China’s Big State-owned Banks Tout Fintech Endeavours

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The mid-year financial reports of China’s big state-owned banks point to heightened efforts to use the latest fintech applications to improve business operations.

Bank of China’s (BOC) mid-year report makes reference to the term “fintech” (金融科技) on at least six occasions, pointing to expanded application of fintech in the areas of wealth management and private banking services, as well as the promotion of all new “smart investment consulting products.”

BOC’s Hong Kong subsidiary has emerged as a key hub for the bank’s fintech undertakings, with the launch of new mobile banking apps, the incorporation of smart teller services, and ongoing increases in customer and transaction numbers via electronic channels.

Industrial and Commercial Bank of China’s (ICBC) mid-year report says that the lender has its eye on “customer group, distribution and behavioural changes in the fintech era,” while Agricultural Bank of China (ABC) said that it is expanding the scope of its fintech applications and “actively embracing fintech.”

ABC touted the accelerated pace of innovation in supply chain finance and mobile payments, as well as its full use of new technologies such as big data and clouding computing. The bank is already applying blockchain technology to the field of supply chain financing.

China Construction Bank (CCB) is the only big state-owned bank to have launched its own fintech subsidiary to date, establishing Jianxin Jinke (建信金科) in April 2018 as a fully invested subsidiary.

CCB says it is using a “digitised management mentality” to optimise risk control models and ensure the ongoing healthy growth of financial inclusion operations, as well as applying artificial intelligence to the improvement of automated customer services.

Xue Hongyan (薛洪言), an online finance analyst with Suning Finnce, said to Securities Daily that China’s listed banks have proven eager to spend big on fintech since the start of 2018.

Ping An Bank saw a 165% YoY rise in its IT capital expenditures in the first half, as well as a rise of over 25% in tech personnel (including contractors).

Xue said that China’s fintech sector will need to expand international cooperation and openness in order to achieve more rapid progress, outlining three key recommendations:

i) Use of international organisations and platforms to strengthen research and exploration of fintech;

ii) Learn from the experiences of advanced economies to strengthen innovation in regulatory systems;

iii) Maintain an open “win-win” mentality and deepen international cooperation.

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