On December 22, the Industrial Bank took another move on its group-based development when Industrial Digital Financial Services Co., Ltd. (hereinafter referred to as "IB Digital Financial") opened in Shanghai.
With a registered capital of 500 million yuan, IB Digital Financial was jointly invested by the Industrial Bank and Global Infotech Co., Ltd., Shenzhen Kingdom Company and , and implementsemployee ownership programme. Among them, the Industrial Bank, through IB Wealth and Assets Management Limited, a wholly-owned subsidiary of IB's holding subsidiary Industrial Fund Management Co., Ltd., has 51% shareholding, Shanghai Beiyuan Investment and Management Center, the employee stock ownership platform (partnership form) has 19%, the other three joint investors have 10% respectively.
Embracing the Digital Wave
In the Internet era, more open and inclusive Internet companies extend their business to the traditional financial sector, forging a variety of unexpected business model, and continue to "erode" the existing market share of banks. Industrial Bank clearly understands that, faced with fierce "cross-sector" challenges, the only way to win is to move actively and creatively.
With the bank-bank platform launched in 2010 and based on a comprehensive financial services solutions composed of payment and settlement, wealth management, science and technology output, financing services, capital and assets & liabilities structure optimization, use of funds, agency for international settlements and training and exchange, IB has helped many small and medium sized banks to realize the improvement of management level and market competitiveness, created a new model of banks cooperation which quickly became its prominent competitive advantage in the field of interbank business. As of the end of November 2015, the bank-bank platform has 637 contract customers, 529 customers in operation, 294 cooperative banks interoperated via counters, linking more than 35,000 outlets, and the total amount of payment and settlement exceeded 2.5 trillion yuan. In the export of technology for small and medium banks, there are 269 contract customers and 135 in operation.
Despite the advantage, the Industrial Bank still maintained keen “market vigilance”. The bank recognized that while the digital wave is sweeping various industries and more and more financial peers and Internet giants are joining the market competition, the business areas pioneered based on its bank-bank platform is becoming a competitive Red Sea.
After in-depth analysis of the market structure, the bank reached two basic judgments on how to create a new lead in the digital wave: First, the platform model, as the most common business model mastered by Internet companies, is quickly spreading to the traditional industries; Second, cloud computing and big data is the key information technology to promote the progress of businesses against the background of digital wave. It is the key for traditional banks to create new competitive advantages in the digital age.
At the same time, the bank also noticed that, promoted by digital revolution of mobile Internet, cloud computing, big data and artificial intelligence, the financial services scene will undergo migration from offline to online, and the customers of financial services will be more inclusive and rely more on data analysis applications. Thus, in order to achieve new breakthroughs, IB Digital Financial was founded.
It is introduced that at the beginning, the company will undertake the technology output advantage of IB's bank-bank platform, providing financial information cloud services for small and medium banks, non-bank financial institutions, small and medium enterprises, including financial IT services outsourcing for financial institutions, financial business process outsourcing, financial knowledge process outsourcing, applications development and operation services, systems integration services, and gradually expand the scope of business according to the overall strategy of the Group and market demands.
Complementary Advantages of Diverse Shareholders
Against the background of Internet + and mixed ownership reform, regulatory authorities encourage commercial banks to set up specialized division or independent legal entity of Internet banking, and propose to consider the introduction of mixed ownership in the subsidiaries, the implementation of appropriate management ownership and other specific guidance.
Born at the right time, the Industrial Bank also likes to take the opportunity in setting up IB Digital Financial to explore the introduction of external strategic investors, employee stock ownership and other innovative institutional mechanisms. As prior statement indicated, IB Digital Financial was jointly invested by the Industrial Bank and Global Infotech, Shenzhen Kingdom Company and Newland, and implements employee stock ownership programme.
Global Infotech is a leading financial software products and integrated service providers in China mainly for financial industry clients, providing a full range of information technology services including IT solutions, IT operation and maintenance services, and IT systems integration services. The company's solution products with independent intellectual property rights have covered almost all application fields of banking IT solutions.
