Zeng Gang: The way for small and medium-sized banks to serve small and micro enterprises

Small and micro enterprises are important contributors to the mainland's economic growth and the main force in absorbing social employment. Strengthening the financing services for small and micro enterprises is an important part of financial support for the real economy, stable employment, and encouragement of entrepreneurship. The 2022 government work report proposes, "Make good use of inclusive small and micro loan support tools, increase the re-lending of small loans to support agriculture, optimize regulatory assessment, and promote the significant growth of inclusive small and micro loans, and the proportion of credit loans and first-time loan households continues to increase." Guide financial institutions to accurately grasp credit policies, continue to give financing support to enterprises in industries seriously affected by the epidemic" and other requirements, and further promote banks and other financial institutions to solve the financing problems of the real economy, especially small and micro enterprises.

From the perspective of multi-level financial market supply entities, small and medium-sized banks are the main force serving small and micro enterprises. First of all, small and medium-sized banks, at the beginning of their establishment, were positioned to provide financial services for local small and micro enterprises, self-employed people and "three rural" groups, and the core was to improve the availability of credit services. Secondly, small and medium-sized banks have long been deeply rooted in the local area, familiar with local industries and small and micro enterprises, and deeply integrated with the local economy and local industries, especially in serving the small and micro enterprises represented by individual industrial and commercial households, small and medium-sized banks have a unique advantage in customer reach and service because they are based on the local area and deeply cultivate the natural attributes of the local area.

In order to fully reflect the situation that small and medium-sized banks adhere to the positioning of small and micro services and continuously improve service quality and efficiency, the Shanghai Financial Development Laboratory released the white paper "Challenges and Ways to Break the Situation of Small and Medium-sized Banks serving small and micro enterprises" on March 17, 2022, focusing on the practice of "three major problems and four major breakthroughs" for small and medium-sized banks to serve small and micro enterprises, and to provide suggestions for accelerating the completion of the shortcomings of small and micro entities in financial services and improving the accuracy and effectiveness of policies.

Small and medium-sized banks face "triple challenges" in small and medium-sized banking services

From a practical point of view, small and medium-sized banks are facing "triple challenges" such as risk control, customer acquisition and technology in serving small and micro enterprises.

The first is the risk control challenge, the quality of small and medium-sized banks to benefit small and micro customers is poor, so a stronger risk control system is needed. However, the cruel fact is that the customer qualifications of small and medium-sized banks are weaker than those of large and medium-sized banks, and their risk control capabilities are far inferior to those of large and medium-sized banks.

The second is the challenge of customer acquisition, the key service objects of inclusive finance of small and medium-sized banks are small and micro enterprises, poor people, urban low-income people and other people with unstable economic strength, and large and medium-sized customers and international large customers are served by large banks and joint-stock banks. However, with the implementation of the digital projects of the bank around its "inclusive finance" and "rural revitalization" and other development strategies, its business capabilities have been greatly improved, and the network operation capabilities have been greatly improved, and the service system of "outlets + networks" has been built, although the outlets in remote areas have been reduced, but due to its strong brand and digital service capabilities, its customer acquisition and operation capabilities in remote areas have not only not weakened, but have been enhanced. In the face of crushing competition from large banks, the ability of small and medium-sized banks to operate regional customers formed by taking advantage of offline geographical advantages is challenged all the time.

Finally, there is the challenge of science and technology, the business of commercial banks is highly homogeneous, the types of business are converging, and the types of systems required are relatively similar, but the scientific and technological resources invested are hugely different.

Most small and medium-sized banks invest less than 500 million yuan in science and technology a year, and there are about a few hundred scientific and technological personnel. The scientific and technological capabilities of small and medium-sized banks cannot keep up, and the scientific and technological capabilities of large banks are getting stronger and stronger, and the efficiency is exerted to the extreme. For example, in 2020, the investment cost of science and technology is 23.819 billion yuan, and the number of scientific and technological personnel is 35,400, which has far exceeded the total income and total number of many small and medium-sized banks. Small and medium-sized banks cannot afford to invest due to insufficient resources in financial technology, which has formed a technological gap between large banks and small and medium-sized banks.

