With the in-depth development of the digital economy, "digitalization" has become a strategic standard for China's banking (601988) industry. In recent years, digitalization has become a disruptive phenomenon in the strategic transformation of global enterprises. Banks are accelerating their digital transformation with the help of emerging technologies to achieve high-quality development. The Fintech Development Plan (2022-2025) issued by the People's Bank of China in January 2022 pointed out that "in the next four years, accelerate the improvement of the modern financial system that adapts to the development of the digital economy and contribute financial strength to the construction of a new development pattern". To build a modern financial system and optimize banking and financial services, we need the support of full-process innovation of digital technology.
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Based on the achievements and related trends of the digital transformation of the banking industry in 2023, this article looks forward to the development trend of the banking industry in 2024 in a number of hot technology fields such as big data, digital talents, and open platforms.
The policy is implemented in AI applications or an inflection point
In July 2023, the Cyberspace Administration of China, together with the Ministry of Education, the Ministry of Science and Technology, the Ministry of Industry and Information Technology, the Ministry of Public Security, and the State Administration of Radio, Film and Television, announced the Interim Measures for the Administration of Generative AI Services (hereinafter referred to as the "Measures"), which will come into force on August 15, 2023. The relevant person in charge of the Cyberspace Administration of China said that the introduction of the "Measures" aims to promote the healthy development and standardized application of generative artificial intelligence, safeguard the public interest, and protect the legitimate rights and interests of citizens, legal persons and other organizations.
IDC**, by 2025, more than 80% of banks will deploy digital humans. "Understand words, understand language, and understand business" has become the normal ability of digital employees, and digital employees will be based on repetitive and low value-added work, do a good job as people's intelligent assistants, and free up manpower to do more creative work.
"Data Elements Financial Services" generate innovative "chemistry".
The National Data Bureau and other departments recently jointly issued the "Three-Year Action Plan for "Data Elements" (2024-2026). In terms of key actions, the action plan selects industries and fields such as industrial manufacturing, modern agriculture, commerce and trade circulation, transportation, financial services, and scientific and technological innovation to promote the multiplier effect of data elements and release the value of data elements. In terms of "data elements and financial services", the Action Plan proposes to improve the level of financial services, support financial institutions to integrate and use data such as science and technology, environmental protection, industry and commerce, taxation, meteorology, consumption, medical care, social security, agriculture and rural areas, water and electricity, strengthen the identification of entities, optimize credit business management and insurance product design and underwriting and claims services in accordance with laws and regulations, and improve the level of financial services for the real economy.
With the acceleration of digital transformation, banks are facing an increasingly large amount of data, and at the same time, due to their special risk attributes, they have extremely high requirements for system stability and business security, so data security, data governance, and data value mining have become important propositions in the circulation and application of financial data elements.
To empower the digital transformation of banks, it is necessary to focus on improving the efficiency of data use, mining the intrinsic value of data, and promoting the circulation and integration of data elements, so as to better play its active role in consumer finance and small and micro financial services. In the future, banks need to pay more attention to data and rely on data assets to provide customers with integrated and customized financial services in a safe and controllable environment.
Digital risk control or innovation model
Risk control is the foundation of commercial banks' operations, and it is also the focus of current and future operations. Based on its risk control technology and capabilities, digital technology will make full use of financial technology to build a new intelligent risk control system and reshape the core competitiveness of banks. Compared with the traditional risk control model, the intelligent risk control system can collect, accumulate and integrate transaction data, operating data and financial data, reduce the dependence on manpower and experience, effectively improve the efficiency and accuracy of the bank's traditional risk control algorithms and models, establish a new risk management and control model, and truly realize big data risk management and control in a highly automated operation process.
Banks continue to explore the transformation path of digital risk control, and their understanding of digital risk control has also deepened in practice. In the future, digital risk control will not only be the comprehensive application of financial technology such as data and models, but also an innovative model for the deep integration of commercial banking business and management.
