Over the past few years, the spotlight has been on the digital transformation of large and mid-sized banks. Indeed, the digital construction of large banks has gradually transitioned from the initial large-scale and all-round investment to a state of steady development. However, from a broader perspective, the momentum of digital transformation of small and medium-sized banks in the past two years cannot be ignored.
In East China, in 2021, Shanghai Rural Commercial Bank will invest 883 million yuan in technology, a year-on-year increase of 22.30%. There are 484 full-time financial technology personnel, accounting for 6.28% of the total number of employees, an increase of 29.41% over the end of the previous year.
In South China, Zhuhai China Resources Bank has established a team dedicated to data management, which has 17 people so far.
In Central China, Chongqing Rural Commercial Bank has given full recruitment rights to financial technology centers in the recruitment of scientific and technological talents.
In North China, the Bank of Beijing made it clear that basic investment in science and technology accounted for more than 3.5% of revenue each year, and scientific and technological personnel accounted for more than 6%.
These data come from the “Small and Medium-sized Bank Fintech Development Research Report 2022” jointly released by the Internet Finance (Shenzhen) Alliance of Small and Medium-sized Banks, OneConnect, and the Fintech 50 Forum at the 6th China Digital Banking Forum recently.
The report also pointed out that in the past two years, the growth rate of financial technology investment of some small and medium-sized banks has been higher than the average level of large banks. Among them, Nanjing Bank, Changsha Bank, and Chongqing Bank have performed particularly well. In 2021, the growth rate of financial technology investment will reach 54.91% respectively. %, 31.60%, 27.76%.
Small and medium-sized banks are so determined to transform digitally and move so fast, which makes people wonder what is the reason?
Four pressures to accelerate digital transformation of small and medium-sized banks
The report “Research Report on Financial Technology Development of Small and Medium-sized Banks 2022” shows that small and medium-sized banks are generally facing four pressures:
The first is the operating pressure brought about by the downturn of the real economy. Especially under the superimposed impact of the new crown epidemic, the revenue, profit and asset quality of small and medium-sized banks have both decreased, and capital replenishment has been restricted.
The second is the narrowing of interest rate spreads and the decline in profits caused by the liberalization of interest rates. In the middle of last year, the China Banking and Insurance Regulatory Commission implemented new regulations on deposit pricing, which pushed down the interest rates of small and medium-sized banks, and further narrowed the interest rate differences between large, medium and small banks. The client transfers to the big bank.
The third is the competitive pressure brought about by the sinking of the large banking business. In recent years, large and medium-sized banks have aimed at the sinking market and developed inclusive finance for small and micro enterprises. The market space of small and medium-sized banks has been squeezed to a certain extent.
Looking through the 2022 semi-annual reports of Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, and Postal Savings Bank of China, it is found that the scale and growth rate of inclusive financial loan balances of these five large banks in the first half of the year have further expanded, which are about 1.4 trillion yuan and 1.7 trillion yuan respectively. yuan, 1.11 trillion yuan, 2.14 trillion yuan, and 1.09 trillion yuan, an increase of 27.4%, 28.4%, 25.36%, 14.25%, and 13.77% over the end of the previous year. This will undoubtedly bring greater “involution” to small and medium-sized banks. “pressure.
The fourth is the technical and innovative pressure brought about by the rapid development of financial technology. Digital transformation centered on financial technology has become a top priority for the development of small and medium-sized banks. However, small and medium-sized banks will also face a series of new challenges while seizing the new opportunities of fintech development.
The superposition of various internal and external factors has accelerated the digital transformation of small and medium-sized banks.
The report shows that compared with 2021, small and medium-sized banks will make breakthroughs in data capacity building in 2022. More and more small and medium-sized banks focus on digital transformation, continue to make efforts in the field of data governance based on external regulatory requirements and internal development needs, and actively build data-driven business management models.
However, there are still obvious differences in the fintech development of different types of small and medium-sized banks. The fintech development of private banks still maintains the lead, and the fintech development of rural commercial banks continues to lag behind that of city commercial banks, and this gap will further widen compared with 2021.
