"From Zero to One" Multiple small and medium-sized banks break the ice on agency business

China Economic Reporter Guo Jianhang Beijing Report With large banks establishing "Wealth Management Departments" at the head office level, small and medium-sized banks are quickly filling the gaps in the distribution of wealth management products. Recently, several small and medium-sized banks have achieved breakthroughs in their distribution business, marking a typical example of this trend. Recently, Guizhou Fenggang Rural Commercial Bank officially launched its insurance agency business, marking a substantial step forward in its financial "intermediary" services. The bank pointed out that the implementation of the insurance agency business has expanded new pathways for financial services to support agriculture, rural areas, and farmers, further enhancing its comprehensive service capabilities. Meanwhile, Jiangyin Rural Commercial Bank has also successfully launched its first trust product for distribution, issued by Huaxin Trust, which focuses on the asset allocation needs of high-net-worth clients and aims to provide long-term wealth appreciation solutions. In terms of wealth management product sales, the differences between national banks and regional small and medium-sized banks are akin to large comprehensive supermarkets versus community convenience stores: the former offers a rich variety of wealth management products, each with its own characteristics; while the latter, though fewer in variety, has achieved full coverage of basic products to meet the daily wealth management needs of local residents. Uneven Development The changes in the number of institutional distributors reflect the market trend of small and medium-sized banks achieving "from zero to one" in wealth management distribution. The latest report from the China Banking Wealth Management Registration and Custody Center, "Annual Report on the Banking Wealth Management Market (2025)," shows that by December 2025, a total of 593 institutions had distributed wealth management products issued by wealth management companies, an increase of 31 from the beginning of 2025. It is understood that there are numerous rural financial institutions with significant disparities in scale, and the development of distribution business is extremely uneven. Some rural commercial banks in eastern regions already have specialized wealth management departments with a rich selection of asset allocation products. However, some rural commercial banks in other regions have only just achieved breakthroughs in distributing wealth management products "from zero to one." Overall, although rural commercial banks are limited by resource investment and channel coverage, their overall distribution performance is relatively weak, but their attitude towards expanding wealth management distribution is positive. Peng Shujun, a senior figure in rural finance, believes: "For commercial banks, externally, without wealth management business, it is impossible to meet the financial service needs of clients in the new era and achieve 'client-centric' operations; internally, without wealth management business, it is impossible to adapt to changes in financing structure and narrowing interest margins, making it difficult to stabilize income. Since 2020, the number of individual clients for wealth management products has increased by 11.905 million. If banks do not engage in wealth management distribution, the expansion of such client resources will face challenges." It is understood that some small and medium-sized banks have elevated their wealth management business to a higher strategic level. Jiangyin Bank stated in response to institutional investors' inquiries that its strategic layout for 2026 will focus on intermediary business income as the core growth engine, with a strong emphasis on wealth management business, enriching the product matrix, and strengthening online and offline collaboration. Fenggang Rural Commercial Bank pointed out that the insurance agency business has achieved "from zero to one," expanding new business in financial "intermediary" services and further enhancing the level of service to "agriculture, rural areas, and farmers." Compliance Construction Challenges With the rapid expansion of small and medium-sized banks' agency sales business, the number of agency institutions published by wealth management subsidiaries in recent years has mostly been contributed by small and medium-sized banks. However, as small and medium-sized banks expand their intermediary business and improve their wealth management ecosystem, the compliance construction of this business has become increasingly important. Su Xiaorui, a senior researcher at Suxi Zhiyan, stated to reporters that under the comprehensive implementation of the "Administrative Measures for the Agency Sales Business of Commercial Banks," small and medium-sized banks indeed face more severe challenges in compliance construction for agency sales of wealth management products compared to large banks: from a technological perspective, the technological strength of small and medium-sized banks is generally weaker than that of large banks, leading to high compliance costs; from a talent development perspective, professional compliance talents in the wealth management field tend to gather in large banking institutions; from a compliance awareness perspective, some small and medium-sized banks, driven by the pursuit of agency sales scale and short-term profits, exhibit a tendency to "emphasize sales and neglect compliance," which in turn affects internal compliance construction. Su Xiaorui pointed out that based on past experiences, small and medium-sized banks' agency sales of wealth management products are prone to the following misconceptions: first, prominently highlighting the short-term ultra-high yields of newly launched products by wealth management subsidiaries in the app to attract investors to follow suit without warning about the risk of subsequent yield cliff drops; second, lacking a full-process service awareness, believing that any issues with agency products should be borne by the product provider, and lacking continuous supervision of partner institutions. Therefore, small and medium-sized banks should abandon the rough operational model of "performance-only" and establish evaluation standards that comprehensively consider product risks, completeness of information disclosure, historical yield payment situations, etc.; refer to advanced industry experiences, comprehensively assess the core investment research capabilities of partner investment managers, the sustainability of product performance and market percentile performance, and the forward-looking nature of strategies, to promote the "premium" access of partner institutions and products; comprehensively enhance service awareness, transforming "one-time transactions" into "full lifecycle management," establishing a normalized communication mechanism with wealth management companies, and preparing for customer communication and risk warnings in advance for abnormal fluctuations. (Editor: Yang Jingxin Review: He Shasha Proofreading: Yan Jingning)