Industrial Bank Redoubles its Bank-securities Business
Released 10: 00 January 5, 2011 Source: China Network Television
While the capital market has become increasingly mature and complete in China, the business and cooperation between commercial banks and securities companies are also increasingly deep. From bank-securities transfers to the third-party depository, the cooperation between banks and securities companies has been extended from conventional capital deposits and settlement services to deeper cooperation, such as product creation and channel sharing. As the first commercial bank to engage in banking in the securities market, Industrial Bank (IB) has been committed to the development of its bank-securities business for over 10 years. The number of securities companies that IB serves and its share in the depositary market for security transaction settled funds is at the forefront compared with other similar banks in China, and IB also takes the lead in the bank-securities business field. In order to explore IB's fast development secrets in its bank-securities business, a few days ago, a reporter interviewed IB's Inter-bank business department's General Manager Zheng Xinlin.
Grasping Market Opportunities to Establish the Foundation for Developing a Bank-securities Business
As one of the earliest commercial banks to be engaged in the securities market banking business, in 1996, IB started a China inter-bank settlement service, a relatively early security fund settlement business, becoming the designated bank for settling the securities funds of the Shanghai Stock Exchange and Shenzhen Stock Exchange. IB established a preliminary inter-bank service system centered on bank-securities cooperation. After which, IB obtained the certification as a depositary bank of security funds and a verification bank for new stocks. For over 10 years, IB has actively improved its service model and carried out bold reforms and innovation around the changes in regulatory policies and market development trends while paying attention to standard operations. The bank has stood and grown together with the Chinese securities market regardless of the situation, winning extensive recognition from market players and occupying a certain market share in the field of bank-securities, gradually become a special advantage of IB. Looking back over more than 10 years at the achievements of IB in bank-securities, IB's key lies in its ability to accurately grasp the great opportunities in the market's transformation and regulatory reforms and establishing cooperative alliances with securities companies at the appropriate times to drive forward various financial service programs, moreover IB's achievements have been made by engaging in the security funds settlement business relatively early, and by strengthening its support to key securities companies during the downturn of the industry, catching the first chances of the depository system's reforms. All of these have built up a good foundation for the rapid development of IB's bank-securities business.
At present, The Chinese securities market is in a period of rapid development, with innovative products emerging one after another. This elevates the requirements for commercial banks to provide a specialized level of bank-securities services. Following the specialized principle, IB has always abided by the guideline of being a “specialist bank”, using the specialized operating concept throughout the organizational system, team construction, internal controls and risk management system. Taking the organizational system as an example, according to the specialized labor divisions requirements, IB established a special securities inter-bank office in the institutional business department of the Head Office, being responsible for the business management, marketing, product innovation, and customer service of the banking business in securities market. Meanwhile, the Bank also assigned securities inter-bank service managers at various branches especially to strengthen the relevant services for securities brokers, ensure the implementation of the bank's business programs, policies and measures, and strengthen the guiding and driving power of the Head Office over the bank-securities business.
Fight a Good Third-party Depository Campaign to Take the Initiative
The third-party depository is a product of the great reform in the capital depositing model of the Chinese securities market. Boasting years of service experience and sharp sensitivity in the securities market, as early as 2005, IB began to pay attention to their customers' the third-party depository business, initiating in-depth research into the effective ways for safekeeping customers' capital and having discussions with many securities brokers. In 2006 ahead of schedule, IB launched the customer reserve and system research and development. In November that same year, IB was one of the first three banks (ICBC, CCB and IB) in the industry to sign the first multi-bank the third-party depository agreement with Guotai Junan Securities.
