Wealth management business has become a “battleground” for banks and an important field for the transformation of large retail. Many banks emphasize the promotion of the “big wealth” strategy in their annual reports. At the 2021 performance analysis meeting of listed banks held by China Singapore Jingwei on April 7, Li Jian, director of the research department of Bank Of China Limited(601988) Industry Association and director of China Institute of international finance, said that from the perspective of the bank’s annual report, “great wealth” is a light capital development model, which can save capital utilization. To do a good job of “great wealth”, we must truly take customers as the center, consider the long-term sustainable interests of customers, and provide diversified services for customers from a comprehensive and comprehensive perspective.
“great wealth” is a light capital development model
China Construction Bank Corporation(601939) chairman Tian Guoli said in the annual report that CCB adhered to the perspective of big wealth, continuously widened service boundaries, upgraded service efficiency, accompanied and helped more customers plan and grow wealth, strengthened the development of consumer fast loan and credit card, and successfully broke the situation of big retail service and big wealth management. Zhang Qingsong, President of Agricultural Bank of China, also said that in line with the diversified asset allocation needs of individual customers in the new era, accelerate the improvement of the big wealth management system, constantly enrich the supply of products and services such as funds, insurance, financial management and family trust, and strive to create more value for customers China Merchants Bank Co.Ltd(600036) chairman Miao Jianmin stressed that focusing on both ends of the customer’s balance sheet, we should promote the value cycle chain of large wealth management, build the value cycle chain of large wealth management in the way of light capital, and further improve the allocation capacity of large categories of assets. President Tian Huiyu said that 2021 is the first year of China Merchants Bank Co.Ltd(600036) big wealth management. In addition, BOCOM is also building an integrated business system of “big wealth – big asset management – big investment bank”; Everbright proposes to focus on the strategy of “building a first-class wealth management bank”.
“At first, wealth management was just an integral part of big retail. But now some banks think it includes the services of enterprises and financial institutions. It can no longer be simply regarded as an extension of big retail, but more an extension of business form. It is an important part of a light capital transformation model from traditional deposit and loan business to asset management business and from on balance sheet to off balance sheet.” Zeng Gang, director of Shanghai finance and development laboratory and deputy director of the national finance and development laboratory, said during the discussion.
Zeng Gang believes that in recent years, the narrowing of the bank’s net interest margin and the continuous strengthening of capital supervision have led to the decline of the return on the bank’s on balance sheet business. “Big wealth” is mainly from the perspective of “big asset management”. The intermediate business income dominated by Commission income and light capital income such as agency sales and management expenses can effectively improve the return on capital. “For listed banks, it makes sense to earn valuation.”
Specifically, China Construction Bank Corporation(601939) , Agricultural Bank Of China Limited(601288) limited the “great wealth” strategy to personal financial business. Although Bank Of China Limited(601988) did not put forward the concept of “great wealth”, it took wealth finance as one of its eight development fields Industrial And Commercial Bank Of China Limited(601398) vigorously develop wealth management business in promoting the strategy of the first personal financial bank Postal Savings Bank Of China Co.Ltd(601658) , China Merchants Bank Co.Ltd(600036) , China Everbright Bank Company Limited Co.Ltd(601818) , etc. expand their scope to corporate business.
Among them, China Construction Bank Corporation(601939) proposed to build a new ecology of personal finance around the positioning of “customer main relationship bank”, promote the high-quality development of retail business, strengthen hierarchical management, open up the chain of “direct operation of basic customer scenarios – direct operation of potential customers in private areas – franchise of medium and high-end customer outlets – 1 + 1 + n service for private customers”, coordinate hierarchical services, integrate the rights and interests of various products, and open up the advanced path of customer self motivation. The digital business model is becoming more and more mature, outlining the blueprint of “inclusive, shared, professional and intelligent” big wealth management, and creating a big wealth management system with CCB characteristics.
Taking it as one of the wings of the “one body and two wings” development strategy of Gejin, ABC proposes to take customer construction as the main body, unswervingly promote “big wealth management” and digital transformation, strengthen the support of “big wealth management” and digital transformation, and comprehensively improve the operation ability, business innovation ability and value creation ability of individual customers.
Postal Savings Bank Of China Co.Ltd(601658) also takes wealth finance as one of its four strategies, but unlike Bank Of China Limited(601988) “wealth finance” is limited to personal business, Postal Savings Bank Of China Co.Ltd(601658) also brings the company’s wealth management business into its scope, promotes the three categories of corporate wealth management products of “agency sales, financing and intelligence, and account settlement”, designs product packages to meet the needs of customers, and enriches capital market, M & A and portfolio financing products, Provide customers with a variety of value preservation and appreciation wealth management services.
China Everbright Bank Company Limited Co.Ltd(601818) proposed to give full play to the synergy of e-sbu’s “great wealth”. On the one hand, the company’s financial business should accelerate the creation of a new marketing model of “stratification, concentration and specialization”, actively promote the strategic transformation of “commercial bank + investment bank + asset management + transaction”, take FPA as the transformation engine, increase the total amount of customer financing, and promote the mutual sharing of customer resources, product resources and service resources. On the other hand, strengthen the value of retail channels and promote the construction of wealth e-sbu individual customer ecosystem. In addition, in the financial market business, give play to the resource integration ability of the custody platform in the big wealth management ecological chain, and drive various custody products through custody matching business.
