Benefiting from the wave of digital transformation in China, the vertical SaaS business in China’s industry has grown rapidly. Recently, the annual report performance of listed companies related to SaaS business has been disclosed one after another, and the service revenue has continued to maintain double-digit growth.
According to the annual financial report of Bairong yunchuang (06608. HK) in 2021, the company’s revenue reached 1.623 billion yuan, a year-on-year increase of 43%. Among them, the main business SaaS business (intelligent analysis and operation services) revenue increased by 38%, reaching 737 million yuan. By the end of 2021, the company had provided services to 5700 financial institution customers in China, with more than 3300 paying customers, a year-on-year increase of 27.5%.
In addition, ocft. US announced that the company’s operating revenue in fiscal year 2021 was 4.132 billion yuan, a year-on-year increase of 24.76%.
Behind the performance growth is the continuous transformation and upgrading of financial SaaS to cope with industry changes. An industry executive told China Business Daily that since 2020, the regulatory environment has changed, and financial SaaS involving credit field is facing compliance related problems. As the core risk control capability of financial institutions must be independent and controllable, the business model of SaaS services on the “cloud” has been impacted.
However, after a year of exploration, many enterprises have found solutions. Among them, Yusys Technologies Co.Ltd(300674) ( Yusys Technologies Co.Ltd(300674) . SZ), soxinda Holdings (03680. HK), Beijing Beijing Centergate Technologies (Holding) Co.Ltd(000931) Kejin Technology Co., Ltd. (hereinafter referred to as ” Beijing Centergate Technologies (Holding) Co.Ltd(000931) Kejin”) and other companies adopt the business model of joint operation to provide relevant services for customers and localize the system deployment. On the basis of serving financial institutions as the main body, onepay has strengthened the supervision of the ecological construction of governments and enterprises, and strengthened the overseas market, which have built a richer growth curve for the company.
financial SaaS changes
The China Banking and Insurance Regulatory Commission recently issued the guidance on the digital transformation of the banking and insurance industry, which clearly pointed out that the banking and insurance industry must “focus on” professional fields such as model algorithm and artificial intelligence in the future development, and emphasize the win-win ecological construction.
IResearch consulting report predicts that the investment in technology upgrading of the banking industry will reach 310 billion yuan and 370 billion yuan in 2022 and 2023 respectively. Among them, compared with general-purpose SaaS companies, boutique vertical SaaS companies serving the subdivided fields of the banking industry have broader growth space and are expected to share spillover dividends.
An industry executive told reporters that the characteristic of SaaS model is that service providers build relevant software and infrastructure in the cloud, make the products to the extreme after one-time investment, and basically no marginal cost will be generated in the follow-up. The more customers connected to the product, the higher the renewal rate, and the better the economic benefits. “In essence, SaaS mode sells subscription services, and customers pay subscription fees annually or quarterly.”
However, the above industry executives said that in recent years, the regulatory environment has changed significantly, and financial SaaS involving the credit field is facing compliance related problems. The regulation clearly requires that financial institutions shall not outsource the risk control links that constitute their core competence, and must be independent and controllable. The risk control system must be localized and deployed in the bank room, and the risk control model must be white box and interpretable.
The appeal of enterprises accessing SaaS services is very simple: “spend less and do more”. However, while obtaining efficiency, enterprises may need to reduce some customized business needs and try to solve problems within the “maximum common divisor” provided by SaaS standardization scheme; At the same time, because the data is stored in the cloud rather than locally, data security should also be transferred. However, in China, as a financial institution, banks have various business scenarios and are difficult to standardize. At the same time, the financial industry has higher requirements for data security. The regulations of “no outsourcing of core competencies” and “no data travel” proposed by the supervision alone are enough to make SaaS based credit solutions difficult.
In 2020, the CBRC issued the Interim Measures for the administration of Internet loans of commercial banks, requiring commercial banks to implement centralized operation and unified management of Internet loan business at the head office level, integrate Internet loan business into the comprehensive risk management system, establish and improve the risk management system, internal control mechanism, network information system and security protection measures suitable for the characteristics of Internet loan business, and effectively identify, evaluate Monitor and control the risks of Internet loan business to ensure that the development plan, actual development speed and business scale of Internet loan business are compatible with the bank’s risk preference, risk management system and risk management ability.
If the Internet loan business model involves cooperation with external institutions, the core risk control links shall be carried out independently and effectively by commercial banks, and the core business links such as credit review, risk control, loan issuance, payment management and post loan management shall not be entrusted to third-party cooperative institutions.
transformation and personalized service
According to Sun Bo, general manager of the joint operation division of Beijing Beijing Centergate Technologies (Holding) Co.Ltd(000931) Kejin Technology Co., Ltd. (hereinafter referred to as ” Beijing Centergate Technologies (Holding) Co.Ltd(000931) Kejin”), many enterprises have found a new direction suitable for themselves.
