(Yicai Global) Feb. 7 -- Two Chinese private lenders are going fully digital and suspending their cash businesses within the next few months, taking the country a step closer to becoming a cashless society.

NewUp Bank will no longer provide cash deposit and withdrawal services from automatic teller machines and from its brick-and-mortar branches from March 1, the Liaoning, northeastern Shenyang province-based bank said last month. And Zhonguancun Bank will follow suit from April 1, the Beijing-based bank also said in January.

Enhanced digital services will extend the reach of regional lenders beyond that of their brick-and-mortar outlets, an industry insider said.

Mobile payments are becoming increasingly popular. Mobile banking transactions were up 58 percent in 2020 from 2019 at 191.9 million, according to the China Banking Association. And remote transactions were up 14.6 percent over the period to 370.9 million.

The two lenders might be intending to transform into internet-only banks which can operate nationwide, whilst regional banks are restricted to their local area, the insider said. Also, the asset-light business model of online banks is very attractive to private banks.

Privately run banks need to invest more in technology and build online operational modes in order to attract customers with better products and experience, said Yang Xinjun, president of Zhonguancun Bank which is based in the capital’s hi-tech hub Zhonguancun. Over 60 percent of the bank’s business was done online as of July last year, Yang said earlier.

Editors: Tang Shihua, Kim Taylor