China Merchants Bank Co.Ltd(600036) in terms of corporate business, deepen the “light bank” strategy, actively explore the transformation of its own 3.0 business model, build a 3.0 model with “big wealth management business model + digital operation model + open and integrated organization model” as the core, and take “creating value for customers” as the original intention in terms of retail business, integrate Wuxi Online Offline Communication Information Technology Co.Ltd(300959) business, create an open platform for wealth management, and let wealth management fly into the homes of ordinary people; From the original focus on providing retail services to high net worth customers, it has changed to provide more diversified “others, enterprises and societies” comprehensive services to private customers and the enterprises behind them. In terms of wholesale finance, interbank customers will be included in the ecosystem of its great wealth management value cycle chain to more effectively support the development of retail and corporate business.
“Big wealth management income includes wealth management, asset management and custody business fees and commission income.” China Merchants Bank annotated in the annual report.
Li Jian believes that driven by factors such as economic development, wealth accumulation and interest rate marketization, customer demand is increasingly diversified. Under the concept of “customer-centered”, banks need to provide diversified services from a comprehensive perspective to meet the growing needs of customers.
“In this context, the bank’s promotion of big wealth management business, whether residential or corporate customers, should be considered from the logic of all-round, whole process and enterprise life cycle operation.” Li Jian said.
“This direction is not a problem from abroad, but the transformation is not so easy.” Zeng Gang said that generally speaking, the asset management industry is a business carried out around the capital market. Although it has the advantages of a large number of customers and is good at fixed income products and pension finance, at present, the investment side of banks has less advantages in investing in the equity market than asset management institutions such as public funds, and has a relative disadvantage in standardized asset investment ability and investor education, so it needs to further improve its ability.
wealth management transformation has just begun
“What’s more, investor education has not been completed, which is the biggest defect compared with public funds.” Zeng Gang said that for banks, the transformation of wealth management has just begun.
“At most, the stalls selling vegetables have been set up. There are many advantages and abilities with many outlets and Wuxi Online Offline Communication Information Technology Co.Ltd(300959) customers, but the contents and abilities have not been reflected, and it takes a long time to cultivate. It takes half a hundred miles, but now it’s only 20, and there’s still a long process.” Zeng Gang said.
Zeng Gang, taking the recent net breaking of financial products as an example, believes that investor education is an urgent task for banks and financial companies.
“From the perspective of customers, the current regulatory authorities, industry self-discipline organizations, commercial banks themselves, including the media, market institutions and other market subjects need to put investor education to a point where we can’t pay too much attention.” Li Jian said that after the transition period of the new asset management regulations, the rigid exchange has been completely broken, and the bank’s product sales are facing profound transformation and change. It is necessary to change the past self-centered product sales to customer-centered asset allocation and investment consulting services, so as to truly make the seller responsible and the buyer responsible.
small and medium-sized banks explore two modes of financial management companies
2022 is the first year after the end of the transition period of the new asset management regulations, and it is also the year when banks officially spin off the financial management business and operate as the main body of financial management companies. Zeng Gang said that in the future, the divestiture of financial management business and the net worth transformation of products will limit financial management income to handling fees, and banks will no longer have excess returns. Therefore, the impact on medium income will continue. For small and medium-sized banks, it is necessary to clearly explore the business model of wealth management companies.
“If this road is not clear, the path of wealth management transformation and development of small and medium-sized banks is not clear.” Zeng Gang said that small and medium-sized banks need to leave room for development in the field of wealth management, because it is a necessary product for banks.
Bank Of China Limited(601988) Research Institute senior researcher Wang Jiaqiang believed during the discussion that although small and medium-sized banks are inferior to large banks in terms of financial management business, the total wealth of the state and residents is growing, the residents’ awareness of financial management is increasing, and the wealth market is still very large. The most important thing is how to find their own positioning for small and medium-sized banks.
“Although the capital network is insufficient, we can accumulate more experience through investment and make more distinctive places, which should lead to greater development.” Wang Jiaqiang said.
Li Jian believes that financial management business is an important part of non interest income, is also attractive to small and medium-sized banks, and is very important for small and medium-sized banks to maintain customer relations. However, the establishment of financial management companies in small and medium-sized banks is facing bottlenecks, including the investment and research ability of personnel in financial management subsidiaries, the ability of company science and technology and information system, and the qualification, concept and knowledge reserve of financial product sales personnel.
“Can he really do a good job in investor education when he faces local and regional small and medium-sized bank customers? Can he have the necessary qualification of financial product salesperson?” Li Jian said that this is a problem that small and medium-sized banks must solve. “If these bottlenecks can be well solved, it is also worth looking forward to some distinctive small and medium-sized banks to explore this aspect in the context of the common prosperity strategy.”
Zeng Gang suggested that for the financial transformation of small and medium-sized banks, there are two modes to explore in the future: one is how large banks empower small and medium-sized banks; Second, small and medium-sized banks form groups to establish wealth management companies.
“In practice, some financial managers of large banks have explored the ecological problems of inter-bank cooperation and cooperated with small banks to customize and affix labels. I’ll help you design products, but I still customize them according to your customers’ needs. You can also cooperate while selling.” Zeng Gang said, “for example, is it possible for local rural credit cooperatives to form a group to establish a financial management subsidiary from the provincial association level and develop products suitable for such bank customers? I think it can also be explored.”
