How Small and Medium-sized Banks Implement Sustainable and Healthy Development

In recent years, a series of major changes have occurred in the external operating environment of the domestic banking industry, and a new competitive pattern is bound to be formed in the Chinese banking industry. As a small and medium-sized bank, it is necessary to follow the law of development of the banking industry, but also to combine their own reality, to adapt to the internal and external constraints. Small and medium-sized banks should scientifically study the external business environment, rationally analyze their own business management capabilities, levels and stages of development, adhere to the basic direction of serving the real economy, segmentation of markets and customers, clear market positioning, give full play to their comparative advantages, and unswervingly take the road of scientific development with specialization and differentiation. Only in this way can we realize sustainable and healthy development and make our own contribution to building a moderately prosperous society. Insist on the development of specialization and differentiation The significant changes in the external environment have determined that the development mode and path of small and medium-sized banks must be transformed. The development trend shows that banks are experiencing, and will certainly experience, the transformation process from capital-consuming to capital-intensive, from rough operation to refined operation, and from homogenization to differentiation and specialization. The scientific development of small and medium-sized banks on the road of specialization and differentiation is not only the strategic guidance for small and medium-sized banks by the regulatory authorities, but also the inherent requirements for small and medium-sized banks to realize the interests of shareholders, fulfill their social responsibilities and reflect the value of their employees, and it is the inevitable road for the sustained and healthy development of small and medium-sized banks. For a long time, no matter large banks, or small and medium-sized banks, the domestic banking industry in the business operation of the phenomenon of homogenization. As a small and medium-sized banks, if you compete with large banks for homogenization, you can only get a share of the pie, can not be bigger and stronger, and always in a marginalized state; if you take the characteristics of the differentiation, differentiated business model, it is possible to do fine and strong. The United States banking industry, for example, the United States, the top 100 banks, comprehensive banks accounted for only 20%, more specialized banks, have their own operating characteristics and comparative advantages. It can be said that the lack of domestic is not a big bank, the lack of specialization, differentiation, specializing in small and medium-sized enterprises, community, "three rural" and other market segments of the characteristics of the bank services. Small and medium-sized banks to take the road of differentiation and specialization, to strengthen the market and customer segmentation, adhere to their own market positioning. The market positioning of Huishang Bank is "based on local, support small and medium-sized, and serve the public". In recent years, it has been exploring and making efforts to differentiate and characterize its operation mainly in three aspects: specialization, refinement and branding. Specialization is the establishment of specialized institutions, professional people to do professional things, to provide financial products and services at a professional level. For example, in the small business business, we have accelerated the establishment of small business operation centers and the construction of specialty sub-branches. Refinement mainly refers to the transformation of the service mode and marketing service mode, shifting from roughness to refinement and forming a marketing service mode with its own characteristics. Branding is to form its own characteristics and brand in products and services to enhance visibility and expand influence. For example, in terms of small business, since its establishment, it has been focusing on building the "Little Giant" and "Eagle" service brands. In 2012 alone, it cultivated 893 "small giant" enterprises and 3,326 "young eagle" enterprises. It should be noted that small and medium-sized banks to take the road of specialization and differentiation, to create a special bank, is a systematic project, need to create a good external environment. For example, the implementation of more differentiated regulatory policies for small and medium-sized banks, strengthen the policy support for small and medium-sized banks, strengthen the effective guidance for small and medium-sized banks, small and medium-sized banks to promote the differentiation and specialization of the operation, so as to create a good external environment for the healthy and orderly development of small and medium-sized banks. Explore integrated operation and enhance financial service capacity From the history of international banking development, most of the financial systems in western developed countries have experienced several changes and iterations of separate and mixed operations. In general, the international financial industry is moving towards integrated operation. From the perspective of the history of domestic financial development, after 1993, China practiced "separate operation and separate supervision", i.e., banks are not allowed to engage in non-banking financial business such as securities, insurance and trust. In recent years, many banks, especially large state-owned banks, national joint-stock banks have set up financial holding companies, involved in trusts, securities, insurance, funds, financial leasing and other business areas, the trend of integrated bank operations has been called for. For example, Everbright Financial Holding Group and Ping An Financial Holding Group already have full financial licenses. Some city commercial banks are also gradually exploring and involved in integrated operations, such as the Bank of Beijing (601169, stock bar) initiated the