News Column

Banking on big data

February 25, 2014

Global Times

Chinese banks are adopting high technology at different rates. Photo: CFP

During the World Zhejiang Entrepreneurs Convention, Ma Yun, the founder of China's leading e-commerce company Alibaba, pronounced that banks in China have stumbled in carrying out commercial reforms, but predicted big data would force change in the banking industry. Ma's words won widespread praise, and some considered his statement to be the spark that would encourage banks to make a move in technology reform.Millions of clients interact with banks every month, applying for mortgages, accessing online banking, and asking about services. All these actions are collected and put into the banks' databases. Yet it was not until recently that banks, using the techniques for analyzing huge amounts of disparate information that have come to be known as "big data," have found connections between all of this information, offering improved or customized services to their clients. Currently, there are varied ways for banks to harness the power of big data. One universal strategy is the introduction of the chief information officer or CIO, which is still a fairly new position in Chinese banks.On December 15, the Chief Information Officer League was established by the Chinese Institute of Electronics, the Electronic Industry Press, and Renmin University, aiming to promote the CIO framework in large and middle-sized enterprises in China. The chairman of the All-China Federation of Industry and Commerce, Wang Qinmin, attended the opening event, during which he spoke of the urgent need for and importance of the CIO.This advocacy of creating CIO positions at banks is not new. Back in 2009, the China Banking Regulatory Commission issued its Guidelines on the Risk Management of Commercial Banks' Information Technology, which suggested banks have a CIO position that is responsible for playing a direct role in key decisions for business development involving the use of IT in the bank. Nevertheless, the guidelines have not drawn much attention among banks in China. Only a few have established the CIO position. Statistics show that only five out of 16 listed banks have a CIO. The Standard Chartered Bank is one of the few that made an early move to establish a CIO position. The bank has realized that good data access and analysis is a key condition for offering customized services in today's age of big data. Since 2004, the bank has successfully combined the departments of technology and operations into one department, and the CEO of the Standard Chartered Bank was their former CIO.In today's technology and operations department at Standard Chartered Bank, two-thirds of the staff are in charge of operations and one-third deal with technology.The operations staff connects with clients, while the IT staff focuses on research and development. The advantages of combining these two teams together into one department have been pronounced - the operations team offers business feedback to the technology team, which in return sees the possibility of developing automatic procedures based on this feedback, smoothing out the daily work of the operations team.During an interview with the media, Ericson Chan, the CIO of the bank, said that banks need to blend technology into the work of every single staff member, and understand how digital technology impacts the interaction between them and their clients as well as the future of the banks.As a member of the top management team, part of Chan's job is to streamline the working procedures and efficiency of all other departments of the bank.The Standard Chartered Bank is not alone in appointing a CIO. China Guangfa Bank (CGB) is another example. In late 2013, the CIO of the bank, Wang Bing, said that they are changing their electronic banking department into an Internet commercial department. This is not only changing the name of the department, but the orientation, strengthening efforts in the areas like big data. "We will gain our customers online and identify customers by using the technology of big data," said Wang.Last year China Minsheng Bank also signaled its move into big data, announcing their cooperation with SequoiaDB, a service provider offering users convenience by managing big data analysis programs.The trend toward banks using big data is unstoppable, although the question of when each bank joins the trend is still uncertain.

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Source: Global Times

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