Chart of the Week: Chinese bank settlement fees fall as nonbanks steal share

However, the downtrend is likely to stabilise soon.

Settlement fees as a proportion of the total fee income held by Chinese banks have steadily fallen from 2011 to 2017 amidst the explosive growth of online payments pioneered by fintech titans Alibaba and Tencent, according to S&P Global Market Intelligence.

The amount of nonbank third-party payments have ballooned by 480% from 2014-2017 as technology has overhauled consumer behavior in the country, forcing banks to keep up pace with the breakneck pace of change. However, the heyday of China's payment titans appear to be nearing its end as homegrown lenders start gaining traction.

"We believe the falling growth in payment and settlement fee income will likely stabilise. This is because the nonbank digital payment service providers have already saturated the small ticket transactions, further explosive growth in this area is unlikely," the report's authors said.

Also read: Banks are putting up a fight against China's tech titans

In fact, since Alipay Mobile and WeChat Pay launched, bank card penetration rates have plateaued. 

Morevoer, S&P notes that business and the general public in China still continue to place their trust in banks with regards to large transaction settlements whilst third-party players are left to scramble for small-ticket transactions.