establishment of consumer finance companies and insurance companies, the Bank of Nanjing (601009, stock bar) participation in foreign city commercial banks and non-bank financial institutions. In terms of Huishang Bank, it has also been actively exploring in integrated operation in recent years. With Chery Automobile Company *** with the formation of Chery Huiyin Automobile Finance Co., Ltd. as the main sponsor initiated the establishment of the Wuwei Huiyin Village Bank, is also actively promoting the initiation of the establishment of the Jinzhai Huiyin Village Bank, the preparation for the establishment of the financial leasing company's work. We have made certain achievements and accumulated some experience in integrated operation. As far as the development trend of the domestic financial industry is concerned, the integrated operation of commercial banks will certainly continue to evolve in the future, and the mode of operation and the content of operation will also continue to change. First of all, macroscopically speaking, the domestic economic development from the external to the connotative growth mode of change, China's financial system to the bank as the main body, the traditional indirect financing methods are difficult to meet the various types of direct financing needs, and to provide direct financing of various types of market players are still lack of strong resources to support and serve the ability; from the microscopic point of view, the customer's demand for financial services is more personalized, comprehensive and integrated, the level of demand The increasing level of demand requires banks to provide comprehensive financial services. Secondly, the profit model of China's banking industry, which is highly dependent on credit spread income, has not been fundamentally changed, and the development mode of "credit expansion-capital replenishment-credit expansion" is unsustainable, especially in the context of tightened supervision and accelerated reform of interest rate marketization, the banking industry is facing the urgent pressure of business transformation. In this sense, banks rely on their own strong customer base and business channels, and actively explore integrated and hybrid operations, including banking, securities, insurance, funds, trust, financial leasing, etc., to give full play to the advantages of business synergy, linkage, integrated services, to develop sources of non-interest income, optimize the income structure, and the inevitable choice of banks to change the mode of profitability, and accelerate the transformation of their own operations. Although economic and social development for the banking industry to carry out integrated operation has brought opportunities, but China's banks engaged in integrated operation is still facing many constraints. For example, the development of the financial market is immature, the financial ecosystem is not sound enough, the relevant laws and regulations can not keep pace with the development of integrated management, can not ensure that financial supervision is reasonable, standardized and effective implementation of the deposit insurance system as well as the protection of the rights and interests of financial consumers has not been established and so on. In terms of the banks themselves, commercial banks, especially small and medium-sized banks, mainly urban commercial banks, will be constrained by their own ability and management level in carrying out integrated operation. One is the lack of sufficient customer identification and cross-marketing capabilities, which makes it difficult to realize the segmentation and ****enjoyment of customer resources among subsidiaries, and unable to give full play to the potential advantages of integrated operation. Secondly, the lack of cross-field operation and management capabilities has led to a disconnect between operation and management capabilities and business development, making it difficult to deal with problems arising from the integrated operation. Third, insufficient risk management and control capabilities, and integrated operations may magnify other types of risks such as reputation risk, liquidity risk, and connected transactions. Fourth, insufficient talent reserves for cross-business field operation, and lack of a talent team for cross-market, cross-business and integrated operation. In promoting integrated operation, small and medium-sized banks should fully consider regulatory policies as well as their own operation and management capabilities and levels, and should not go beyond their own specific development stages. On the one hand, small and medium-sized banks can actively promote and actively explore integrated operation and launch their own financial leasing companies, fund management companies, trust companies, etc. with holding capacity under the premise of regulatory policies and their own capacity. On the other hand, in the case of their own capacity and level is not yet available, actively and asset management companies, trust companies, securities companies and other non-bank financial institutions to carry out complementary business collaboration, borrowing the ship to the sea, not for all, but for use. Business cooperation with the same industry can not only integrate external resources, expand business scope and enhance its own capabilities, but also reserve experience and talents for the development of integrated operation. Accelerating business transformation and enhancing business development In recent years, forced by changes in the external business environment, the domestic banking industry has been focusing on promoting business transformation. State-owned banks, national joint-stock banks and other advanced peers have been exploring business transformation for a longer period of time and have made remarkable achievements. Small and medium-sized banks' main business is still in the traditional market, and their main source of income is still in the traditional business. If they do not develop emerging businesses, the room for the survival and development of small and medium-sized banks will be very narrow. Moreover, the economic restructuring, the growing wealth of the population, and the development