In the initial period of development, because tight limitations required in policy and weak branch coverage and customer foundation, IB faced an unfavorable environment to expand its the third-party depository business. For this reason, IB took its expansion in the online securities companies as a breakthrough point of its the third-party depository business, and timely adjusted and regulated its work procedures, possessing an unconventional and efficient network accessing speed giving IB the first chance from among the competition for developing bank terminal customers. During business implementation process, IB has always regarded the third-party depository business as the main position for bank-securities cooperation. IB has formulated clear development strategies and continued investing resources to intensify the marketing towards its target terminal customers. The bank has furthered business cooperation by relying on the combined marketing of special businesses with securities companies and intensified efforts carrying point-to-point marketing activity (including residential business offices of securities brokers) and actively developed a group of middle and high-end customer resources. As for corporate customers, IB emphasizes taking the initiative and the advantage that brings to carry out joint marketing with other business sectors, especially regarding corporate customers holding restricted but tradable shares of listed companies under the backdrop of focusing “previously forbidden activities” for reducing exposure to “large and small parts of non-tradable shares”. In terms of innovative business services, IB took furthering the coordinated service with securities companies as the emphasis, creating product portfolios and service programs including bank-securities co-branded cards and structure financing products. To the present, the third-party depository business of IB has networked 96 online securities companies (of them, four companies are merged) and nearly 20% of online securities brokers have chosen IB as their first online bank. Online customers have exceeded 2 million, setting a sound foundation for developing the bank-securities business to the next stage.
Exploring Broader Space for Bank-securities Cooperation
Following on from the increasing advances of the financial markets “disintermediation” and integration oriented operation, the coordination and cooperation with securities companies is an important path for commercial banks to take part in the capital market. IB will start from the complementary nature and interdependency of the banking and securities businesses to explore a broader space for bank-securities cooperation.
The first step is share customer resources. Do this by discussing with securities brokers the investment demand and assets structure of shared customers and undertaking comprehensive analysis, the bank will provide more pertinent and all-round products and services according to different service characteristics of the bank and the securities companies. The second step is to share products and channels. Securities companies can expand products' scales and market influence at a fast rate relying on the marketing channels of commercial banks and can enrich their own sets of products by working as agencies for the fixed-income financing products and gold trading products of commercial banks. Commercial banks can gain access to capital markets and currency markets channels through securities companies to bring products in the capital market into the comprehensive financing scope of customers and provide customers with more financing products with varying returns and risk levels. The third step is customer managers of banks and stockbrokers closer cooperation. As both parties encounter the market directly, bank branches and sales offices of securities companies can directly receive information from customers and give feedback, they are the final executors of sales and services to customers. The braches of banks and securities companies may facilitate the communication and business contact between their customer managers through establishing “paired relationships”, so as to share experiences in customer marketing and improve the service experience and investment returns of customers together.
Bank-securities Business Cooperation in the Post Third-party depository Age
After the clean-up, rectification and equity division reform, the Chinese securities market has stepped into a healthy development path. With the accelerating market orientation of interest rates, product innovation based on the securities market will become a major driving force for the market orientation of interest rates. At the same time, newly-emerged businesses, such as financial futures trading and self-operated PE of securities companies will also bring a larger space for the cooperation of securities companies and commercial banks.
Under the backdrop of the financial markets synchronized development, the requirements of customers for wealth management services is becoming increasingly individualized. This also objectively requires both banks and securities companies to integrate with each other to cooperate on innovation and complementing each other with respective advantages; and to actively develop synchronized, collaborative and innovative financial service products in order to meet the overall demands of the market and customers. The third-party depository business is a crossing point for banks and securities companies to meet the demands of customers for diversified investment and wealth management services relying on their unique service platforms and specialized advantages respectively.
On the other hand, with the gradual opening of the international financial market, 24*7 fund transactions will become a trend of the future. Besides providing more financing tools, banks should also improve customers' satisfaction in extending the operating time period for fund transactions and centralizing idle money. For example, banks may now consider reducing restrictions on the operating time period for bank-securities transfers to facilitate customers in getting the highest fund utilization benefits and secure the highest turnover rate. Additionally, at present the customers who handle their transactions off-site, i.e. using the internet and telephone takes up a large proportion of the accepted channels of securities companies. Hence, banks may strengthen their multi-channel services, increasing channels for signing the third-party depository agreements, inquiring, and securities agency transactions via internet banking and mobile banking to facilitate customers' ability to handle securities activities through banking channels.
Facing the development trend of bank-securities business in the third-party depository age, IB will further consolidate and improve its bank-securities business foundation, consolidate its traditional advantages, and further enhance the “customer-focused” management model, also intensifying customer sub-categorization and business innovation, establishing a complete integrated marketing system and improve its integrated service capacity and core competitiveness, so as to continue its leading position in the field of bank-securities cooperation in the Chinese market.