Small and medium-sized banks serve small and micro enterprises

Due to the vast geographical differences in which small and medium-sized banks are located, and the scale of assets is different, there will not be a one-size-fits-all approach, and the road to breaking the situation must be a combination of commonality and personality, and it is a local and policy-oriented policy on the basic laws of the industry.

There are more than 4,000 corporate banks in China, but if you divide according to the scale of assets, less than 100 with assets of more than 300 billion yuan, including more than a dozen state-owned banks and joint-stock banks. The vast majority of small and medium-sized banks in the waist and tail have assets of less than 300 billion yuan. Therefore, with the asset scale of 300 billion yuan as the limit, we divide small and medium-sized banks into head and waist and tail, and select representative small and medium-sized banks for research and analysis.

Due to the strong financial strength of the head of small and medium-sized banks, they are more based on themselves in the supply of small and micro finance, but even so, they are also actively seeking external cooperation to make up for their shortcomings, but this cooperation is mainly in a supplementary position. Correspondingly, the small and medium-sized banks in the waist and tail have fewer resources to invest, and they need to urgently find solutions and products, and they need to "warm up" through cooperation. Only in this way can they quickly make up for their shortcomings and quickly provide products and solutions according to customer needs.

First of all, scientific and technological support is the core means of breaking the situation.

At present, if commercial banks still want to achieve the impossible triangle of "volume increase and price reduction and non-performance" in the field of small and micro finance, they must make full use of data intelligence, mobile Internet and other technologies to reshape the value service chain of small and micro credit in all fields such as risk control, products, operations, and customer acquisition, so as to achieve the commercial sustainability of small and micro finance.

Technology has become the only way for small and medium-sized banks to break through the inclusive financial services of small and micro enterprises. However, in reality, the scientific and technological resources that small and medium-sized banks can invest are very different. If a large number of small and medium-sized banks in the waist and tail want to break through in science and technology, they must have an open mind, start from the perspective of customer needs, and seek broader cooperation in the industrial chain, so as to adapt to changes in the market as quickly as possible, and quickly iterate out product and service models under the established constraints:

The first is to optimize the existing credit process. New credit technologies are expected to play a role in the fields of batch customer acquisition, approval automation, anti-fraud, accurate pricing of credit, and post-loan early warning. The experience of Changshu Rural Commercial Bank is to give simple and a large amount of repetitive work to science and technology as much as possible, and to carry out a comprehensive online transformation of the business, through the power of science and technology, to achieve "let customers run less errands, let data run more", to achieve cost reduction and efficiency.

The second is the custody fintech system. In the current process of serving small and micro enterprises, some small and medium-sized banks are affected by many factors such as insufficient investment, lack of talents, lack of ideas, etc., the parameterization of key business systems such as core systems, credit systems, and risk control middle offices is not strong, the quality of system construction is not high, it is difficult to support the long-term development of small and micro finance, and it is urgent to cooperate with institutions with scientific and technological custody capabilities. For example, Industrial Bank is one of the few banks in the industry with independent intellectual property rights in the core business system, and is the only bank that exports the core service capabilities of the bank, supporting the operation of more than 350 small and medium-sized banks in China. However, in addition to a few companies such as Industrial Digital Gold, other companies such as the Provincial Rural Credit And the Shandong Provincial Urban Merchants Alliance are only scientific and technological systems that host small and medium-sized institutions in the province, which are far from meeting the needs of the market.

The third is the joint development of system group model groups. A number of small and medium-sized banks for self-built system groups, model groups are difficult to reach, need to unite external forces to jointly build, such as Zhongyuan Bank and external advanced data cooperation agency CCB modeling, from the perspective of operation, the effect is remarkable: at present, in the personal customer credit pass rate, asset non-performing rate and other core indicators to achieve the industry-leading level.

