Editor's note
On June 17, the 9th online seminar of the "Huarui Fintech Salon Series", co-hosted by Shanghai Huarui Bank, the International Monetary Institute (IMI) and the Fintech Research Institute of Chinese Minmin University, and co-organized by the China Banking Research Center of Chinese University and the China Digital Finance Cooperation Forum, was successfully held. Zhang Jianhua, Secretary-General of China Digital Finance Cooperation Forum and Director of the Financial Development and Regulatory Technology Research Center of Tsinghua University PBC School of Finance, first shared in the discussion session, he discussed the problems and challenges faced by commercial banks in digital transformation from the perspective of small and medium-sized banks, and elaborated on the internal strategies and external support that should be adopted to promote the transformation of small and medium-sized banks.
The following is the full text of the minutes:
01
The transformation of small and medium-sized banks has a long road to go
At present, the digital transformation process of China's large banks is leading the world, and the performance of large mainland banks is similar to that of other large international banks in terms of system construction capabilities, practices and digital product applications. At present, large mainland banks have adopted many mature technologies, and are actively exploring and stockpiling emerging technologies such as artificial intelligence large models, blockchain, and quantum computing. At present, the transformation path of large banks is relatively clear and optimistic, and in the future, large banks need to consider how to better integrate their own businesses, and how to better adapt to the overall strategy of bank operation and digital development. However, the performance of small and medium-sized banks is slightly deficient compared with the performance of large mainland banks, and the transformation path of small and medium-sized banks is quite different from that of large banks.
02
Small and medium-sized banks are currently under pressure
2.1 Financial Indicators
The market share of the six major banks has continued to decline since the beginning of this century, from 60% of the original four major banks to 50% of the later six major banks, and then to 40% in 2020. However, from the data of the past two years, it shows that the asset scale of large banks has caught up, the average growth rate has exceeded that of small banks, and the high profitability advantage of small and medium-sized banks in the past is no longer there.
2.2 Sinking of services of large banks
The sinking of services of large banks has seized many high-quality high-end customer resources of small and medium-sized banks, the so-called pinching effect. The advantages of large banks mainly rely on the development of financial technology rather than the rapid expansion of personnel outlets, and large banks have a high input-output ratio.
Therefore, in the future digital economy era, if the financial industry does not carry out digital transformation, it will be disconnected from society and customers, so digital transformation is the only way for financial institutions.
03
Small and medium-sized bank transformation strategies
3.1 Define clear goals
Unlike large banks, small and medium-sized banks can't keep up with some of the latest cutting-edge technologies, so they need to set their own clear, limited goals.
3.2 Consider the input-output ratio
Small and medium-sized banks need to use some more practical technology, consider the problem of resource endowment, consider what needs to be urgently implemented, and consider what to do first and then what to do. Due to the rise of the overall economy, the scale of the economy has expanded, and the total amount of finance has increased, resulting in an increase in the supply of the financial industry and intensified competition. The traditional turf of small and medium-sized banks may be crowded out, and considering the generation gap between large banks and small and medium-sized banks, small and medium-sized banks are suffering a serious dimensionality reduction blow. In the face of the market sinking of large banks, the core task of small and medium-sized banks is to hold their positions and first retain customers and then acquire customers.
3.3 Access to External Support
Regulation requires a certain degree of differentiated management. At present, the regulatory authorities are more supportive of large banks for technological output. A more open regulatory strategy for small and medium-sized banks is recommended. At present, the regulatory requirements require financial institutions and the banking industry to have independent risk control models and achieve self-control. The non-outsourcing of core financial business refers to which can be outsourced in the financial industry, and which can cooperate with third-party technology companies or large banks. At present, there are also many technology companies in the market that provide high-quality basic services in the financial field, and can consider developing into partners.
The data industry has become a factor of production, and sometimes capital investment may not be able to obtain effective data, so we need to consider the issue of public data openness. Because small and medium-sized banks themselves have less data, less customer base, insufficient dimension of retained information, incomplete information about existing customers, and the sources and channels of their new customers are not as extensive as large banks, it is more difficult for them to obtain external data. Therefore, the digital transformation of the financial industry depends on the overall construction of digital infrastructure, which includes both internal hardware or technical infrastructure, as well as external factors, especially how data is elementalized and how data is reflected.
Data circulation problems mainly include government public data and quasi-public data, such as some communication data and electricity data held by government monopolies and state-owned enterprises. In addition, there is completely market-oriented business data, business data comes more from major platforms, and platform economy and scene economy are typical characteristics of the digital economy, platforms and scenarios gather a large amount of data, so these data are more in the form of private data. These three types of data property rights are different, and the transaction rules and transaction arrangements are also different. However, the issue of factor circulation will always become the basis for the digital transformation of financial institutions, especially small and medium-sized financial institutions. The lack of foundation will lead to the backwardness of technology, so that small and medium-sized banks cannot compete with large banks, and if there is no support in obtaining data, small and medium-sized banks may face greater pressure in the future.
In the future digital economy era, digital economy and digital finance are interactive processes, digital economy inevitably requires the digitalization of the financial industry, digital finance can also promote the entire economy to a certain extent to further deepen digitalization. Therefore, digital transformation is an urgent issue for both large financial institutions and small and medium-sized financial institutions.
Opinion collation: Fang Hanyi
Executive producer of this article: Shang Qian
Layout Editor|Zhang Hao
Responsible editors|Li Jinxuan, Jiang Xu
Director system|Vermilion frost
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