Ping An Bank’s ambitious and innovative strategy to transform its retail business made the bank a digital banking leader in only four years and created a “finance+” ecosystem that redefined retail banking.
“Elephants Can Dance.” People in China use this phrase to describe how difficult real change can be for a financial institution. For Ping An Bank, an innovative joint-stock Chinese bank headquartered in Shenzen, it took only four years a transform itself from a large-scale retail banking follower to a tech-advantaged retail banking leader and industry visionary with its retail business delivering more than half of total profits in 2020.
When the bank began its retail business transformation in 2016, Xie Yonglin, Chairman of Ping An Bank, set his sights on becoming China’s leading digital retail bank. Over the next four years, Ping An Bank’s retail business grew quickly on a clear path – from service to platform, from platform to ecology – through its advanced technology strength, outstanding professional services, and sharp insight into customer needs.
Finance + Ecology + Technology Redefines Retail Banking
“The best way to predict the future is to invent it” – futurist Nicholas Negroponte.
Based on the concept that “Whoever Gets the Scenario Right Wins, but the Right Scenario Depends on Ecology,” Ping An Bank’s retail transformation was built on a visionary “finance+” ecology designed to achieve a closed-loop operation of banking services and customer lifestyle needs. The bank rolled out new apps to create a “finance +” ecosystem for customers, with Finance Channel, Life Channel, and a“Finance + Life”online platform to connect customers to high-demand services, including food, clothing, shelter, transportation, and health.
Ping An Bank’s focused and strategic investment in technology was the foundation of its retail banking breakthrough, supporting its “finance+” ecology. The bank employed more than 8,000 technology personnel as of June 2020, a 13% increase in only six months, and it increased its annual IT capital expenditure and investment by 24.8% from the prior year.
Technology Edge moved the bank’s retail business online, greatly reducing labor costs and improving customer service efficiency. AI now accounts for 90% of Ping An Bank’s customer service, enabling the bank to serve five times the number of customers per month than last year and lowering operating costs per customer by 38%.
In 2020, Ping An Bank applied its new “finance +” strategy to its retail, private banking, consumer finance, and multi-type financial businesses. “Digitalization of operations, strengthening online operations, providing comprehensive services, and developing the banking ecosystem resulted in a 1+1+1+1>4 advantage,” said Xie.
Strong Profits & Ambitious Private Banking Growth Targets
Ping An Bank’s goal over the next three years is to rebuild its balance sheet and hone its competitive advantages in digital banking, eco-banking, and platform banking. “The future is all about technology,” said Xie. “Leveraging our corporate technology innovation and existing technology capabilities, Ping An Bank has put technology at the heart of our business and we expect to achieve vigorous growth in the next development cycle.”
In the first half of 2020, Ping An Bank’s retail revenue reached RMB 43.353 billion, up 12.3% from last year, representing 55.3% of total business revenue and 54.7% of profit. During this period, Ping An Private Bank delivered stellar results, as qualified client assets under management (AUM) broke a trillion RMB by July.
“Ping An Bank has put technology at the heart of our business and we expect to achieve vigorous growth in the next development cycle.”
Ready to embark on the second stage of its retail transformation, Ping An Bank is planning to double its AUM. “We are planning to increase AUM from RMB1 trillion to RMB2 trillion in only two years,” said Cai Xinfa, Head of Retail Banking at Ping An Bank.
How will Ping An Bank achieve this remarkable feat? Its private banking growth has been surging exponentially in recent years, with AUM quarterly growth breaking RMB100 billion in 2018 and rising to enter the Trillion-Yuan Club in July. Behind this ambition, and success, lies the powerful strength of Ping An Private Bank. The bank committed to innovating and upgrading its private banking products, technology, and business modes across the organization in the first half of this year.
First Ping An Bank improved all private banking products, providing enhanced coverage for all products and enabling more robust financial services to high net worth clients. Next it upgraded the organization, building the 1+N investment consultation service system which includes private banking, online investment consultation, product management, legal & tax consultation, and meeting all customer investment and financing needs. It introduced comprehensive technology upgrades, including building customer-oriented online private banking platforms and tools, strengthening online capabilities, and creating the industry’s first AI display, reducing customer transaction time from five minutes to zero and AI signature approval optimized to eight seconds.
The Elephant is Dancing
“With new technology, growth is empowered with endless possibilities,” said Cai. “We have taken advantage of AI technology to boost our private bank businesses and give our customers better service experiences.” Reaching RMB 2 trillion AUM in two years was just a small step for Ping An Bank. The ultimate goal is to rank among the World’s Leading Private Banks in 10 Years, and their retail strategy is moving them closer and closer to the target.