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BEIJING, Oct. 4 (Xinhuanet) -- China's financial sector has seen some seismic changes in the past few years as many financial services are going online. From payments to wealth management, China's many internet firms are pushing for financial innovations that challenge traditional banks. However, big banks are now fighting back.
China's top two internet firms Tencent and Alibaba are now aiming to take over the financial sector. Tencent launched Webank in 2014, and Alibaba set up Mybank this year. They don't have any brick-and-mortar stores, and their businesses are done entirely over the internet. Many believe that with their reputation of technology, they will surely beat traditional banks. But banking insiders told me, that the war between new comers and traditional players, has only just begun.
Albert Chan, lead of Financial Services, Accenture Greater China said:"Digital transformation in the financial services industry, first of all, is not about technology. If you ask me about the traditional banks in China, most of them master the same technologies that the internet companies master."
Consultancy Accenture is providing digital and online solutions for major Chinese banks, and many of them are quite proactive in trying new technologies.
Today some banks are even implementing with innovative ways to use digital recording and big data analysis to optimize their user experience by documenting whether their customers are either happy, or not.
These devices certainly look cool, but the biggest challenge that banks are facing from internet competitors come from the area of lending, which is in the core of retail banking. New comers like Webank and Mybank claim to be more efficient, convenient to use, and, more willing to lend to small and micro enterprises.
These claims are directly challenging the inefficiency and risk-averseness of big traditional banks. Some are trying to make a change. ICBC, China's biggest bank by asset, launched its internet financing center on September 29th, with similar operating model as Webank and Mybank.
"ICBC has 200 million internet banking users, and we hope to be a driving force in the era of internet plus," said Jiang Jianqing, Chairman Industrial And Commercial Bank of China.
Both the chairman and the president of ICBC present at the press conference believe the internet financing center is the cornerstone of the bank's internet strategy. However, such a major department is not launched in the CBDs of Shanghai or Beijing, but rather here in Hefei, a second tier city in inner China. Because when it comes to internet, geography is no longer a priority.
The focus is now on user data. Without going face to face with customers, ICBC will gather online borrowers' credit history and other transaction data, before deciding to make a loan. Experts say that implementing such a model copied from internet firms, could be challenging for big banks.
"Data are owned by different departments, very difficult for them to share data. In the new big data world you can't separate market data from risk data from transaction data. All these need to be analysed," said Albert Chan.
The director of ICBC's internet financing center is confident. Xiong Yan, director of ICBC Internet Financing Center said:"The center consolidated many of our existing departments and they now operate in one single platform. In fact, ICBC has already set up a customer database for nine years. We are not followers, we are pioneers in this regard."
The director also seems confident about the ICBC's risk control. She says they have over 2000 credit analysts guarding the quality of their internet loans. As bad loan ratios rise for major Chinese banks this year, trying to control internet credit risks becomes a major task.
(Source: CNTV.cn)