Shenzhen Kingdom is a conglomerate providing industry information services for financial, internet banking and other areas. Its market share in the core business systems of securities market has reached 45 percent, the highest in the nation. It occupies a major position in the publicly offered fund industry, trust, insurance and other asset management sectors, and also has 70% market share in the spot goods, equity exchanges, financial assets trading and other pan-financial industry.
Newland is one of the few domestic service providers integrating end products and applications, and also the world's major equipment provider and major domestic payment terminal provider, especially in payment terminals for small and micro businesses. After several years of efforts, its market share has exceeded 70%.
Chen Jinguang, the vice president of Industrial Bank said at the opening ceremony, "based on the common judgment of digital development trend for future development of financial services, we came together," the said partners will be the important and equal builders of IB Digital Financial in the future, also important participants when IB Digital Financial provides inclusive digital financial services for the whole society.
Analysts believe that the multiple cooperation will constitute a strong support to the new company's capacity and resources of main business in the current and future period of time. IB Digital Financial will integrate the advantageous resources from the three founding shareholders, including products, technologies, personnel, customers, etc., thus building join forces in the field of financial cloud to create a new competitive force for the new company.
Three Steps in Main Business Planning
IB Digital Financial was founded with a clear vision: seize the opportunities of the digital revolution, use mobile Internet, cloud computing, big data, artificial intelligence and other emerging technologies, deepen the integration and development of the group, and rely on group strengths, to provide the whole society with inclusive digital financial services.
Based on the IB's bank-bank platform technology output, the main business was planned in "three steps", i.e. to create a financial cloud ecosystem in three steps:
First, it will focus on the completion of a comprehensive upgrade of the existing technology export business, construct a leading cloud computing technology service center in line with banking regulatory standards, build cloud services targeted at banks, and fully improve the technology service level for small and medium sized banks; and based on such efforts and the development experiences of non-bank financial institution group, further expand the extension and connotation of industry cloud services and provide the burgeoning non-bank financial and internet financial enterprises with cloud information services, thus upgrading bank cloud to financial cloud. From the bigger picture, IB Digital Financial will also link SMEs with financial cloud and the Internet, to provide SMEs with more accurate, prompt and suitable financial services through integration of resources and the accumulation of data, thus making IB Digital Financial the domestic leading inclusive financial services platform, i.e. inclusive finance cloud.
With the development of Internet applications and new technologies, the information industry is quickly migrating from providing software to cloud-based services. IDC, a US market research firm, predicts that the number of industry cloud platform in China will increase to more than 100 in 2016, more than 80% of new cloud applications will be hosted at IAAS (infrastructure as a service), SAAS (software as a service), PAAS (platform as a service) and other three major cloud-based platforms. The report of Gartner, a global authoritative IT research and consulting firm, also showed that 25 percent of global companies have been investing in "cloud computing", China's proportion has reached 61%; by 2024, the business applications based on the "public cloud" service globally will account for 50% of all applications from enterprises.
For many small businesses, software services in the cloud is the best way to use advanced technology which eliminates the needs for purchase, building and maintenance of the infrastructures and applications, saves the cost of information construction and accesses to information-sharing bonus. As a result, the application of financial cloud to SMEs will undoubtedly generate great room of growth for IB Digital Financial in the digital era.
Prior to the establishment of IB Digital Financial, the Industrial Bank already has business licenses of eight major categories, four directly controlled (wholly-owned) subsidiary, five indirectly controlled subsidiaries, investment in shares of five companies, formed a comprehensive financial service group with bank as the main body, covering trust, financial leasing, funds, consumer finance, futures, asset management and research and consulting. Backed by Industrial Bank, a comprehensive financial services group, IB Digital Financial will improve the capacity in its technology export business on bank-bank platform, construct a cloud ecosystem, and explore new territory of internet financial services for the whole group.