Three digitalizations: reducing costs and increasing efficiency, attracting innovation and promoting vitality, and smart management
How can small and medium-sized banks do a better job in digital transformation and allow digitalization to penetrate into every capillary of the bank? OneConnect, as a financial technology solution provider, talked about the three things they have been doing in the past to help small and medium-sized banks in the process of digital transformation:
First, reduce costs and increase efficiency for small and medium-sized banks through digital operations
In the past few years, many small and medium-sized banks have been actively promoting the online operation of their business.
In terms of business process, the original manual process is upgraded to be processed by the IT system, such as payment and settlement, interest calculation, report statistics, etc.;
In terms of product services, the original large number of face-to-face manual services are upgraded to bank machine tools, such as cash deposit and withdrawal, card issuance, account opening, etc.;
In terms of customer transactions, customer transactions are online and mobile, and customers can remotely handle banking business through electronic channels such as online banking and mobile banking, such as remittance, payment, and salary payment.
These digital operation methods have greatly improved customer experience and improved bank operational efficiency. However, the process automation and operation intelligence of small and medium-sized banks need to be further improved.
Taking smart voice as an example, banks have played a lot of roles in improving their digital operations. For example, play the role of customer service to answer customer questions; play the role of a collector to remind and guide overdue customers to repay in time; play the role of a salesperson to accurately push product marketing to customers.
However, many tools currently on the market are not mature enough. When a customer asks a question, the intelligent customer service often does not match the topic, which makes people very headache. The reason for such problems: first, the intelligence level of intelligent customer service is not enough, and the strategy is not flexible; second, technology providers are required to have a deeper understanding and insight into the pain points of each link of the business.
Shen Chongfeng, chairman and CEO of OneConnect, said frankly to Leifeng.com: The market needs such a company that understands both business and technology, and can well integrate and match business needs and technology to help banks better realize digital transformation.
In the past few years, OneConnect has focused on creating over-the-top smart voice products, focusing on the financial industry, and has formed five knowledge bases, covering more than 1,600 AI service scenarios and processes, and created more than 200 quality inspection models. The AI recognition rate has reached 94%.
Previously, OneConnect built a new-generation telephone sales system for a joint-stock bank. This system not only solved the pain points of low intelligence of agents, high cost center of telemarketing, and difficult maintenance of knowledge base in the past, but also changed the previous product-based sales system. The marketing model establishes a customer-oriented full-product marketing model, which greatly reduces the cost of the enterprise and promotes sales. It is understood that after the system was launched, the text robot shunted 52% of incoming calls, and at the same time, the sales performance also increased sharply. The daily turnover of smart telemarketing exceeded 300 million.
Second, through digital management, we will bring new opportunities to small and medium-sized banks
Under the background that they are not as competitive as large banks in terms of brand and strength, how small and medium-sized banks can attract new products and promote vitality in the fierce market competition is a major problem that plagues small and medium-sized banks.
In order to cater to the market of the young generation at the C-end, many small and medium-sized banks have followed suit and launched their own banking apps like large banks.
But the result is that these apps are highly homogeneous, and most users may only open them once a month, which is simply unable to compete with large and medium-sized banks with excellent retail business performance such as Industrial and Commercial Bank of China, China Construction Bank, China Merchants Bank, and Ping An Bank. Compared with a lot of Internet companies.
Of course, it is really difficult for the APP of small and medium-sized banks to benchmark against large banks, and there is no need for small and medium-sized banks to compare with large banks. Small and medium-sized banks have closer contact with potential customers in the region, and are more familiar with regional economic characteristics, business characteristics and customer groups. It can improve the stickiness of local users and build its own moat.
But unfortunately, small and medium-sized banks have not done a good job in localized customer operations. The reason is that they lack operational experience and teams, and it is difficult to use activities to wake up users.
Financial One Account has also seen this in the past, and correspondingly launched a “smart banker” solution.
This set of solutions is derived from the successful experience of Ping An Bank’s retail transformation. It focuses on six application scenarios and core business needs of customer deposit management, new customer acquisition, target management, process management, team management, and mobile exhibition industry. It drives the entire business through a digital sales management system. Increased team productivity.
At present, this solution has been applied in many small and medium-sized bank APPs:
In East China, OneConnect helped a city commercial bank build its own equity mall in its mobile banking APP for 8 months, and the number of transaction users reached 99,000, a year-on-year increase of 241%; the cumulative equity transaction amount reached 17.2 million yuan, a year-on-year increase of 194%;
In Southeast China, OneConnect helped a city commercial bank build an APP to empower front-line marketing personnel, and cooperated in-depth in business middle-end and big data marketing. The proportion of retail loans of the bank increased from 15% at the end of 2019 to 24.4% at the end of 2021. %.
