding their agency sales cooperation networks.
The Financial Times reporter noted that since November this year, several wealth management companies, including ICBC Wealth Management, CITIC Wealth Management, CIB Wealth Management, CMB Wealth Management, and Suzhou Wealth Management, have successively announced the addition of new wealth management product sales partners. The partners are mainly city commercial banks and rural commercial banks in third-tier and lower-tier cities. The sales channels of bank wealth management products are constantly expanding into lower-tier cities, and the county market has become the core track for competition among all parties.
Wealth management companies are accelerating the expansion of their distribution channels.
Recently, several bank wealth management companies have issued announcements to expand their distribution channels, indicating a growing trend of wealth management distribution businesses penetrating lower-tier markets such as counties and rural areas. Large state-owned banks, joint-stock banks, and city commercial banks' wealth management subsidiaries are all ramping up their efforts, expanding their service reach through cooperation with local small and medium-sized banks.
Looking at specific institutional actions, ICBC Wealth Management's announcement in November revealed that, effective November 11th, it had signed a cooperation agreement with Huishang Bank, formally establishing a sales agency relationship for wealth management products. BOC Wealth Management also issued two announcements in November, adding Henan Rural Commercial Bank and Shaanxi Xianyang Rural Commercial Bank as sales partners, further extending its sales channels to lower-tier markets in Henan and Shaanxi provinces.
Besides the wealth management subsidiaries of state-owned banks, the expansion into lower-tier markets by joint-stock banks and city commercial banks is even more intensive. A review by the Financial Times reveals that since late November, CITIC Wealth Management has released several announcements regarding the addition of new sales agents for its wealth management products. These partners include eight local small and medium-sized banks, such as Jiangsu Peixian Rural Commercial Bank, Jiangsu Yizheng Rural Commercial Bank, Jiangsu Binhai Rural Commercial Bank, and Jiangsu Fengxian Rural Commercial Bank. Jiangsu Province has become the core area for its expansion into lower-tier markets.
In addition, Suyin Wealth Management has recently issued several announcements regarding the addition of sales institutions for some wealth management products, further extending its cooperation to county-level markets in Ningbo, Quzhou, Wenzhou, Shaoxing and other places in Zhejiang Province.
"The lower-tier market holds enormous demand for wealth management. By partnering with local small and medium-sized banks to build a distribution network, we can not only accurately reach customers in counties and rural areas, but also leverage the local service advantages of our partners to enhance customer experience," a person in charge of a wealth management subsidiary of a major state-owned bank told reporters. Currently, the lower-tier market has become an important arena for wealth management companies to differentiate themselves in the market.
Reporters noted that this trend is supported by industry data. The "China Banking Wealth Management Market Quarterly Report (Q3 2025)" shows that 31 wealth management companies have established distribution channels with banks outside their parent banks. In September, 583 institutions across the market were distributing wealth management company products across banks, an increase of 35 compared to the same period last year, indicating a continued improvement in the coverage of distribution channels.
Small and medium-sized banks break through barriers and increase revenue through agency sales
In fact, leveraging the resources of large wealth management subsidiaries to sell products has become an important way for small and medium-sized banks without wealth management licenses to participate in wealth management business and increase operating income.
In their recently released third-quarter reports, several small and medium-sized banks revealed the latest progress in their agency sales business. Lanzhou Bank's outstanding agency wealth management products exceeded 10 billion yuan in the first three quarters, and its first jointly launched agency wealth management product sold out its 100 million yuan quota within six hours of its launch. Jiangsu Changshu Rural Commercial Bank also stated in its third-quarter report that its fee and commission income increased by 57.53% year-on-year in the first three quarters, mainly due to increased fee income from agency wealth management business.
Industry insiders believe that the core driving force behind the accelerated expansion of wealth management product distribution to lower-tier cities lies in the complementary needs and market opportunities between wealth management companies and small and medium-sized banks.
“For wealth management companies, small and medium-sized banks have a stable customer base and localized service capabilities in regional markets, which can help fill the gaps in county and community markets where large banks are not fully covered, rapidly expand the sales radius of products, and diversify the risk of dependence on parent bank channels.” According to Xue Hongyan, a special researcher at Jiangsu Commercial Bank, for small and medium-sized banks, selling wealth management products can enrich their sources of fee income and open up new profit growth points against the backdrop of pressure on net interest margins.
Zhang Qiaochu, a researcher at Puhui Standard, told the Financial Times: "From a market perspective, the narrowing net interest margin has compressed the profit margin of traditional deposit and loan businesses. Small and medium-sized banks urgently need to increase revenue through intermediary businesses, and agency sales do not require a large amount of capital, making them a preferred option for optimizing their revenue structure. In terms of their own capabilities, the transformation to net asset value-based management has significantly increased the requirements for investment research, risk control, and information disclosure. Small and medium-sized banks, limited by their own size and resources, usually face relatively greater pressure from the high costs and potential risks required for self-management."
Reporters noted that in March of this year, the State Financial Regulatory Commission issued the "Administrative Measures for the Agency Sales Business of Commercial Banks," which officially came into effect on October 1, further promoting the standardized and orderly development of the agency sales business of commercial banks.
Xue Hongyan further added: "The regulatory authorities' guidance on the marketization and professionalization of asset management business has also provided policy support for this kind of cross-institutional cooperation, promoting the industry from a closed ecosystem to open and collaborative development, and ultimately benefiting investors' demand for diversified wealth management products."
Deep Transformation Towards "Light Asset Management"
The new asset management regulations issued in 2018 clearly stipulate that financial institutions whose main business does not include asset management should establish asset management subsidiaries with independent legal person status to carry out asset management business, strengthen the isolation of legal person risk, and those that do not yet meet the conditions can set up a dedicated asset management business department to carry out business.
According to a Financial Times reporter, 2025 is a crucial year for the transformation of wealth management businesses at small and medium-sized banks. Previously, financial regulators had issued guidance to some city commercial banks and rural commercial banks that had not established wealth management subsidiaries, requiring them to reduce their existing self-operated wealth management assets to zero by the end of 2026.
Several industry insiders interviewed said that against the backdrop of reducing proprietary wealth management, most small and medium-sized banks will likely undergo a deep transformation towards "light asset management" in the future.
"For smaller banks with weaker financial strength, agency sales are a key path to survival and development," said Lou Feipeng, a researcher at China Postal Savings Bank. Specifically, small and medium-sized banks need to focus on improving the construction of their agency sales systems, realizing online management of product access, sales record inquiries, and risk warnings, in order to reduce operating costs and improve customer experience; they also need to strengthen differentiated positioning and regional cultivation, and provide differentiated services in combination with local market characteristics in the face of fierce market competition.
However, Zhang Qiaochu believes that in the short term, some leading regional banks will retain a small amount of proprietary wealth management business to differentiate themselves from competitors and maintain core customer loyalty, thanks to their local customer base and unique asset resources. Meanwhile, the pure agency sales model relies on the product quality and commission policies of partner institutions, resulting in insufficient profit stability and a potential loss of business initiative. Furthermore, some small and medium-sized banks are actively applying for wealth management company licenses, thus they will also tend to maintain their proprietary wealth management advantages.
