At the end of the third quarter of 2013, the assets custody scale of Industrial Bank (IB) reached RMB 2633.02 billion, a doubled increase on a year-on-year basis, and compared with the scale of RMB 227.149 billion at the end of 2010, it increased by 10.6 times. Initiated in February 2005, the assets custody business of IB has grasped various favorable opportunities depending on powerful internal integration advantages, extended its business qualifications to many areas including fund, securities, trust and QDII, and become an outstanding player in the field of assets custody. Now, it is endeavoring to become the leader in the field. According to the Development Report of China Assets Custody Industry (2012), IB has ascended into the first echelon of domestic custody banks in terms of custody incomes with its fast growth of assets under its custody, only next to the four big state-owned banks, ranking No. 1 among all joint-stock commercial banks.
What are the secrets behind its achievements? Our newspaper made an exclusive interview with Wu Ruoman, General Manager of the Assets Custody Department of IB.
Economic Observer Newspaper : Now, all banks develop assets custody as a strategic business. In your opinion, what are the major causes?
Wu Ruoman: The development of assets custody business is an unavoidable trend. It has become a very important intermediate business in the financial market due to its “independent, safe and specialized” features.
For commercial banks, the steady development of capital market generates various investment and wealth management businesses, which bring new development opportunities for their assets custody business. Meanwhile, in the process of financial disintermediation and acceleration of market-oriented interest rates, all banks are in urgent need of transforming their profiting model. As the business of assets custody occupies no capital and boasts significant integrated gains, it tallies with general trend for commercial banks to transform themselves toward “low capital consumption and sustained growth”. As a result, the business attracts great attention from commercial banks.
Economic Observer Newspaper : Could you talk about the general development ideas of IB for the business of assets custody?
Wu Ruoman: The assets custody of IB has always adhered to the road of differentiated development. Such differentiation can be seen not only in the innovation of products, but also in our day-to-day services. Over these years, we insisted on building a professional research team to catch the financial tendency on a real-time basis, studied the changes in policies and market, and made judgment over and adjustment to the business development direction. Our bank concentrated the major objectives of custody onto the trust business and securities platform business in recent years and built them into our leading products. By the end of the third quarter of 2013, our custody scale under trust plan hit RMB 840.440 million and that under tailored plan hit RMB 732.655 million, both ranking No. 1 in the market.
Economic Observer Newspaper : The assets custody business of IB developed at a rocketing speed, making noticeable achievements. What are the reasons for the success of IB?
Wu Ruoman: First, since the initiation in 2005, the assets custody of IB has always adhered to taking business innovation as the prime power for development and progress, kept extending the business areas of custody, and actively strived for various business qualifications. We always believe that we can respond to the coming business opportunities by easy stages and not fail the trust of customers only by building a solid foundation in an all-round way. Meanwhile, the diversified business categories also disperse market risks in an effective way.
Second, as the saying goes, “talents are the soul of an enterprise”. We attach great importance to the training of Interdisciplinary talents and building of team spirit. During the day-to-day business operation, the marketing team, legal examination team and accounting operation team must, besides internal close cooperation, also grasp the macroeconomic situation in the long run, and improve professional capability through constant study and research.
Third, innovation brings business vitality and good benefits. In the past year, we adhered to promote efficient and sound services with innovation. Our professional team is good at seizing changes in policies and market, understanding the needs of customers, and keeps developing new services out of the old continuously and extending new custody areas. Up to now, we have taken the lead to release a number of innovative products in the industry, and we offered 16 influential innovative product programs only in 2012.
Fourth, while pursuing innovation, we have also made great efforts to extend business channels, built service sharing platforms of high quality for customers, and put ourselves in the customer's shoes to seek common development with customers. Moreover, we encourage and support customers to practice innovative ideas and provide them with outstanding technical and business support. Thanks to that we have upheld the concept of “customers' interests first”, we have won the recognition of customers and constructed a solid customer foundation. Now, we have more than 200 partners in the business of assets custody.
Economic Observer Newspaper : What measures has IB taken to improve the satisfaction of customers?
Wu Ruoman: In order to ensure that customers can have good service experience, we have also carried out classified business management and simplified the business process based on intensifying audit control over internal risks, so as to improve the operation efficiency and further guarantee the interests of customers and investors. In the meantime, we have set store by technological input and established a stable and experienced development team and efficient and flexible development mechanism, responding to various business demands in a timely manner. The large-sized projects developed in each year reach about three on average. Now, we have formed a system cluster featuring core processing of custody business, interactive channels for front-end customers, and professional support at the back end across the bank. Considering the business volume growing at a fast rate, we laid stress on improving the automation level of system in all links and took the following measures such as launching or closing products in batches, automatic entry of electronic data, electronic account checking in batches, transmitting customer's statements in a linked way, and effective combination of system with operators, so as to ensure the smooth handling of business. On May 27, 2013, the new generation of assets custody system was put into operation smoothly, lending further boost for the faster and sturdier development of our bank in the field of assets custody and driving the further improvement of service efficiency and customer satisfaction.
Economic Observer Newspaper : While keeping business growth at a rocketing speed, how did IB balance the relation between scale growth and risk management?
Wu Ruoman: In terms of risk management, we started by preventing compliance risks and operation risks. In terms of compliance, we established special audit supervision office for risk control and compliance examination in our department, building an internal control mechanism with clear structure and effective control. During the examination of contract texts, all the contracts about custody business were examined by competent expert-level legal professionals to protect the interests of investors and the benefits and rights of custodian banks. With regard to avoiding operation risks, we have established unified and normative standardized work process. Besides, we can fill up the gap in process or management in a timely manner according to business development and changes in situation, keeping up with the time and preventing undesired events from happening. We have also established the fast response mechanism and plan against possible emergencies during operation, so as to ensure that the problems can be solved quickly after the occurrence of emergencies.
Since we started to carry out custody business, we have not encountered any dispute over contract or agreement or any case related to custody business, and have kept sturdy and smooth development all the time.