This century-old bank is gradually building its own new background of digital finance: strong, resilient and safe.
· Source: Light Finance Author: Li Jingfang
Simple laws of physics often imply profound revelations.
In quantum mechanics, under the irradiation of light, atoms continuously absorb photons to jump from a low-energy state to a high-energy state, which is called a "quantum transition". This kind of positive "quantum transition" has a lot of implications.
For the banking industry, which is currently facing a new round of differentiation, one of the best ways to achieve a new leap is to do a good job of digital remodeling. In recent years, large banks that have invested more than 20 billion yuan in technology every year have attracted more attention from the industry for their digital transformation.
Over the years, the Bank of China, which has maintained the highest proportion of fintech investment among the four major banks, has always been at the forefront of this round of digitalization and has carried out comprehensive digital reforms. From the 2023 annual report of the Bank of China, it can also be felt that the series of digital transformation plans of the Bank of China are receiving positive results, making digitalization a strong driving force for the operation and management of the banking industry and customer service.
01
Build a new background for digital finance
Digital transformation is not only a strategic priority for major banks, but also a profit growth point for banks in the future.
According to the China Banker Survey 2023, intelligence and digital transformation are the top strategic priorities of banks, as well as an important measure for characteristic operations, which was voted by 61.2% of bankers, and 51.9% of bankers chose "Fintech leads digital transformation and drives business growth".
In the previous information revolutions, major state-owned banks have been pioneers in digital transformation. For the Bank of China, which wrote the construction of a "technology-led global service system" into its work requirements in its annual report as early as 2011, today's digital transformation has already entered a new chapter, and a new background of digital finance in terms of technological strength and capabilities, customer first, growth and security is taking shape.
High-tech investments are essential to build strong digital capabilities. In 2023, Bank of China Information Technology will invest 22.397 billion yuan, accounting for 3.60% of operating income, and a total of 14,500 employees in the technology line, accounting for 4.74%. Light Finance found that in 2023, the proportion of BOC's fintech investment in operating income will further increase compared with the previous year, and the proportion of fintech investment among the four major banks has been at the highest level for many consecutive years.
BOC is well aware of the importance of hard-core technology strength to digitalization, and has been committed to building strong digital capabilities.
On the one hand, BOC's technology infrastructure is constantly improving. In 2023, the Bank of China will continue to implement the strategy of "Eastern Data and Western Computing", accelerate the construction of "multi-location and multi-center" information infrastructure, and vigorously promote the transformation of its technical architecture, with a total of 26,500 cloud platform servers and a 100% cloud migration rate of new applications.
At the same time, it has also accelerated the implementation of enterprise-level architecture construction, and in terms of enterprise-level public infrastructure capacity building, more than 2,700 saleable products have been incorporated into product factory assembly, and the architecture remodeling and service upgrading of basic financial products such as debit cards, credit cards, pensions, and bills have been completed.
On the other hand, it is to build the digital support capability of the system. Last year, the Bank of China (BOC) launched the "One Meter Access to the Bank of China", and by the end of 2023, the number of users of the "Data Vertical" platform reached 240,000, realizing a data application service model combining "centralized data usage" and "autonomous data usage".
In addition, the Bank has also continuously increased the application of new technologies and enhanced its fintech innovation capabilities, such as accelerating the construction of new technology platforms such as artificial intelligence, privacy computing, OCR recognition, and RPA process automation, covering more than 1,800 scenarios in the head office and branches. By building a product scenario innovation ecosystem, we will strengthen the marketing capabilities of the Internet ecology and actively promote the marketing system of all employees of the Bank of China.
There are many criteria to measure the strength of a bank's fintech, and large state-owned banks have always been the vane of banks' fintech innovation and application. According to the statistics of the "List of Winning Projects of the Fintech Development Award" released by the central bank in the past three years, the Bank of China has won 3 first prizes in the past three years, with a total of 15 projects awarded, ranking second in the industry, and in 2023, 4,122 new patent applications will be filed and 1,056 new patents will be authorized.
A review of the development of digital finance in the Bank of China shows that if strong digital capabilities are the "bottom", the fundamental starting point is to build on the foundation of the customer-first concept.
