RETAIL BANKING | Staff Reporter, Hong Kong

Michael Wang of Bank of China (Hong Kong) shares how they collaborate with fintechs

He reveals that the bank has been working not only with large enterprises such as Tencent and Alibaba.

Michael Wang is the deputy general manager of e-finance centre at Bank of China (Hong Kong). Prior to joining the Group, Wang also served as general manager of the financial planning department and Shangbu Sub-branch, Bank of China (Shenzhen Branch). He was previously the deputy general manager of interbank and corporate department, WeBank, Tencent. Wang graduated from Zhongnan University of Economics with a Bachelor’s Degree in International Finance. He completed the MBA in Finance Program (FMBA), jointly offered by The Chinese University of Hong Kong and the Tsinghua University.

In this exclusive interview with Asian Banking and Finance, Wang shares more about the digital banking landscape in Hong Kong, BOHCK's initiatives with fintechs, his business philosophies, and goals.

How is the Hong Kong banking sector affected by the big push for digitalisation in the financial services industry?
In recent years, digitalisation has profoundly changed the banking industry. It can be observed that the development paths of fintech and banking digitalisation in Europe, US, and mainland China are quite different. For Europe and the US, the markets are relatively mature, digital innovation is more focused on the reform and advancement in systems and processes. There are also banks with strong technological sense joining the market.

However, there is not much change in main financial products offered. For mainland China, it has a vast territory and a large population. The financial service available for the general public is insufficient in the past. With the rapid development of the internet and e-commerce, we can see great breakthroughs in the aspects of mobile payment, wealth management, and online financing. These have transformed its banking industry accordingly.

Hong Kong has a well-developed infrastructure, advanced offline service platform, as well as well-established regulatory and supervision framework. The development path in Hong Kong’s banking industry is similar to that of a mature market which focused more on the advancement in system processes and services and improvement in channel management. And we attach high attention to consumer safety and protection of their rights and interests. For example, banks in Hong Kong are racing to apply new technology in biometrics and authentication such as fingerprint, finger vein, soft-token and voice recognition, etc.

Besides, banks are fostering intelligentisation of bank branches and services, such as iService, customer service, Chat robot, etc., to provide customers with self-servicing and automated servicing modes. Another example is that many banks have been exploring the application of blockchain and distributed ledger technology in use of mortgage loans and trade finance. Furthermore, SVF licensed payment companies in Hong Kong are also working proactively with banks to achieve a breakthrough in the mobile payment market.

In fact, it is hard to compare the stage of digitalisation and innovation of the banking industry with other regions as it depends on the characteristics of the corresponding market. For Hong Kong, both regulatory authorities and the banking sector are supportive and attach importance to innovation. We place a high value on the protection for depositors and investors, as well as customer privacy. Based on this ground, when undergoing the digitalisation process of Hong Kong’s banking industry, there are two notable features that deserve special attention.

Firstly, banks are eager to collaborate with fintech and internet companies. Hong Kong, as a city with perfectly independent development of fintech and internet innovation, it is arduous to benefit from economies of scale. Nevertheless, Hong Kong has a well-developed regulatory system. The banking industry offers talents and professionals and various financial services, together with the strong influence as an International Financial Centre. These attract technology companies to collaborate with banks in Hong Kong, jointly promoting innovation and enhancing the status of the financial industry.

Secondly, we have the ability to integrate the Eastern and Western achievements and advantages in the fintech field. As mentioned above, Hong Kong is a mature financial centre, and drawing on the digitalisation experience of banks in Europe and US, we have already achieved an obvious digitalisation progress on the improvement in systems, processes, and other services for our banking industry. At the same time, with reference to the successful attempt of mainland China to reach its billions of users through e-finance, Hong Kong is also "going out" to reach the market in Southeast Asia.

With a large population in Southeast Asia, financial service availability and penetration is insufficient, and hence, our banking sector could have benefitted and gained experience by serving people’s financial needs in Southeast Asia, e.g. exploring the mobile payment market as mentioned above to offer one-stop mobile consumption experience. With the use of digital products, business models are no longer limited geographically.

Please tell us a little bit about your most recent initiatives around digital and mobile banking. What were the challenges you encountered in rolling out these initiatives? What are the results?
We actively improve customer experience and make functional advancement on both online and offline platform. For example, we are currently revamping our mobile banking App with more personalised features, and promoted “Smart Branch” to offer an enhanced range of e-services that deliver innovative and personalised banking experience to customers when they visit our branch. We aim to build an omnichannel for seamless multichannel experience.

Pony Ma, founder of Tencent, once mentioned that both internet and mobile banking services in Hong Kong is not user-friendly enough as there are dozens of functions which can be improved. This actually can be traceable to the historical background and other reasons.

