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Lender nurtures fintech innovation projects

By Jiang Xueqing in Shenzhen, Guangdong | China Daily | Updated: 2019-08-23 10:27
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A staffer demonstrates face recognition function of an ATM at a China Merchants Bank branch in Nanjing, capital city of East China’s Jiangsu province. [Photo by Su Yang/For chinadaily.com.cn]

Efforts centered on unlocking creative skills of young entrepreneurs in the country

Before starting an internet startup in June, Zhang Tao, the former chief of a subbranch of China Merchants Bank Co Ltd in Shenzhen, Guangdong province, had worked in the banking industry for over 10 years.

He is now the founder and CEO of a startup that has 12 employees. The small business received an angel investment from CMB International Capital Corp Ltd, a wholly-owned subsidiary of China Merchants Bank. By the end of June, the total assets of the listed commercial lender headquartered in Shenzhen had reached 7.19 trillion yuan ($1.02 trillion).

Founded with an aim of using algorithms to help individuals and companies choose gifts, the startup was hatched through a mechanism initiated by CMB to spur innovation and entrepreneurship.

"I used to feel stressed about buying gifts for my wife before holidays and anniversaries. It took a lot of time, and the worst part was that she often blamed me for having poor taste or not knowing her well. I asked around and found that many friends had similar experiences. In my view, with the help of technologies, we can find the right gifts more efficiently," said Zhang at a meeting held by the China Banking Association in Shenzhen on Aug 6.

He pitched this idea to the judges of an in-house innovation contest held by CMB and created a project group with three colleagues from other departments and branches. After a three-month competition, his project and four others were selected for incubation from more than 700 applications.

His team moved into an incubation center for innovation established by CMB in Shenzhen last year. The center aims to encourage CMB employees who have creative project ideas to form small project groups across departments and pitch their ideas to the fintech committee of the bank.

If a project gets the green light, it will receive funding from the bank, and the relevant group will gather at the incubation center to do the project for a certain period, trying to figure out if the business idea really works.

The center has supported over 1,000 projects since it was founded in May 2018. Project duration typically varies from three months to one year.

Wang Weixing, a member of the project support team at CMB's incubation center for innovation, said the bank normally supports three main categories of projects. The first is centered around information technology infrastructure, such as cloud computing platforms, big data platforms, artificial intelligence and knowledge graph. The second is focused on information management, which refers to the construction of an internal management system to improve management of risks, operations, customer relationship, and assets and liabilities. The third aims to build customer service ecosystems that offer products including online gift markets and service applications for car owners.

"Finance is vigorous only in business scenarios. Banks must create their own business scenarios to compete with internet companies that have an advantage over banks in this respect," said Zhang, the former bank executive.

"In my opinion, the banking industry has a deep understanding of its clients as internet companies do. By establishing a system of small project groups, we now combine knowledge of our clients with methodology and mechanisms for the internet," he said.

The core advantage of small project groups lies in their quick response to the market, fast decision-making and rapid iteration, according to Zhao Ye, supervisor of the project support team at the incubation center. Over the past year, the bank formed a support system to facilitate such groups in many areas including user research, interaction design, product management, operations, and business development.

To support fintech innovation projects, CMB has set up a fund of which the size is no less than 1 percent of the bank's operating income in the previous year. Furthermore, the bank announced in March that it will continue to ramp up investment in financial technologies to accelerate the transition toward a fintech bank. Its overall budget for fintech investment will be at least 3.5 percent of its operating income a year ago. The bank posted 248.44 billion yuan in operating income for 2018.

A crucial driver of CMB's fintech innovation endeavors is the hunt for innovative talent and startup founders.

"Younger employees will become an increasingly larger proportion of our staff. Many of those born in the 1990s are seeking self-fulfillment, rather than simply caring about salaries and promotion. We look forward to driving a better integration of the self-worth and work of our employees, in addition to inspiring their capabilities and enthusiasm for innovation," said Zhao.

The human resource department of the bank will spot innovative talent during the process of project execution, keep observing their abilities, and promote internal talent mobility and development.

In recent years, the banking sector has strengthened the cultivation of fintech talent. Gao Feng, chief information officer of the China Banking Association, said in July China plans to issue guidelines on fintech talent. The association will combine the efforts of various parties to build a system for fintech talent certification, compile teaching materials, and organize training sessions, he said.

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