"Adhere to the concept of customer first, and continue to improve service quality and efficiency. Closely follow the people's yearning for a better life, and do a solid job in product innovation, process optimization and consumer rights protection. Ge Haijiao, chairman of the Bank of China, said in his speech in the annual report.
"Customer-centric" promotion of digital finance is the core of the bank's future development and in-depth operation, and it is also the way for the bank to realize the value transformation from traffic to users, to customers and then to product sales. Adhering to the customer experience-centric approach and digital transformation as the starting point, BOC has accelerated the transformation and upgrading of all channels, created online channels with more scenario integration capabilities and offline channels with more dynamic value creation, and built a business ecosystem that organically integrates online and offline and seamlessly connects financial and non-financial services.
Maintaining growth and security is the guarantee for banks to operate steadily in the development of digital finance. In 2023, BOC's performance growth has shown resilience. At the end of last year, the total assets of the Bank of China reached 32.43 trillion yuan, an increase of 12.25 percent year-on-year, the operating income was 622.889 billion yuan, an increase of 6.41 percent, and the net profit was 246.371 billion yuan, an increase of 4.07 percent. Under the dilemma of the industry's net interest margin, BOC optimized its asset-liability structure, and the average balance of RMB medium and long-term loans in Chinese mainland accounted for 74.14% of RMB customer loans in Chinese mainland.
While maintaining steady performance growth, risk control is the bottom line. At the end of 2023, the non-performing loan ratio of Bank of China was 1.27%, down 0.05 percentage points, and the provision coverage ratio was 191.66%, up 2.93 percentage points from the end of the previous year. Through digital means to help prevent and resolve risks, BOC reconstructed and upgraded the Group's integrated anti-money laundering in-process system, monitored the whole process in series, and used data empowerment to help precise risk prevention and control.
The decisive battle of digital finance is in full swing. In this wave, BOC is gradually building its own new background: strong, resilient and safe.
02
Digitalization leads to comprehensive value creation
After years of in-depth deployment, the digital transformation of banks is gradually entering an era of comprehensive value creation: reducing transaction costs, improving business efficiency, enriching business scenarios, broadening customer acquisition channels, and promoting profit growth.
"Insist on enhancing the ability to create value. "The Bank regards its digital strategy as a powerful weapon for value creation, accelerates digital transformation and innovation, promotes the integration of business models, technological capabilities and data elements, and provides customers with accurate, convenient and intelligent financial services.
Digital finance is one of the "five major articles" proposed by the central government, and it is also the basis for promoting the development of other major fields. In the process of comprehensive digitalization, BOC's technology finance, green finance, inclusive finance, and pension finance have also achieved rapid growth in 2023.
- A total of 1.47 trillion yuan of credit was granted to 68,000 science and technology enterprises, and a total of more than 610 billion yuan of comprehensive financial support was provided, and loans to science and technology finance, strategic emerging industries and manufacturing industries increased by 30.94%, 74.35% and 28.05% respectively compared with the end of the previous year.
- The balance of domestic green credit exceeded 3 trillion yuan, an increase of 56.34% over the end of the previous year. The investment scale of green bonds exceeded 100 billion yuan, and the domestic green bond underwriting ranked first in the interbank market.
- The balance of inclusive loans to small and micro enterprises was RMB1.76 trillion, an increase of 43.17% over the end of the previous year, higher than the average growth rate of the whole bank's loans, and the number of inclusive loan customers exceeded one million, an increase of 320,000 over the end of the previous year, with a growth rate of 43.21%.
- We have built a complete pension personal financial product system, upgraded the "Silver Hair Zone" of mobile banking, and increased the number of enterprise annuity personal accounts by 224,900.
"The goal of developing digital finance is to better serve the real economy. "The digital transformation of financial services is bringing quality and efficiency improvement to banks.
BOC has actively integrated into the digital industry ecosystem, deeply promoted the construction of open banking to the public, enriched the service scenarios of "Bank of China Enterprise Cloud Direct Connection", launched four sub-brands, such as "Cloud Account Collection", "Cloud Finance", "Cloud Direct Remittance" and "Cloud Payroll", and upgraded the "Bank of China Enterprise e-Butler" one-stop enterprise digital service platform. In 2023, BOC's corporate finance business in the mainland achieved operating income of RMB206.096 billion, a year-on-year increase of 8.48%. At the end of the year, the number of corporate online banking customers reached 8.19 million, an increase of 13.31% over the end of the previous year.