It is understood that at present, Beijing Centergate Technologies (Holding) Co.Ltd(000931) Kejin adopts the way of joint operation with financial institutions to solve the above problems. Sun Bo said: “Our business model is to build the self-supporting ability of retail credit business for urban commercial banks and rural commercial banks through localized deployment of the whole process risk control system running through pre loan, in loan and post loan. In the pre-sales link, we will conduct in-depth research on the infrastructure and retail credit status of the proposed cooperative banks. On the basis of full understanding of the bank’s risk preference and strategic planning, we will work with the heads of all lines of the peer to jointly design financial products and make accurate decisions Marketing the customer acquisition scheme and private domain user operation scheme, and jointly modeling and jointly setting up anti fraud strategies and other pre loan risk control strategy sets. The advantage of this solution is that it gives people “fishing”. Localization of system deployment + localization of operation team not only meets the regulatory compliance requirements, but also after the validity of the contract, the bank has the intellectual property rights of the system and related risk control capabilities. The whole cooperation is not only the promotion of the scale of self operated retail credit business, but also the realization of knowledge transfer at the lowest cost. “
For Beijing Centergate Technologies (Holding) Co.Ltd(000931) Kokin, although this localized solution is “heavier” than SaaS solution, the huge investment in the early stage has brought two values to bank customers: full compliance and improvement of their own ability. It is understood that most banks will choose to continue to subscribe after the expiration of the joint operation contract with Beijing Centergate Technologies (Holding) Co.Ltd(000931) Kejin.
In addition, at present, Yusys Technologies Co.Ltd(300674) , soxinda holding and other companies are also adopting the business model of joint operation to provide relevant services to customers. On the basis of serving financial institutions, some financial SaaS service providers strengthen the supervision of the ecological construction of governments and enterprises and strengthen the overseas market.
Financial one account link extends the experience accumulated in the digital transformation of enabling financial institutions to the whole digital service ecosystem, and has implemented a number of major projects in the fields of regulatory technology, privacy computing and digital inclusion, including in-depth cooperation with Shenzhen Stock Exchange, Hong Kong stock exchange, Guangdong Local Financial Supervision Bureau, Hainan Local Financial Supervision Bureau and Chengdu Jinxin, Among them, the intelligent financial comprehensive service platform of Hainan Province constructed by financial one account link was rated as the benchmark model of innovation supervision in Hainan Province.
In terms of overseas business, oneconnect has carried out in-depth cooperation with overseas institutions such as sb finance in the Philippines, the National Development Bank of Sri Lanka and Xindaya, a cross-border trade platform in Singapore, laying the foundation for opening up a broader overseas market. By the end of 2021, the company had reached cooperation with 3 top banks and 12 local banks in Southeast Asia.
It is worth noting that, as an important part of the retail business transformation of financial institutions, China’s commercial banks still face many pain points in “equity management and refined operation”: unclear procurement process, lack of hierarchical and cluster operation of customers, unclear customer portrait, low accuracy of equity matching, lack of equity resources and poor convertibility are particularly common.
In the process of daily rights and interests management and distribution, the selection of cooperative suppliers, advance payment, reconciliation, invoice reimbursement and other processes are cumbersome and cumbersome, and the operation labor cost is high. Once the response speed lags behind and the rights and interests match is wrong, it may also cause customer complaints.
Industry experts pointed out that many regional banks have weak customer base and low conversion rate, and the proportion of truly active individual customers is less than 20%. “Some customers focus on health care, some only look at convenient travel, and some focus on high-end business travel rights. Small and medium-sized banks do not have a clear picture of their customer base, which will eventually lead to high marketing costs.”
In order to solve the above problems, onepay launched the cloud equity platform, which is mainly to realize precision marketing with label management, provide differentiated rights and interests for different customer segments, create the customer acquisition ability and customer retention ability of application scenarios, enhance customer stickiness and effectively improve the operation effect; Build a unified equity management platform for the whole bank, realize the settlement of one invoice, greatly reduce the bank’s equity management cost and procurement cost, and save worry and effort. In addition, the equity platform adopts the mode of light deployment. The docking is completed in 10 working days and can be used with one click. There is no need for the bank to spend a lot of manpower and material resources on background management and operation and maintenance.
Its cooperation institutions include a large urban commercial firm in Central South China, a provincial urban commercial firm in South China, a medium-sized agricultural commercial firm in Central South China, a urban commercial firm in East China, etc. Taking a large-scale urban commercial behavior in central and southern China as an example, within one year, the number of registered users of the bank’s mobile banking increased by 25% year-on-year and Mau increased by 32% year-on-year, driving the per capita duration of active users of mobile banking to increase by three times.
