Produced by |WEMONEY LABORATORY
Text: Liu Shuangxia
Since the launch of the first wealth management product by China Everbright Bank in 2004, the wealth management market of mainland banks has gone through a 20-year journey, from germination to growth, and has undergone profound changes from barbaric growth to standardized development. Especially since the new regulations on asset management, bank wealth management has gradually returned to the essence of "wealth management on behalf of customers".
In the journey of the new 20 years, the development of bank wealth management has ushered in new changes. In the era of low interest rates, the "deposit substitution effect" of bank wealth management has become increasingly prominent. At the same time, with the rise of inclusive wealth management, the financial needs of small and micro enterprises have been taken seriously, and institutions such as MYbank are actively exploring to meet this demand. In addition, the application of large model technology has brought new opportunities for high-quality development of the banking and wealth management industry.
01. In the era of low interest rates, the "deposit substitution effect" of bank wealth management is highlighted
In 2004, CEB launched its first wealth management product, ushering in a new era of wealth management in China. From 2004 to 2018, mainland banks experienced rapid development in wealth management, with a wealth management scale of nearly 30 trillion yuan, ranking first in the asset management industry. But at the same time, the wild growth has also made the risk accumulate, and it is imperative to break the rigid exchange.
Since 2018, a series of regulatory documents, such as the new regulations on asset management, the new regulations on wealth management, and the measures for the management of wealth management subsidiaries, have been promulgated one after another, prompting banks to carry out profound changes in their wealth management.
Wind data shows that in 2018, the wealth management scale of mainland banks fell from a high of 29.5 trillion yuan, and the market scale shrank significantly. As of the end of 2023, the scale of bank wealth management products will be 26.8 trillion yuan.
However, at the same time, the implementation of the package of supervision has also provided all-round and framework guidance for regulating bank wealth management, so that it will gradually return to the essence of "wealth management on behalf of customers".
In the throes of transformation, the banking and wealth management industry has gradually explored a more reasonable development model and sought new growth points in stability. Especially in the past two years, in the context of the decline in deposit interest rates, the suspension of manual interest supplements, and the low market risk appetite, the "deposit substitution effect" of bank wealth management has become more and more obvious.
With the characteristics of low threshold, low rate and stable income, bank wealth management can be bought for 1 yuan or even 1 penny, the risk is relatively low, and the income is higher than that of bank deposits, making it the best choice for residents and enterprises to preserve and increase their wealth.
The data shows that the scale of bank wealth management has returned to growth. According to the "Semi-annual Report on China's Banking Wealth Management Market (2024 First)" disclosed by the Banking Wealth Management Registration and Custody Center, as of the end of June this year, the scale of the bank wealth management market has rebounded to 28.52 trillion yuan, and a total of 341.3 billion yuan has been created for investors in the first half of the year.
According to the market insights released by McKinsey, in the context of the general decline in the risk appetite of wealth management customers, bank wealth management will be the mainstream variety of customer wealth management allocation to replace deposits, and the annual growth rate of bank wealth management market management scale is expected to reach 9%, increasing to 50 trillion yuan in 2030.
02. The tide of inclusive wealth management is rising, and the demand for small and micro financial management has attracted attention
Inclusive finance aims to make financial services accessible to everyone in need, and strives to solve a series of problems such as whether financial services are available, whether they are feasible, whether they are expensive or not, and whether they are good or not.
With the development of the theory and practice of inclusive finance, its connotation and extension have been continuously enriched, from focusing mainly on microfinance to providing multi-level and diversified financial services, including wealth management.
The intrinsic genes of inclusive wealth and serving the public adhered to by bank wealth management are highly consistent with the concept of inclusive finance and common prosperity. It can be seen that wealth management has flown into the homes of ordinary people in an inclusive way from the old Wang Xie Tang Qianyan. Especially with the help of Internet channels, the scale of bank wealth management users will usher in rapid growth along the trajectory of public funds, and it is expected that by 2030, the number of bank wealth management investors is expected to reach 200 million.
In addition to large enterprises and individual users, the financial needs of small and micro enterprises are also truly "seen", becoming one of the most potential customers for bank wealth management.
Feng Liang, President of MYbank, said that there are a large number of small and micro operators, but their liquidity management has been in a state of "no one cares" and "it is difficult to manage" for a long time, which is a "blank area" for financial services:
On the one hand, in the past 10 years, inclusive finance has often been equated with inclusive credit, while there is no dedicated service institution for small and micro working capital wealth management. On the other hand, the business cycle of small and micro businesses is complex, the capital fluctuates greatly, the liquidity is high, the asset management services of large enterprises are "unaffordable", and the wealth management products for individuals are "not easy to use".