In the field of personal finance, Bank of China adheres to the leadership of science and technology, promotes the systematic integration of business and the integration of products and services, and takes a step closer to building a leading bank in full-stack personal finance. At the end of 2023, the total number of individual customers of mainland commercial banks exceeded 525 million, a year-on-year increase of 3.80%, leading the growth rate of comparable peers. The personal finance business in the mainland achieved operating income of 244.054 billion yuan, a year-on-year increase of 7.52%. The scale of financial assets of individual customers exceeded 14.29 trillion yuan. The number of monthly active customers of mobile banking reached 87.76 million, and the annual mobile banking transaction volume reached 54.88 trillion yuan, a year-on-year increase of 17.46%.
In BOC's most distinctive global business, digital empowerment is also increasing its contribution value.
In 2023, the Bank built a collaborative management platform of "one-point access and global response", continuously optimized its global network layout, developed its business steadily, promoted the internationalization of the RMB, enriched cross-border services, and improved the quality and efficiency of its operations. The Belt and Road countries have followed up more than 1,000 corporate credit projects, providing credit support of more than US$316 billion.
The Bank of China has also continued to improve its global digital service channels, and for overseas individual customers, the Bank has released version 6.0 of Personal Mobile Banking to comprehensively improve the customer experience. By the end of 2023, overseas corporate online banking will cover 56 countries and regions and provide services in 14 languages, and overseas personal mobile banking will cover 30 countries and regions and provide services in 12 languages.
The prelude to digital transformation leading the comprehensive value creation of banks has just begun. How banks can empower their businesses through digitalization, and whether they can dig deep into value and bring new profit growth will also test the bank's ability and wisdom in operation and management.
03
Be a doer: Continuously improve the efficiency of financial services
In the series of strategic transformations underway in the banking industry, such as wealth management and digital transformation, the difficulty and effectiveness vary.
In this regard, CICC believes that digital transformation is more difficult than other strategies based on differences in business logic and the number of organizational manpower. This is because digital transformation has put forward higher requirements for the traditional organizational structure, strategy formulation and execution capabilities of the banking industry.
It can be said that in addition to testing the bank's strategic determination and execution, digitalization determines the upper limit of a bank's digital level, whether it can deeply integrate into the real economy, whether it can contribute to major national development strategies, and whether it can build strong comprehensive financial service capabilities.
The BOC's answer is to be a "doer". With a strong strategic focus, a series of changes triggered by digital transformation will inevitably penetrate into the bank-wide transformation. BOC's digital finance development strategy is based on the improvement of technology and data capabilities, the digital transformation and upgrading of financial services as the core, the integration into the digital economy ecosystem as the breakthrough, and the risk prevention and control as the foundation, deepening the integration of "industry digital technology" and continuously improving the efficiency of financial services.
In the process of digitalization, banks need to integrate digital thinking and capabilities into the overall organizational level and business level. Only by deepening the background of digital finance development into the whole bank, accelerating the reform of systems and mechanisms, and building a strong talent team, can the whole bank be united in the battle of digital transformation.
In this regard, the Bank of China has continuously deepened the mechanism of "unveiling the leader" to stimulate the enthusiasm of innovative entities, and produced 26 outstanding achievements in the fields of green finance, inclusive finance and technological innovation in 2023. The "fruitful action" was carried out to innovate and replicate, and 28 outstanding achievements at the grassroots level were quickly put into storage, and the management efficiency was effectively improved. In terms of talent team building, BOC continued to optimize the incentive and restraint mechanism and continuously improve the scientific, institutionalized and standardized level of training.
There is no reversal of the megatrend of digitalization reshaping the business model of the banking industry. Only by being a comprehensive doer can banks seize the opportunity to make a leap forward in the development of digital finance. Over the past century, BOC has been constantly polishing its digital background and is radiating new vitality.