Second, accurate risk control is the fundamental guarantee for breaking the situation.

In the process of sinking small and micro credit, small and medium-sized banks have failed to master the core information identification technology, and it is difficult to control the output value, cash flow assessment, risk measurement and other information of small and micro enterprises, and they are facing some deep-seated obstruction points and difficulties in all aspects such as pre-loan, loan, post-loan, and risk sharing, which restricts the sinking effect. In this regard, it is necessary to focus on the following aspects of work:

First, give play to the important role of big data risk control. For example, the use of digital empowerment IPC risk control to carry out cross-verification, empower credit factories to continue to carry out standardized analysis, empower supply chain finance, and so on.

The second is to explore risk sharing with credit-enhancing entities with risk-based capabilities. In particular, commercial financing can help small and medium-sized banks in the whole process of financing services. In addition to the basic credit enhancement function, commercial financing also has differentiated advantages in customer acquisition, products, risk control preliminary screening, post-loan management and other aspects, which can provide multi-faceted support for small and medium-sized banks. For example, the commercial financing institutions represented by Ping An Puhui in the market have long-term deep cultivation of long-tail small and micro customers and served the long-tail small and micro business groups with a unique "retail guarantee" model.

The third is to make full use of government big data. At present, the state is building a data sharing and exchange platform, the data sharing and exchange platform covers the national, provincial, prefectural and municipal levels, the sharing platform at all levels horizontally docks the business system, basic information resource database, theme information resource database and other social information databases of the regional government affairs departments under its jurisdiction, and connects vertically with the provincial data sharing platform and the prefectural and municipal data sharing platform through the cascading system, forming a horizontal linkage and vertical penetration of the data sharing and exchange system, realizing cross-level, cross-regional, cross-system, cross-departmental, Cross-business collaborative management and services. In January 2022, Shenzhen Credit Reporting Service Co., Ltd., Shanghai United Credit Reporting Co., Ltd., and Sichuan Credit Information Co., Ltd. have successively completed the filing and filing publicity, showing that the integration of local government data has entered a new stage, relying on market-oriented local credit reporting entities, it is possible to better organize and process government information and public utility information to financial institutions, effectively empowering financial institutions to provide services to small and medium-sized enterprises.

Third, deeply cultivating areas and scenes and obtaining customers in batches is an important part of breaking the game.

The key to customer acquisition is to make full use of mobile Internet technology, fully excavate and master customer information, reduce customer acquisition costs, deeply cultivate the regional economy, and enhance the ability to obtain customers in batches, so as to achieve commercial value.

The first is to learn from the Taizhou Tailong model and use large-scale push troops to carry out grid marketing. For regional banks, it is still the mainstream way to make full use of the advantages of familiarity, rely on the push team to reach the enterprise, and understand and continuously track the real operation of the enterprise on the ground. In the current digital context, the use of mobile Internet technology to accelerate the migration of customer information and services to the online and mobile terminals is the key to breaking the situation. Guangzhou Rural Commercial Bank chose to cooperate with Zhejiang Tailong Bank to establish the Pearl River Branch of Guangzhou Rural Commercial Bank, which was incubated outside the system. In the Pearl River sub-branch, Tailong Bank produces senior executives and technicians, Guangzhou Rural Commercial Bank provides funds, and the management is responsible for Tailong Bank, and the business model of Tailong Bank is adopted to do inclusive small and micro financial business.

The second is to cooperate with large software service providers to obtain customers in batches. Software service providers such as SaaS platforms gather a large number of customers with potential loan needs, and with dynamic data such as purchase and inventory, production, personnel management, ordering, sales, cash, bills and other dynamic data in ERP, it is easy to find small and micro enterprises with real credit willingness.

