China’s rapid embrace of financial transactions via smartphone has opened new opportunities in the investment sector. Li Yimei, CEO of Beijing-based ChinaAMC, describes how her firm is using technology to serve clients and stay on top of the asset management business.
Global Finance: Please tell us about the “Charlie” robo-advisor.
Li Yimei: Last year, we developed Charlie as our first in-house robotic financial advisor, to cater to China’s massive working population who need long-term financial planning. The “robo-investment” function of Charlie covers three types of basic investment demand: daily wealth management, childhood education and retirement, matching each with an investment portfolio, corresponding risks and expected return. The system has already served more than 84,000 customers. We are upgrading the system to diversify possible scenarios to better tailor portfolios for our customers.
For example, when Charlie identifies a customer as a father who may want to prepare financially for his 5-year-old child’s high school, it can recommend for him a portfolio with a 10-year duration and periodically recommend position adjustments according to market shifts. Portfolios for a father preparing for his child’s college could include longer-term products with higher risk.
GF: How have WeChat, JD and other online financial services helped ChinaAMC?
Li: The past few years have witnessed explosive growth for China’s online-based financial services platforms, exemplified by Tencent’s WeChat and JD Finance. Unlike traditional sales models that relied primarily on banks and brokerages, these online platforms have drastically shortened the distance between consumers and fund products.
We actively embraced the mobile internet from the onset. In addition to relying on various mobile apps as our direct sales channel, we are the first fund company to partner with Baidu, Alibaba and Tencent at the same time. Banks remain a dominant sales channel in China. But we expect a future in which traditional financial institutions and online platforms are more intertwined and mutually dependent.
GF: Not to be overlooked are the benefits of computer technology for investment management systems. How has ChinaAMC applied computerization to exchange-traded fund (ETF) management?
Li: We view ETFs as a strategic business and a commanding height to win in the highly competitive Chinese mutual fund industry. Since the launch of our first ETF in 2004 (also China’s first), we have invested tremendous resources into our proprietary index-investing system, risk management, liquidity support, sales and client service. We are among the very few companies to develop our own portfolio composition files system. Because of these efforts, we have become the largest ETF manager in China, accounting for one-quarter of China’s ETFs by the end of June.
GF: How is ChinaAMC using artificial intelligence (AI) to broaden its customer base?
Li: AI has also been used extensively for investment advisories. AI is good at sifting through a vast trove of customer data before profiling and accurately matching demand with suitable products. It has cut average costs tremendously and lowered the bar. Otherwise, only wealthy people with millions of yuan in assets would be served; Charlie requires a minimum of 500 yuan [$70] to be eligible for our service.
AI will continue reshaping the asset management industry. AI is good at crunching a vast amount of dynamic data in real time and applying complex logic and machine learning to predict the market. If we compare investing to scouting for crabs on a beach, a rookie has to flip over 10 rocks to spot a crab. But AI flips over all of the rocks in a second!
