OREANDA-NEWS. November 19, 2013. “To guide the entire bank to be in the shoes of customers substantially and provide more diversified financial services for customers, to some extent, means transforming the values of our retail banking.”

Since the reform of business divisions in 2005, the retail banking of Industrial Bank (IB) has witnessed significant improvement in its main business indexes including deposit, loan, and customer size, within only a period of several years, and substantial change in its market position in the banking industry.

Recently, the “Retail Banking Management Headquarters” of the bank took out the word “management” quietly, which seems to mean that its reform of retail banking will also make a new stride. In the opinion of Chen Jinguang, Vice President of IB, the retail banking business is also at a key historical node with the rise of internet finance and change of living environment in cities. Grasping this opportunity, the retail banking of IB will witness a new round of frog-leap development, and mutually complements and gets highly integrated with the financial market business and corporate finance business. Moreover, its future development will, no doubt, become more robust. The reporter of Securities Times made an exclusive interview with Vice President Chen Jinguang regarding some hot topics.

Deepening the reform of retail banking
Reporter of Securities Times: By changing the name of “Retail Banking Management Headquarters” to “Retail Banking Headquarters”, what kind of message does it intend to deliver to the market?

Chen Jinguang: In 2005, we put forward to transform the “business model and profiting model”. According to this strategic requirement, the retail banking took the lead to carry out business transformation in the bank. Over years of practice, after the listing of the bank in 2007 in particular, we took the mortgage loan as the breakthrough point, drove liabilities with assets, and achieved frog-leap development of retail banking preliminarily, outperforming other businesses substantially from an absolute position falling behind.

However, in confrontation with the profound changes in market environment, the conventional development model has to face against increasing challenges. It already cannot adapt to the development of the times to take the deposit size as the main indicator. It will be unavoidable to have diversified financial assets of customers, so it is necessary to make adjustment to the entire production and operation model to achieve frog-leap development again.

To change the name of “Retail Banking Management Headquarters” to “Retail Banking Headquarters” reveals our change from being management-based to being operation-oriented. This means the further deepened reform of retail banking and adaptation to the market development trend fundamentally.

Reporter of Securities Times: How do you look at the change in the future operating model of retail banking?

Chen Jinguang: Centering on customers, we will make adjustment from top-level design at the top to the channel construction and product R&D at the bottom. In this year, we will start mainly from the following four aspects specifically:

In terms of system and mechanism, we will alter our assessment method and business targets and readjust the organizational structure and team building model in the retail banking line. In terms of channel construction, we will insist on the combination of tangible and intangible channels. Now, the service model of community bank has been put into pilot operation across China and the electronic banking is also in the process of upgrading. In the meantime, because we have unique advantages, namely more than 20,000 outlets connected by the bank-bank platform, thus we have channels with robust service potential. In terms of product development, we have developed and upgraded the products including travel loan, simple loan and Enjoyable Life. We have those products that others do not have, better ones for those that others have, and new ones for those better products that others have, thus really achieving differentiated competition. In terms of basic work, we have built and transformed several main systems including customer relation system and employee performance system, and thus established powerful back office system guarantee. With these effective measures, we improve customer experience to a brand-new height.

Looking into the future, we always believe that profits will come naturally as long as we can make customers satisfactory. For this reason, the Head Office established the Department of Customer Development in this year, putting customer development at the first place for the development of retail banking. Meanwhile, we have adjusted the “savings-focused” business orientation, taken the general financial assets of customers as the assessment indicator, and guided to entire bank to be in the shoes of customers, so as to provide more diversified financial services to customers. To some extent, it is to transform the values of our retail banking.

The Head Office has also always endeavored to be a good product supplier, with a view to providing sufficient products for the sales terminals. By transforming our business model and improving the service contents, the profiting model of our retail banking will become more mature in the future.

Reporter of Securities Times: We can feel the importance to improve customer experience in your introduction. Could you give us some examples?

Chen Jinguang: From the products including the “Suixingyou” (Interest-guided Tour) developed in this year and the upgraded “Enjoyable Life”, we can see how we increase our own profits by reshaping customer experience.

Let's take travel loan as an example. An increasing number of Chinese people realize that it is a life attitude to travel: young people should travel for their honeymoons; the elderly should travel in groups after retirement, and officer workers should take their kids to travel by asking for annual leave even if they are very busy and tired.

In contrast with the development of the tourism, the support services of financial industry are far from enough. Upon the chance that the state encourages the development of travel consumption, we took the lead to enter the travel finance market. The travel loan brand “Suixingyou” (Interest-guided Tour) that we have built with enormous efforts has witnessed significant social effects.

