How should the retail business of regional commercial banks be successfully transformed

How should the retail business of regional commercial banks be successfully transformed

In the current domestic banking retail business reform, how many small and medium-sized banks choose will have a far-reaching impact on the future industry structure.

Most city commercial banks and rural commercial banks are usually called small and medium-sized banks. In fact, from the perspective of regional market share, they are all "local big banks", and some banks are also local "leading banks". For example, Shunde Rural Commercial Bank has a market share in Shunde that exceeds the sum of the five banks that established diplomatic relations between workers and peasants. From the perspective of "local big banks", we can clearly see the advantages and potential of banks and find a feasible way to improve and develop.

Why should we pay attention to the transformation of retail business?

First of all, retail business is the foundation of sustainable development of regional banks. Retail business mainly serves the vast number of natural persons or small and micro enterprises, and has the characteristics of dispersion, stability, weak cycle and low capital occupation. Comparing China Merchants Bank, which is the leading retail business in China, with CITIC Bank, which is good at corporate business, we can see the advantages of retail business transformation. At the end of 20 16, the assets of China Merchants Bank and China CITIC Bank were similar, with 5.94 trillion and 5.93 trillion respectively. In terms of operating income and net profit, China Merchants Bank is higher than CITIC Bank by 55.2 billion and 20.5 billion respectively. In terms of efficiency indicators, whether ROA or ROE, China Merchants Bank is also significantly ahead of CITIC Bank. For regional banks, the concept of "the retailer wins the world" is also applicable.

Second, the retail business is the basis for the development of regional banking business. In the traditional core business areas of banks, such as payment, wealth management and loans, the Internet financial platform has constantly attacked the city and plundered the land. Take payment as an example. As of the end of the first quarter of 20 17, Alipay and Tencent Finance, two Internet giants, accounted for more than 93% of the payment market share. The counterattack of regional banks is limited by their own strength and often appears as the capital channel of Internet giants. Once corporate customers are not caught, retail cooperation channels are limited and risk control ability is lost, regional banks will be very passive.

Third, retail business is the touchstone to test the strategic strength of regional banks. Many regional banks hope that the retail transformation will be "short, flat and fast". If there is no obvious effect in the short term, they will be suspicious, stagnant or even retrogressive. Retail business is actually a relatively basic work, emphasizing the accumulation of wealth and thin development. China Merchants Bank, for example, has been deeply involved in retail since its establishment. With the accumulation of more than 20 years, it has a deep customer base and a retail culture that is difficult for peers to replicate. Therefore, to develop retail business, regional banks need to accurately grasp its internal development laws and characteristics and maintain strategic strength.

Retail transformation is the appearance, and the bottom change is the key.

The first is the change of economic structure. When consumption gradually becomes the main engine of economic growth, the corresponding retail financial service model will inevitably receive more attention, as evidenced by the changes in bank income structure and customer structure in the past two years. Facing the adjustment of economic structure and industrial transformation, it is the general trend for the banking industry to transform into retail.

The second is the change of business model. Mobile Internet technology has broken the boundaries between time and space and blurred the industrial boundaries. As the field with the deepest penetration of new technology, new competitors in the field of bank retail business emerge one after another. Accelerating the in-depth application of financial technology and promoting online transformation is the trend of regional banks in the future industrial 4.0 era.

The third is the change of customer behavior. After growing up in the internet environment, I have a natural resistance to physical outlets, and my consumer demand is highly dependent on digital channels, pursuing socialization, personalization and diversification. If regional banks can't change with customers' behavior habits, it is inevitable that their outlets will be "empty".

What should regional banks do?

The first is to build a mobile platform. In recent years, banks have generally upgraded their Internet channels. On the basis of the original electronic payment, mobile service platform, mobile banking, direct banking, WeChat banking and other platforms have gradually become the standard for banks to develop Internet finance business. Compared with traditional physical channels, these mobile platforms have no heavy operating expenses and can provide customers with more convenient, more favorable and wider services.