Third, control risks for small and medium-sized banks through digital operations
Acquiring customers is only the first step. For small and medium-sized banks, another very important task is risk control, because small and medium-sized banks are weaker in institutional strength and risk resistance than large enterprises.
In July this year, the China Banking and Insurance Regulatory Commission announced a data: In the first five months of this year, small and medium-sized banks accumulatively disposed of 394.3 billion yuan of non-performing loans, 107.2 billion yuan more than the same period last year.
In order to prevent risks, in the past year, small and medium-sized banks have successively launched intelligent credit products, and various technologies such as risk early warning systems, intelligent anti-fraud, big data credit rating, and risk data marts have been initially applied or promoted.
OneConnect has also launched a super brain to help customers build an intelligent risk early warning management system and realize the whole-process upgrade of risk early warning.
At the meeting, Shen Chongfeng, chairman and CEO of OneConnect, mentioned that OneConnect and a major bank launched a “super brain” to solve its “not proactive risk warning”, “warning and tracking not in place”, “data collection efficiency The three major pain points of “low” and achieved a loan risk exposure coverage of more than 13 trillion yuan. The early warning effect is 24 days earlier than the manual early warning method. The project also won the “Second Prize of Pedestrian Technology Progress Award”.
Era 4.0: Small and medium-sized banks need to change their strategies, focus on their characteristics, and create a new ecosystem of intelligent services
At present, digital transformation is no longer a multiple-choice question for small and medium-sized banks, but a must-answer question; it is not a question of “whether you want to switch”, but a question of “have to switch”. It is not only a technological revolution, but also a A cognitive revolution.
Regarding the future development direction of small and medium-sized banks, Jiang Zeshen, deputy director of the Innovation Department of the China Banking and Insurance Regulatory Commission, said that the financial industry needs to grasp three basic logics and practical directions of digitalization: First, the ultimate goal of digitalization is to enhance the bank’s own professional advantages and service capabilities, It is not limited to digitalization itself; second, the basic pursuit of digitalization is to achieve efficient, safe and sustainable bank management, not just focus on the pursuit of speed; third, the key role of digitalization is to strengthen the public trust of commercial banks, not to Assign credit or lend credit.
With the continuous onslaught of digital transformation, the digitalization process of small and medium-sized banks will continue to deepen. “Currently, commercial banks have moved from the 1.0 era of traditional manual outlets to the 4.0 digital era. Banks in the 4.0 era need to use new technologies such as big data, artificial intelligence, cloud computing, and the Internet of Things to create a new ecosystem of ubiquitous intelligent services.” Shen Chongfeng pointed out.
Hu Debin, member of the party committee and vice president of the Bank of Shanghai, said that under the new normal, small and medium-sized banks need to change their style of relying on scale and grasping the total amount. Through digitization, the traditional management process and information transmission mode are subverted, and problems are discovered in time, accurately researched, and quickly solved with data, forming a two-wheel drive of process management and result management, and promoting high-quality development.
Jia Yanjing, secretary-general of the Alliance of Small and Medium Banks, made an in-depth analysis of the opportunities and challenges of the digital transformation of small and medium banks. In her view, it has become a consensus that small and medium-sized banks can use the power of financial technology to comprehensively improve product pricing, resource allocation, data security and risk management capabilities. “Although small and medium-sized banks are currently facing certain operating pressures and challenges, they have the flexible advantage of being small and easy to turn around, and the direction of digital transformation to improve service quality and efficiency is clearer.”
Today we talk about digitization, which is no longer so mysterious. The digital channel has long been a race of thousands of sails. Large banks, small and medium-sized banks have all advanced rapidly in the digital channel, reducing costs and increasing efficiency through digital operations, and promoting innovation through digital management; Control risks through digital operations. Large state-owned banks and joint-stock banks, relying on their advantages in resources, technology, and talents, have already taken up the banner of digital transformation and took the lead in sailing out; now, small and medium-sized banks are also stepping up their efforts to sail to their own and unique digital shores.
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