Innovative models continue to emerge Open banking will welcome more development opportunities
The launch of open banking has broken the closed relationship between banks and customers, and customers can access financial services in non-financial scenarios through third-party platforms. While opening up their own services and data, banks can also work with partners to acquire new customers, increase customer touchpoints, create innovative services, and improve customer experience through data aggregation and product innovation. The open banking model enables banks, customers, and third parties to achieve a win-win situation for all parties, and jointly promote market size growth through cooperation.
At present, large state-owned banks to joint-stock banks, and even urban commercial banks and rural commercial banks are actively trying to adapt to their own characteristics of the open banking model. As pioneers of open banking in China, large banks have also explored a development path that suits their own characteristics, and small and medium-sized banks have jointly built an open platform through cooperation to connect small and medium-sized banks and scenarios, and help them develop Internet financial business. It can be seen that all banks have recognized the huge opportunities contained in open banking, and are actively exploring and deploying, and for the Chinese market, which has a high degree of consumer digitalization, more flexible open banking models and more innovation opportunities may emerge in the future.
Create a new highland for digital talents The future of "intelligence + skills" can be expected
With the increasingly fierce market-oriented competition, the core competitiveness of banks in the future will come from the specialization of people and the intelligence of the system. In the past, the management and empowerment of bank professionals and managers were more advanced, and in the future, through the action platform and talent portrait system, targeted digital process management and business empowerment will be carried out for employees and managers in each position, and the whole process of data accumulation will form accurate support for talent management decision-making, so as to improve the depth and efficiency of management, the professional ability of employees and the ability to study and judge personnel risks.
In the past, banks focused on digital management of customers, but now they are increasingly focusing on digital management of internal talent. However, most banks are only using traditional online human resource management, rather than truly digitally managing and intelligently empowering employees. Perhaps, in the near future, the construction of a talent building platform for future banks will allow employees to truly use digital technology to carry out their work, so that data can empower professionalism and professionalism create value.
The reform of the rural credit system welcomes new opportunities for the digital development of rural financial institutions
In August 2023, the State Administration of Financial Supervision and Administration approved the establishment of Liaoning Rural Commercial Bank, Henan Rural Commercial United Bank, and Shanxi Rural Commercial United BankIn December, the reply disclosed by the Sichuan Supervision Bureau of the State Administration of Financial Supervision showed that it was agreed that Deyang Rural Commercial Bank would absorb and merge Sichuan Guanghan Rural Commercial Bank, Sichuan Shifang Rural Commercial Bank, Sichuan Mianzhu Rural Commercial Bank and Sichuan Zhongjiang Rural Commercial Bank, and inherit the creditor's rights and debts of the above four banks, and a new round of reform of the rural credit system was accelerated.
In 2024, for newly established rural financial institutions, they may be able to shift gears and speed up the digital financial track, and create differentiated competitive advantages by learning from the advanced paradigm of their peers.
Regarding how small and medium-sized banks can catch the digital transformation express, Li Wei, director of the Science and Technology Department of the People's Bank of China, pointed out in an exclusive interview that digital transformation requires a lot of resources, continuous introduction of new technologies, construction of new systems, and research and development of new products, which is inseparable from the support of strong digital capabilities. Small and medium-sized banks are often unable to face the challenges of digital transformation due to their inherent lack of digital capabilities. How to "stay behind" in the digital transformation competition?In this regard, the new stage of financial technology development plan issued by the People's Bank of China proposes to encourage open cooperation, mutual benefit and sharing of common technologies, resources and services of financial technology, and promote the industrialization and large-scale application of new technologies.
Specifically, there can be two schemes: one is to huddle together for warmth. According to their own characteristics, small and medium-sized banks can reduce the duplication of IT infrastructure construction through cooperatives and interbank alliances, share costs in an intensive way, and improve overall production efficiency and operating efficiency. The second is to borrow a boat to go to sea. Small and medium-sized banks can rely on external technology to alleviate the problem of insufficient technical strength. Based on their own technical goals and business needs, small and medium-sized banks can cooperate with large financial institutions and technology companies in the fields of big data, cloud computing, and blockchain, and learn from financial technology capabilities such as cutting-edge technology applications, system construction, and digital operations, so as to avoid detours in the process of digital transformation.