The third is to deeply cultivate the scene, empower the industry, and build an APP digital platform. Explore the cooperation model of development banks, connect more ecological partners, empower small and micro enterprises through technology, and provide more SaaS services and small and micro customer operation software according to the scene needs of small and micro enterprises. For example, the Zhongyuan Jushang APP launched by Zhongyuan Bank empowers small and micro enterprises to operate scenarios, and can provide functions such as invoicing, sales and inventory management, online store opening, store management, real-time business analysis, and data analysis reports. While small and micro enterprises facilitate the opening of stores, banks can also provide more appropriate financial services for small and micro enterprises.

The fourth is to actively promote bank-enterprise cooperation, silver tax cooperation, and government-bank cooperation, and vigorously coordinate various batch customer acquisition platforms. For example, the financial technology companies represented by WeBank identify different types of enterprise users through their own technical capabilities, and provide full-process services from precision marketing to risk control approval to post-loan monitoring.

The fifth is to cooperate with the core enterprises of the industrial chain in supply chain finance. Accelerate the "platform", innovation and transformation of small and micro businesses, and effectively expand the basic customer base of small and micro enterprises in an "intensive" and "batch" manner around the upstream and downstream of the industrial chain. For example, Zheshang Bank focuses on application scenario innovation, using supply chain financing models such as core enterprise "H+h+m" and distribution pass to support the financing of upstream and downstream small and micro enterprises in batches and improve platform-based service capabilities.

The sixth is to use the characteristics of the regional economy to obtain customers. Rooted in the region, the primary goal of small and medium-sized banks is to serve local customers, cultivate the ability to serve specific industries according to the characteristics of local industries, and use technology to obtain customers in a targeted manner through open cooperation.

Finally, agile organization is the fundamental guarantee of breaking the game.

Organizational breakthrough is the fundamental guarantee to adapt to the sinking of customers, and flexible and agile organizational construction is the key direction of organizational breakthrough, and agile organizations improve the efficiency of small and micro services and reduce input costs.

The first is to take the initiative to build a small and micro financial franchise center. Implement the matrix business department system, standardize and digitize the credit process, adopt centralized approval, coordinate and promote the management and development of the bank's small and micro financial business, undertake the policy research, rule formulation, product research and development, risk management and other responsibilities of the bank's small and micro financial business, and be responsible for the small and micro financial operation indicators of the whole bank.

The second is to actively build a franchised branch institution. The keys to the success of franchised branches are: First, the quota, risk management matching. For the franchised branches, risk policies, accountability measures and set a certain risk tolerance, of which the limit of a single-family small and micro enterprise loan is the key, generally should not exceed 1 million yuan. Second, the business authorization is sufficient. Develop an independent authorization system, fully authorize sub-branches and front-line account managers, complete approvals on the front line, and make credit decisions quickly. The third is to strengthen supervision and management. Create a specialized business process suitable for small and micro enterprises, and establish a comprehensive inspection and supervision system with the participation of business lines and risk lines. The fourth is to accelerate the integration of science and technology. Based on informatization, integrate with big data, and strengthen the deep integration of information technology and small and micro credit.

The third is to set up an agile product research and development team. The focus is to promote the integration of technology and business, and set up an agile pilot group around key projects such as new products and new system development, so as to make some businesses agile first. After the success of the pilot project, the scale of agile from point to surface will be carried out, and an "agile tribe" composed of multiple agile groups will be established throughout the business line. In the formation of the agile pilot group, a cross-functional entity team composed of scientific and technological personnel, product managers, account managers, etc., runs quickly and iterates quickly.

Small and medium-sized banks are the main force serving small and micro economies and an indispensable force in serving the regional economy. Under the guidance of the national inclusive small and micro financial policy, small and medium-sized banks need to give full play to their advantages such as leading territorial resources, close to the market and customers, and flexible organizational mechanisms, through openness and win-win, active innovation, and mutual synergy with other market institutions, strengthen their own capacity building, deeply cultivate regional small and micro enterprises, form dislocation competition with differentiated services and products, optimize the supply structure of inclusive small and micro finance, and achieve a virtuous cycle of social value and commercial sustainability.

(Zeng Gang is the director of Shanghai Finance and Development Laboratory)