In fact, the demand for small and micro financial management is not niche. There are more than 170 million small and micro enterprises and individual industrial and commercial households registered in mainland China, involving a total of 400 million employees, and their annual operating income is close to 50 trillion yuan. The agency predicts that by 2030, the AUM contributed by China's small and micro enterprises will double in the future.
As a bank with Internet genes, MYbank has risen rapidly in the wealth management market by focusing on the needs of small and micro financial management with its advanced technology and huge user base. As of the end of last year, MYbank's wealth management agency sales scale has entered the first echelon of the industry. At present, MYbank has cooperated with 23 wealth management subsidiaries, and has reached in-depth cooperation with 5 of them.
03. Large-scale model empowerment to promote the high-quality development of bank wealth management
"Chinese-style inclusive finance" organically integrates digital finance, technology finance and inclusive finance, and uses financial technology and information technology to break the time and space constraints of financial services and provide financial support for the development of new productive forces. In the banking market, the power of technology is also playing a huge role.
AI models are changing the supply model of bank wealth management. By accurately predicting the amount of purchase and redemption by users, wealth management companies can avoid users not preparing enough funds when buying, or reserving too many funds when users redeem, so that the utilization rate of funds is higher, thereby improving investment stability and generating higher returns. At the same time, artificial intelligence technology will also promote wealth management companies to achieve product innovation and intelligent sales channels, achieve accurate matching of people and goods, and improve the efficiency of capital utilization and asset investment. In addition, artificial intelligence will greatly improve the credit rating and risk quantitative analysis capabilities of wealth management companies.
In the next six years, artificial intelligence is expected to drive wealth management companies to increase revenue by 15%-30% and reduce costs by 10-30%.
MYbank has become a pioneer. On September 6, at the Banking Insights Forum of the 2024 Inclusion · Bund Conference, MYbank released the industry's first intelligent inclusive wealth management system for small and micro enterprises and merchants, the "Cuckoo" system.
It is reported that MYbank's "Cuckoo" uses an AI model to predict the capital flow of small and micro enterprises in thousands of industries, so as to provide bank wealth management companies with predictions of redemption and redemption, and jointly customize bank wealth management products that fit the business cycle of small and micro enterprises.
"The goal of the cuckoo system is to become their liquidity management expert." Feng Liang said that in order to meet the needs of capital security and the stability of income, Cuckoo focuses on bank wealth management, and at the same time provides small and micro businesses with special financial products such as Yu Libao, Wenli Bao, and Yue Libao.
Supporting the innovation of the cuckoo system is the application of artificial intelligence technologies such as AI large models. Feng Liang introduced that the most difficult "bone" in small and micro liquidity financial management is to make wealth management products fit the business cycle of small and micro enterprises. If a wealth management company is compared to a crew, if the crew can predict the height of the wind and waves and the speed of the current, they will be able to steer better. In the past, this relied on the experience of the crew, but now, AI can help the crew predict.
It is reported that in the cuckoo system, the application of large models mainly includes two aspects:
On the one hand, "Cuckoo" builds a large model for predicting the flow of small and micro funds through the first time series encoder, forming a prediction of the capital flow of different groups such as e-commerce, code merchants, distributors, and farmers, with an accuracy rate of more than 95%.
On the other hand, Cuckoo builds a product volume and price model based on the prediction of small and micro capital flows, and predicts the future subscription and redemption amount of wealth management products. According to the forecast results, the bank's wealth management subsidiary can improve the capital utilization efficiency by 10%, thereby improving the product revenue experience.
The State Administration of Financial Supervision proposes to explore the construction of an inclusive wealth management product service system, promote the combination of inclusive wealth management and traditional culture, and guide residents to establish a healthy financial management concept. This has prompted financial institutions represented by MYbank to continuously improve their service systems in product design, sales, post-investment management and other links, improve service quality and efficiency, and make inclusive wealth management better accessible to ordinary people, so as to maintain and increase residents' wealth and increase property income.
Looking to the future, with the unique advantages of inclusive characteristics and connecting physical and financial institutions, bank wealth management will accelerate the transformation and application of new technologies such as large models, explore business models that are affordable, commercially sustainable and risk-controllable, and promote financial resources to benefit long-tail inclusive customers, and inject strong impetus into economic and social development.