Fintech Investment by Ping An Bank and China Merchants Bank Surges in 2018

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The latest round of financial reports from China’s listed banks points to a surge in fintech-related investment.

As of 25 March at least five Chinese A-share banks have released their annual reports for 2018 including Ping An Bank, China Merchants Bank, Shanghai Pudong Development Bank, Bank of Changsha and Jiangsu Jiangyin Rural Bank.

According to these reports Ping An Bank’s IT-related capital expenditures surged by over 80% YoY in 2018, while China Merchants Bank (CMB) saw a more than 30% rise in IT investment.

Ping An Bank’s IT-related capital expenditures increased by 82% to reach 2.575 billion yuan, while the bank’s tech personnel expanded by more than 44% compared to the end of the preceding year.

CMB’s 2018 IT expenditures rose 35.17% YoY to reach 6.502 billion yuan, accounting for 2.78% of the bank’s operating revenues.

Other banks are stepping up their fintech adoption efforts, with Shanghai Pudong Development Bank launching the Chinese banking sector’s first API open banking initiative in 2018 as well as an integrated virtual teller machine (VTM).

Bank of Changsha has established a fintech services centre, and its 2018 annual report indicates that fintech facilitated an increase in credit of 7.046 billion yuan, while Jiangsu Jiangyin Rural Bank expanded its online financial offerings with the launch of “Jiangyin Online,” (江银在线).

Domestic analysts say that reducing labour costs and improving customer experience are two of the main considerations of banks when pursing fintech investments.

Li Jianhong (李建红), CMB chair, said that in addition to using technology to improve efficiency and reduce costs the bank is also focused on the use of fintech to “remould” its commercial model, with the ambition of becoming a “fintech bank with the best customer experience.”

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