“We firmly believe that the high-quality development of the financial services industry requires the deep integration of finance and cutting-edge technology.”<>i/
Mike CHEN, CEO of China Everbright Bank, Hong Kong Branch
FinTech has a key role to play not only as a disruptor of the financial services industry, but as a means by which traditional businesses can renew themselves and their relevance, according to Mike CHEN, CEO of China Everbright Bank Co. Ltd, Hong Kong Branch; Vice President of The Hong Kong Institute of Bankers.
Founded in Hong Kong in 1983, the China Everbright Group Limited is a large comprehensive financial holding group engaging in domestic and overseas financial and industrial businesses with full financial licenses covering banking, securities, insurance, asset management, trust, funds, futures, financial leasing, internet finance. It also has involvement in environmental protection, tourism, pension, pharmaceuticals, new energy, high technology and airline leasing and other industries.
“China Everbright Group Limited has formulated a new medium- and long-term development strategy, with three strategic transformation directions - ‘agility, technology and ecology’ - around the strategic goal of building a world-class financial holding group with global competitiveness,” Chen says.
Explaining the direction and aspiration of the Group’s take on technology, he says the aim is to use big data to build an agile platform and open up the IT architecture to drive sustainable growth.
China Everbright Bank was established by the Group in 1992, with headquarters in Beijing. It has since gone on to build China's largest open payment platform, Cloud Payments. Today the platform covers more than 4,000 bill payment service categories, with participation by over 300 payment channel partners and used by more than 200 million transaction users.
“We firmly believe that the fast-paced and high-quality development of the financial services industry requires deep integration of finance and cutting-edge technology,” Chen says.
Hong Kong and beyond
Over the past five years, China Everbright Bank has implemented its globalization strategy with significant milestones. The first overseas branch commenced operations in Hong Kong in 2013, and South Korea, Europe, Luxemburg and Australia are now having footprints established and branches set up. FinTech is playing an important role in its international expansion.
He adds: “It is not only a bridge for communication, but also a starting point for building a cooperative and collaborative platform, and a fulcrum for integrating into the local market.”
In November 2018, China Everbright Bank Hong Kong (CEBHK) together with the Electronic Payment Services Company (Hong Kong) Limited, which is a consortium of 20 licensed banks in Hong Kong, agreed to extend the Cloud Payments platform by adding bill payment merchants from Hong Kong. During the first phase of collaboration, it enables customers residing in China and linked to China banks accounts to pay to Hong Kong-based merchants via Cloud Payments, which enhances the value proposition of Cloud Payments. However, compared with the risks that have traditionally existed in the financial sector, Chen believes those deriving from the increasing use of FinTech are often more concealed, systematic and contagious. The impact on banks is therefore more difficult to predict but, he says, CEBHK is constantly taking steps to prevent potential damage or disruption to the interests of the banks and its customers.
“We continue to strengthen our information system control and information security management, standardize our risk management regarding financial science and technology innovation, gear up our contingency plans in case of disruptions, and build a robust firewall for the cross-infiltration of financial risks and technology risks.” This, he adds, is the bottom line of financial risk management.
What FinTech delivers
Despite all these developments, Chen does not believe FinTech will alter the fundamental nature of banks. “Financial technology is a channel, a means that changes the scope of financial transactions, but does not change the nature of the transactions.”
However, Chen notes FinTech can help banks transform, by making use of technology to introduce new and upgrade existing products and services, and, as a result, attract new users.
These new users can also benefit greatly with the data collected and analyzed by banks. The new possibilities will enable banks to provide more convenient and more options. For example new services designed for the underbanked or small-and-micro businesses that may face difficulties in financing.
In addition to creating new sources of revenue, FinTech itself can be a tool to enhance productivity and efficiency in operations and different aspects of business processes, from customer relation to sales and marketing, and from auditing to risk management.
“At CEBHK, we will continue to use technology to streamline our operations, strengthen our collaboration with technology companies, and harness the burgeoning technology ecosystem in China,” says Chen. “Responding quickly to FinTech and the new demand in the market is what we are doing.”
Meeting the demand for skills
Finding sufficient FinTech talent in the local market is a challenge, Chen admits. He says he would like to see more robust planning to create a comprehensive and structured talent development program.
However, to succeed in a FinTech-driven future, young people will need not only cutting-edge information technology, finance, business and sales skills, he suggests, but also an ability to think critically and creatively. In addition to offering courses in FinTech, colleges and universities should aim to connect their students with market players. Senior corporate management and executives should be encouraged to take up more active roles in giving lectures and sharing their insights and best practice with students from time to time.
Educational institutions could also join up with enterprises by establishing joint production and research labs, Chen concludes.
