Tao Yiping: Traditional Financial Institutions Remain the Mainstream and Main Users of Financial Science and Technology
“There’s no end to the development of science and technology which will bring more changes to finance. As long as we attach importance to science and technology, follow the trend, act in an active way, we can acquire better development. Traditional financial institutions will continue to be the mainstream and main part of financial industry in the era of science and technology.” Tao Yiping, Governor of IB, said on February 25th in a speech he made at the first international summit of scientific and technological finance 2017.
This summit with the topic of “The Belt and Road - Scientific and Technological Finance - Integrated Development” was held in the city of Xiamen. World-class companies, experts and scholars in financial and scientific and technological industry, including Deputy Governor of the New Development Bank Zhuxian, Director of Center for China in the World Economy of Tsinghua University Li Daokui, Director of IB Tao Yiping, global chief strategy officer of Yandex Money in Russia Danila Miroshin, lead researcher of Microsoft Research Asia Thomas Moscibroda and CEO of Abndy Science and Technology Company Zou Hao, attended the main forum in that morning, and made speeches about hot issues such as global financial industry and related artificial intelligence, big data and global asset allocation.
According to the latest report released by KPMG International, an international consultancy, volume of overall investment and deals of Chinese financial science and technology companies in 2016 increased to USD 6.7 billion with a YOY growth of 40%, making a record high. China is becoming a global leader of financial science and technology.
Alongside the booming of financial science and technology, doubts that “traditional financial institutions” represented by banks may lose their advantages in terms of enormous scientific innovations and rapid changes linger and some even predicated that “bank industry will become a dinosaur of 21st century”.
Tao Yiping concedes that these views resulting from little understanding of traditional financial institutions. In fact, in this tide of financial science and technology, relying on electronic and information oriented development for years, traditional financial institutions uphold basic financial laws, actively employ new technologies including mobile Internet, big data, cloud computing, artificial intelligence and block chains, to vigorously enhance the efficiency of resource allocation in the whole financial industry and reduce the costs. As a result, they are not “overturned” and even see a trend of catching up from behind.
Tao Yiping took IB as an example. Persevering in science and technology-driven strategies, the bank is not only one of rare domestic banks with independent R&D abilities of core systems of banks, and also the only one that exporting core system technologies. It offers custody service of core systems to over 300 small and medium-sized banks.
Meanwhile, IB actively explores and promotes data governance platform and big data intelligence cloud platform, and possesses several innovations with regard to targeted marketing and intelligent risk control. For instance, “Golden Eyes” system, a product for intelligent risk control, adopts machine learning algorithms. The accuracy of its forecasts about enterprises which may reduce to ratings lower than “special mention” in the following three years is 55% and it has accurately alerted abnormal loans of more than RMB 15 billion.
In recent years, IB has put forward that information technology should transform from original role of support and guarantee to a mode that leads business development and facilitates operation, and that more technologies should be incorporated into financial innovations, so as to improve their services and boost their competitiveness. IB Consumer Finance Company, a subsidiary of IB, obtained clients through Internet portals and Visual Credit Machine (VCM) of community banks, and established automatic system for approval in central platform by integrating data of third-party institutions. It has become one of the best within two years since its operation. IB launched “IB Butler”, China’s first corporate mobile payment product which has attracted over 40 thousand users within one year.
Unlike traditional profit model solely relying on competitive products, IB adopted the operation logic of ecosphere at an early time, and employed scientific technologies to set up a characteristic business mode— interbank platform. This platform deepens relations with clients through scientific and technological services, further expands cooperation and retains more clients, so as to bring forth comprehensive profits. At present the interbank platform has set up an improved service system covering payment and settlement, science and technology output, wealth management, capital application, financing services, agency international settlements, training and communication as well as economic research and consultation. As of the end of 2016, the number of networked institutions on the inter-bank platform has reached 784; nearly 200 agent village banks had been connected with modern payment system; the number of outlets has reached 46 thousand, with settlements of over RMB 3 trillion; sales volume of wealth management products has exceeded RMB 1.9 trillion.
IB bravely creates new scientific and technological systems and mechanisms, and is the first to establish a subsidiary in the form of independent legal entity — Industrial Bank Digital Finance Information Service as the main platform for innovations in scientific and technological finance. It also learned from operation mode of Internet companies and introduced scientific and technological enterprises as strategic cooperation partners. IB will also convert data management institution and R&D institution, which have served as cost centers for a long time, into profit center for appraisal and evaluation, and establish laboratory for innovations in scientific and technological finance to explore the frontiers including block chains, robots and biometric authentication.
Due to dual attributes of finance and science and technology, scientific and technological finance is in an overlapping position of supervision. For this, Tao Yiping calls on colleagues in the field of scientific and technological finance to remain rational, stay true to the mission, observe financial laws, kindly treat clients and pursue long-term and stable development while enjoying the speed and passion. In the meantime, he suggests that supervisors should reinforce effective supervision over scientific and technological finance, make a transformation from institutional supervision to functional supervision, and promote fair and orderly market development; start supervision over result in addition to supervision over process, conduct prospective researches about the negative impact of monopoly on consumers’ interests, financial innovations and system risks; regardless of “tradition” and “science and technology”, financial institutions should compete in accordance with fair rules, and the access standards for personnel in emerging financial institutions should be not lower than that of traditional ones.
He said that as a financial services group with a complete set of business licenses, IB maintains cooperation with others in a wide range of fields and that the bank welcomes communications to enhance scientific and technological abilities, to offer better services to the society and the general public and to share opportunities in the development of scientific and technological finance.