Since the release of the brand in May 16, we have registered a total of more than 140,000 travel loans. In the summer vacation, a midseason for traveling, the single peak day may register more than 3,000 loans. This means that our product rightly meets the needs of customers. Therefore, we have developed a large number of new customers. Meanwhile, as consumption-based loan, the travel loan may float its rate up to some extent based on the benchmark rate, which also generate a considerable amount of incomes.

Another example is the integrated service program “Enjoyable Life”. It is also a good product developed in the process of offering services to the aged customers in the early period, which can “obtain reasonable profits while bringing benefits to the stakeholders” and contain rich business opportunities. Now, there have already been over 200,000 aged customers joining the “Enjoyable Life” club, and the total volume of general financial assets under the management of our bank has broke through RMB 200 billion.

“Aging population”, “retirement age rise” and “house-for-pension scheme” are all hot terms in this year. Therefore, we further released the upgraded version of “Enjoyable Life” following the trend. Besides providing more considerate wealth management and financial services by bringing into play our specialties, the upgraded version will also provide value-added services and life guarantee in more areas by collaborating with professional social old-age care institutions.

When we go to restaurants, each of them will have some brand dishes. Afterwards, “Suixingyou” and “Enjoyable Life” will be the brand services of our retail banking. Of course, IB is a big restaurant, and we will increase a number of brand dishes each year so as to meet the needs of different customers.

Integrating the advantages of community banking

Reporter of Securities Times: Recently, another bank marched into the market of community banking with a high profile, and proposed specific development ideas. What plans do you have in terms of channel construction?

Chen Jinguang: Based on the experience of banks in the developed countries and successful experience of domestic banks, channel construction is still a key task for sustainable development of banks currently.

Based on the pilot sites launched in this year, we have also begun to sink into communities. IB Fuzhou Federal Plaza Community Sub-branch is the first community banking outlet, which extends the business hours to 8 pm and provides great convenience to community residents. From its opening in this June to now, the savings deposits have exceeded RMB 50 million, and the wealth management products also witness desired sales results.

By now, we have opened more than 70 pilot community banking outlets across China, registering great benefits.

With regard to site selection, we open such outlets at the areas with concentrated target customers, and thus they can fully exert the advantages of approaching residents and customers. If we open outlets at the doorway of customers and attract customers to come inside with our outstanding products and services, a close neighbor-based relation can be established between us and customers.

Considering the high rent cost in cities of the first tier, we have developed a path of expansion based on low cost. With scientific management mechanism, all of these community banking outlets, regardless of size, can provide driving power for the development of IB.

Now, there are still many customer groups, e.g. some vendors in the street, which are the blind zone of banking service. Community banking can build a good platform for integrating resources of both parties. Next month, we will officially release the “Simple Loan”, consolidating surrounding vendors with community banking outlets. We will provide POS machine to solve their problems regarding fees payment with cash, payment and settlement. Based on the running statement of each month, these vendors can also directly handle loans on the internet, so it is very convenient.

Private banking toward a consulting-driven business

Reporter of Securities Times: Private banking is an emerging business and now many banks have got involved in the area. Could you talk about your understanding to the business?

Chen Jinguang: Private banking is not the simple upgrading of private wealth management or retail banking, but a brand-new service model. The popular position given to private banking in the international community is not to simply sell wealth management products, but to meet the needs of customers with integrated and all-round product tools and service measures, so as to improve customer value.

Our private banking business has witnessed fast growth since the launch in 2011, with nearly 14,000 customers. With the general financial assets under our management going beyond RMB 150 billion, it has drawn great attention from the industry both in terms of growth performance and development potential.

According to the research report that we and Hurun Report have issued jointly, there are about 2.8 million high-net-worth individuals (HNWI) with net financial assets exceeding RMB 6 million each at home. Therefore, the development of private banking will have a vast prospect in the future.

We mainly start from the following aspects. First, we should have clear understanding of game rules. In this year, we have made a careful study over the management experience of outstanding private banking institutions both at home and abroad. Meanwhile, in combination with our own endeavor and exploration, we are forming a set of efficient operation and management model.

Next, we should organize a professional team. Talents are a key factor to develop private banking. A reliable and professional image is the basis to win the trust of customers. We will accelerate the training and introduction of professional talents to build a private banking team of high quality and construct a well-established incentive mechanism.

Third, we should provide apposite services. What private banking provides to customers are all-sided services, covering both financial and non-financial services. This requires us, on the one hand, to improve our professional strength and gain the recognition of customers; and on the other hand, improve our service level in an all-round manner to make customer satisfactory. In the meantime, we should also reinforce the exchange and cooperation mechanism with external institutions, e.g. fund company and trust company, so as to learn from others' strongpoint to make up our own shortcomings and meet the needs of customers fully. With our unremitting efforts, the private banking will gradually transform from a product-driven business to a consulting-driven one.