Core Viewpoint - The recent trend of wealth management subsidiaries of banks expanding their distribution channels through partnerships with local banks is driven by both market and regulatory factors, aiming for deeper collaboration beyond simple distribution [1][3]. Group 1: Distribution Channel Expansion - Wealth management subsidiaries are increasingly partnering with local small and medium-sized banks for distribution, enhancing the reach of wealth management services into county-level markets [1][2]. - The number of small and medium-sized banks participating in distribution partnerships has been rising, with several banks like Guangzhou Bank and Fujian Haixia Bank signing agreements with wealth management subsidiaries [2]. - Major state-owned banks are also actively engaging in distribution partnerships, indicating a broadening of cooperation across various bank types [2]. Group 2: Transformation to Wealth Management - Small and medium-sized banks are accelerating their transformation from traditional lending to wealth management, driven by regulatory changes and market conditions [4]. - Data shows significant growth in the distribution scale of wealth management products among these banks, with some like Changshu Bank reporting a nearly 50% increase in distribution scale [4]. - The collaboration with licensed wealth management subsidiaries is seen as a practical choice for small and medium-sized banks to maintain customer relationships and generate intermediary income amidst narrowing interest margins [4]. Group 3: Challenges and Regulatory Impact - The upcoming implementation of new regulations on distribution will impose stricter requirements on sales processes, customer suitability management, and cooperation institution management, presenting challenges for small and medium-sized banks [5][6]. - The new regulations will increase compliance costs and complicate customer risk assessments, necessitating upgrades in risk control systems and digital capabilities [6]. - Experts suggest that the focus of distribution partnerships should shift from scale to quality, emphasizing the need for a dual empowerment model between wealth management subsidiaries and local banks [6].