The second is to attach great importance to operations. These mobile platforms that came into being at the historic moment are mostly tepid in reality. For many regional banks, direct banking is the fashion at present, but it is a pity to abandon it, just can't find a suitable operating model. Mobile banking is like a leg. Simply moving the counter business to the mobile phone has not substantially changed the risk control, operation process and UI behind it. The reason is that the mobile platforms of many regional banks tend to focus on R&D, while ignoring the operation, which can be described as "a good skin, but no precious soul". Under the trend of mobile internet, regional banks should attach great importance to the operation of mobile platforms as the main position and channel for customer service and business operation, rather than an offline extension.

The third is the open scene service. In the Internet era, only by building an open scene system and improving the scene service ability can regional banks give full play to their greatest advantages in the layout of Internet channels. Regional banks should actively enrich the scenarios, explore the new mode of "outlets+bank APP+ scenarios" to acquire customers, and make customers easily experience rich financial products through online and offline omni-channel integration.

Regional banks can become the transcendence of financial technology.

First of all, regional banks should use financial technology to amplify their geographical advantages. First of all, block banks are equipped with relatively perfect and dense outlets and marketing channels in their business areas, which have geographical advantages compared with large banks. Secondly, small and medium-sized banks are closer to potential customers than big banks in traditional business areas, with higher emotional recognition and easy business development. Thirdly, regional banks are rooted in the local area, familiar with the regional economic environment and closely related to the local government, which is more conducive to controlling resources. Regional banks should use financial technology to quickly cut into local vertical areas and customer groups, and strive to gain advantages in personal retail and small and micro businesses.

Second, regional banks should return to the customer source to think about the problem. The innovation of Internet financial products of big banks pays more attention to traditional risk control and business processes, which is relatively heavy and slow in transformation; However, regional banks have short process, high decision-making efficiency and light burden, so it is easier to think from the customer's point of view, and even build a new banking platform that highlights the customer experience from scratch.

Third, regional banks should cooperate well in financial technology business. Compared with large state-owned banks, regional banks have obvious gaps in their own scientific and technological talent resources. The feasible way is to strengthen cooperation with external financial technology companies, make up for their shortcomings at the lowest cost, enjoy technology dividends and reduce trial and error costs. At present, Ping An Finance, Yitong, Xingye Digital and other companies have exported their technical and financial capabilities to regional banks, which is equivalent to pure technology companies. They know more about banks and customers. It is foreseeable that such cooperation will become the mainstream. (Original title: the path of retail transformation and upgrading of regional banks: with the help of financial technology, the author works for Ping An Financial Account, and this article does not represent the company's point of view. )

Extended reading:

One of the best transformation directions of city commercial banks: in-depth coverage of retail banks

At present, the retail credit business of city commercial banks accounts for a low proportion of total assets, which is basically around 10%, which is significantly lower than that of state-owned banks and joint-stock banks. The non-interest income of city commercial banks is generally lower than 20% of that of city commercial banks, and also significantly lower than that of big banks and stock banks.

In the case of limited scale drive, city commercial banks must find new performance drivers. When the company's business is obviously restricted by outlets and cannot be carried out in different places, and the integration of peers and the scale of investment are obviously restricted by supervision, the growth of traditional credit business is also obviously restricted, and city commercial banks must turn to high-yield spread business and non-interest business for growth.

Except for mortgage, most retail businesses have high returns, which can be achieved through risk control and business management. On the other hand, non-interest business can also achieve high growth in business income with low scale growth and low capital consumption. Generally speaking, retail business is one of the best directions for the transformation of city commercial banks.

This paper gives the corresponding transformation strategy: the current business model: retail drives the public, direct banking. Future development: customer-centered in organization and one-stop service; Risk control: non-traditional, big data risk control to solve the risk problems of small and micro enterprises and individuals; Business layout: promote retail business such as small and micro individuals; Technical trend: customer portrait, convenient process.