When we compare Hong Kong and mainland China in the aspect of population, mainland China has hundreds of millions of internet users for the process of trial, error testing, and adjustment, which built a comparative advantage in creating better online products. As a matter of fact, Hong Kong has a well-developed infrastructure on offline platform comparing with online. But it is undeniable that further improvement is needed in user interface design on Hong Kong’s online platforms, not just for the banking industry. 

Fostering Mobile Payment Development is also one of our recent initiatives. 2017 can be called as the base year of Mobile Payments for Hong Kong. In 2017, we have collaborated with different third parties to promote local mobile payment usage in Hong Kong. BOCHK does have the edge on mobile payment development as we have a large customer base and cross-border advantage. When compared with mainland customers, Hong Kong customers tend to be more risk-aware. Thus, comparing to those SVF licensed companies, the involvement of banks can give customers more confidence in using mobile payment services.

We have been spending effort in exploring the development of internet products, especially in the field of investments and loans. When we consider Hong Kong’s position as an international financial centre and intermediary, we can expand our business to other regions by the means of digitalisation and products with internet and mobile features to allow occurrence of cross-boundary business.

When working towards these digital initiatives, there are many challenges to be faced. As a listed and traditional bank, the legacy of the bank’s traditional business and operation has to be considered. We have to strike a balance between the established traditional business models and innovation. It requires us to overcome internal resistance and overturn operation traditions. Furthermore, it takes time to go through the process of change in customers’ habits and market recognition of new digital banking products. In addition, we have to comply with different regulatory and legal concerns as a bank when dealing with the use of big data, collaboration with third parties, and prudent risk assessment for protecting the customers.

What do you consider as your biggest achievement so far as the Deputy General Manager of E-Finance Centre at BOCHK? How has the company progressed under your leadership?
I believe that bank-fintech collaboration can help transform the bank’s innovation. We have been promoting collaborations with third parties. We work proactively with them to strengthen efforts on innovation of technologies, products, and channels for the development of digitalisation. Not only large enterprises such as Tencent and Alibaba, the collaborations also include some leading companies in the field of fintech in the niche market.

Other than the cooperation of specific projects, such collaborations gave us insight and broaden our view in the fintech area. From the bank’s point of view, except account opening in counters, deposit and loan and payment and settlement, these leading companies have the ability to construct thoroughly and comprehensively products for a specific market segment.

Initiating cross-department project in a large scale is also one of the achievements. For example, to foster the digitalisation of channel (branches) management, it involves many departments to engage in, which include front, middle, and back offices. Hence, driving its progress takes extensive effort, especially when colleagues are under tremendous pressure daily. This takes determination and foresight.

BOCHK places a high value on the importance of innovation. In recent years, we have pioneered numbers of innovative technologies’ application in banking, bringing new ideas to fruition. Recently, we have initiated agile development to existing “waterfall” project development approach. Although this approach has just started, effects have already appeared in accelerating the process of a project.

In the process of collaboration with third parties or even the talents recruitment process, I can strongly feel that that market image of BOCHK have been changing from a traditional bank to an innovative bank which pioneers in bringing new ideas to the market. Such a success is the result of combined efforts of the group with the lead of the BOCHK management team. Although changes have just started, they have already been rewarding and inspiring for our further development on innovative products.

What are your key business philosophies?
“Know your weakness and focus” is my key business philosophy which can also be applicable to our department and the bank. It is crucial to know the shortcomings and make your focal point stand out. Banks are encountering rising pressure as there are challenges from different aspects. Developing strategic plans is also challenging as we have to cope with obstacles and the corresponding trade-offs when making choices.

In addition, I unequivocally agree with the beliefs of Tokugawa Ieyasu, for example, “life is like unto a long journey with a heavy burden”. This can also be applied in the realm of business practice as growth and achievements come through the greatest and continuous effort.

What three goals are you focussed on in the next 12 months?
Firstly, we aim to take a market leading position in mobile banking and integrating digitalisation into an omnichannel experience. Smartphones have been adding technology into our daily lives. Hence, to foster better customer experience, it is necessary to tighten digital and physical channels to provide digital end-to-end banking services and offer more functional and user-friendly mobile banking service to our customers.

Secondly, to develop substantial products in the mobile internet aspect. It’s rare to see anyone without a smartphone nowadays. In Hong Kong, it leads other Asian countries in mobile internet usage with 96% of smartphone users accessing internet via smartphone. Looking forward, we will work furiously on developing mobile internet products to meet the evolving financial needs of our customers.

Thirdly, we will offer breakthrough fintech products for our business development in the Guangdong-Hong Kong-Macao Big Bay Area and Southeast Asia. We would like leverage fintech product offerings to expand our customer base and serve the financial needs of the non-local customers.

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