of the direct financing market also provide opportunities and room for the development of emerging businesses for banks. While seeing the opportunities, we also need to see that in the development of new businesses and emerging markets, compared with large and medium-sized banks, small and medium-sized banks still have a lot of constraints, such as regulatory policies, their own capabilities and other aspects. In the regulatory policy to support and allow at the same time, city commercial banks also need to strengthen their own capacity building. To promote business transformation, first of all, we must correctly handle the relationship between business development and business transformation, and the relationship between traditional business and emerging business. Traditional business is the foundation, emerging business is the direction. Business development is the foundation of business transformation, and business transformation is the direction and prospect of business development. Business transformation is business development at a higher level and at a higher level, and it is the trend and direction of the bank's business development. Business development and business transformation are mutually coordinated. We can't give up our advantages to find advantages, and we can't talk about transformation apart from development. Development and transformation are complementary and mutually reinforcing, and we should transform in development, create resources and conditions for transformation through development, and shape the core competitiveness of development through transformation to enhance the quality and efficiency of development. Compared with large and medium-sized banks, city commercial banks should pay more attention to specialization and differentiation in promoting business transformation, and come out of a road of business development and business transformation that is both consistent with their own characteristics and compatible with their own capabilities. To accelerate business development, while adhering to the development of traditional business, vigorously develop emerging business, and gradually form a traditional business, intermediate business, emerging business **** with the development of the business pattern. To do fine and strong traditional business, consolidate the traditional competitive advantages, and provide support for the sustained and stable growth of business. Adhere to the principle of prioritizing benefits and expanding and optimizing intermediate business. Under the premise of controllable risk, clarify the direction of emerging business development and the main attack point, focus on expanding risk-controllable, good benefits, development potential of the business, and do a good job of emerging business. In recent years, Huishang Bank has also been actively promoting and accelerating its business transformation. The main goal and direction is to change from a capital intermediary to a comprehensive financial service provider; to change from traditional businesses such as deposits and loans to emerging businesses such as traditional and investment banking; to change from on-balance-sheet businesses to both on-balance-sheet and off-balance-sheet businesses; and to vigorously develop intermediary business and diversify its income from relying mainly on deposit and loan spreads. Specific practices are summarized in three diversifications: first, diversification of liability sources, second, diversification of asset applications, and third, diversification of income sources. First, to stabilize the cost of liabilities as the core, to diversify the sources of liabilities. Bank liabilities are increasingly showing a trend of diversification, financial management and diversification, and the issuance of financial bonds, interbank deposits and other forms of active liabilities will gradually become an important means for banks to increase liabilities and enhance liquidity. We insist on focusing on low-cost liability business with one hand and active liability business with the other. Secondly, we are focusing on improving pricing levels and diversifying the use of assets. With the process of "financial disintermediation", direct financing will take up a more important position in the scale of social financing, and the asset structure of banks, which used to be dominated by credit assets, is bound to change. To this end, we will gradually form a diversified asset utilization pattern based on credit and a variety of investment methods, while increasing the scale of assets and improving the efficiency of asset utilization. Thirdly, we have diversified our sources of income by strengthening our service capacity. With the advancement of financial disintermediation and interest rate marketization, banks' income will be further diversified, and they will no longer and cannot rely solely on deposit and loan spread income. At present, banks generally emphasize intermediate business that consumes less capital and takes up less capital. It is foreseeable that in the next few years, China's banking industry will certainly enter a period of accelerated transformation of intermediate business. Actively developing intermediate business and accelerating income diversification will be the sure way for banks to promote profitable growth. To this end, we have been vigorously developing intermediate business, adjusting our income structure and realizing the change from "spread-based income" to "income diversification". On the one hand, we will actively apply for various business qualifications, enrich business varieties, improve service functions, expand product coverage through comprehensive services and cross-selling, and improve the profit-generating capacity of various businesses. On the other hand, while continuing to develop the traditional advantageous business, we should vigorously develop the investment banking finance, interbank finance, note finance, supply chain finance and other emerging businesses, and strive to improve the scale and efficiency of emerging business, transformation business and intermediate business, so as to gradually realize the diversified income pattern. (The author is the president of Huishang Bank)