The new trend of retail business and the transformation of city commercial banks

1. At present, there are three new trends in retail industry:

(1) Deep integration of big data and retail banks

The customer management platform built by Wells Fargo is actually the prototype of this combination of big data and retail business. By introducing social and consumption data other than the user's bank account data into the customer management platform, deep mining and even efficient mining are carried out by using deep learning related technologies to establish clear user portraits and realize precise marketing.

One problem with this implementation is the confidentiality requirements of customers for their information. According to Accenture's research, 67% of customers around the world are willing to provide more personal data to banks in order to obtain better services and products. At the same time, most customers have reservations about bank marketers using their personal data to launch "more targeted" or "personalized" services. Therefore, the problems of information desensitization and supervision need to be improved.

(2) Electronic banking and even mobile banking are becoming more and more popular.

In foreign countries, for many customers, especially the younger generation, the financial services provided by Google, Apple, Facebook and Amazon (referred to as "GAFA") have basically replaced the role of traditional financial institutions. In China, Alipay, WeChat/Tenpay, lufax and other platforms have basically covered most of the services that young people can demand for finance. Starting from the payment channel, the technology giants actually declared war on the outlets of traditional banks and began to compete for valuable payment data.

Of course, banks are not without opportunities. After all, technology companies are not credible in terms of customer data protection and personal privacy. Therefore, while catching up with online products and innovating offline products, banks can also give consumers enough attraction in terms of security and confidentiality.

(3) Interpersonal communication is becoming more and more important.

Although banks can indeed provide customers with smart investment, pocket banking and other services to simplify the process and reduce costs. However, in complex businesses such as credit and complaints, customers also want manual services. If this complex business is figured out by customers themselves, its learning cost is high and the process is inconvenient. Therefore, complex business always needs high-quality human services.

2. Discussion on the transformation of city commercial banks

The transformation of city commercial banks is imperative.

On the one hand, traditional city commercial banks take scale growth as the core driving factor of profit, and achieve rapid growth through inter-bank financing and bond investment. However, the new regulatory policies and trends limit the scale growth of city commercial banks from the overall scale growth and the proportion of interbank financing. The performance has been shown in 17 city commercial banks 1 quarterly report, and the profit growth of city commercial banks whose scale growth rate has dropped will no longer be bright.

On the other hand, city commercial banks, as deeply bound to the local economy, are convenient to carry out retail banking business for local small and micro enterprises and individual customers, and can learn from the successful experience of Wells Fargo to achieve ROE promotion and profit growth under the scale restrictions.

If we want to do a good job in retail business, city commercial banks will do the following work in terms of organizational structure, risk control mode, business layout, and technology trends:

1. Organizationally, it takes customers as the center and implements one-stop service.

In the increasingly fierce competition, the implementation of retail business needs to change the traditional business situation divided by business into new business lines divided by customers, and provide various businesses and services for each type of customers. On the other hand, the improvement of business will be re-examined from the perspective of customers, such as the attractiveness of e-banking, pocket banking and outlets to customers and the convenience of processes. This requires banks to change their business strategies, improve the existing organizational management system, and realize the organic combination of many traditional business lines.

2. Risk control: Non-traditional and big data risk control can solve the risk problems of small and micro enterprises and individuals.

By constructing non-traditional risk control processes and measures for small and micro enterprises and personal loans, we can avoid the necessary financial reports of traditional credit and adopt other data to realize the feasibility of risk control; Avoid manual check, try to use parameterized data for efficient automatic risk assessment, and finally realize the rapid growth of small and micro loans and profits.

3. Business layout: promote retail business such as small and micro individuals.

In terms of specific business, we will focus on promoting consumer loans such as self-occupied mortgages and automobiles and loans for small and micro enterprises. If the risk control system is well built, it can achieve profit growth in related fields.

4. Technology trend: customer portrait, convenient process.

By deploying centralized data warehouse, more advanced data analysis engine and more detailed enterprise information management system, banks can obtain comprehensive customer information in time, form customer portraits, and conduct precise marketing and cross-selling; Banks can simplify the process and realize the convenience of the process; Banks can also achieve large-scale operation and reduce costs.