Event overview:
According to the securities times, the guidance on the digital transformation of the banking and insurance industry formulated by the China Banking and Insurance Regulatory Commission was officially issued to the China Banking and Insurance Regulatory Bureau and bancassurance institutions recently. It is judged that the guidance will once again promote the digital transformation process of the financial industry, combine with the existing industrial trends such as distributed upgrading / financial information innovation / digital RMB innovation, stimulate the business breadth and depth of banking / insurance it head companies, and catalyze the release of industrial dividends. Analysis and judgment:
The top-level plan will set the tone again, and bank it will lead the digital economy of the 14th five year plan industry
The guidance is a top-level plan in the financial field. The document includes seven parts: overall requirements, strategic planning and organizational process construction, digitization of business operation and management, data capacity-building, scientific and technological capacity-building, risk prevention, organizational guarantee, supervision and management. From the perspective of specific work objectives, the guiding opinions put forward that by 2025: 1) the digital transformation of banking and insurance industry has achieved remarkable results. 2) Digital financial products and services have been widely popularized, financial innovation based on data assets and digital technology has been put into orderly practice, the development ability of personalized, differentiated and customized products and services has been significantly enhanced, and the quality and efficiency of financial services have been significantly improved. 3) The digital operation and management system has been basically completed, data governance has been improved, scientific and technological capacity has been greatly improved, and the level of network security, data security and risk management has been comprehensively improved. *** On January 15, 2022 Xi Jinping the general secretary published “constantly strengthening, optimizing and expanding China’s digital economy” in Qiushi magazine. 1) Quantitatively, by 2025, the added value of core industries of digital economy will account for 10% of GDP; The scale of software and information technology service industry will reach 14 trillion yuan; The application penetration rate of industrial Internet platform has reached 45%. 2) Qualitatively, the new infrastructure part focuses on “cultivating large software enterprises with international influence and focusing on breaking through key software”. Judging that the financial industry, especially the banking industry, as a key infrastructure industry in China, will accelerate the investment in it, so as to lead the industrial informatization and contribute to the output value of digital economy. More importantly, bank it, as the main battlefield of industry information innovation / localization, is also the breakthrough of key software application pilot, which is expected to breed more medium and large software enterprises.
Distributed Innovation + financial innovation, and the industry space is rapidly opened under the policy guidance
The bank’s IT market is vast and the industrial dividend is being released – according to airy consulting, the technology procurement cost of Bank Of China Limited(601988) industry will reach 61.8 billion yuan in 2020, which is expected to reach 88.2 billion yuan in 2022 and exceed 100 billion yuan in 2023. Behind the scale expansion, two major industrial / policy trends are crucial:
Trend 1: the demand for Distributed Innovation of core system is accelerated: due to historical reasons, the centralized architecture based on IBM mainframe has always been the mainstream choice of bank it. However, with the continuous impact of the Internet Financial wave in recent years, the bank’s centralized core system is under great pressure on load performance. At the same time, the high operation and maintenance fees charged by overseas manufacturers such as IOE also make the bank overwhelmed. On the other hand, the distributed architecture born out of Ali’s “de IOE” process has developed rapidly in recent years, the technology has become mature, and its application in the financial field has gradually verified its feasibility. Since 2020, some banks have successively started the distributed migration of core systems. It is expected that this process will be accelerated during the 14th Five Year Plan period. Bank IT manufacturers who can provide distributed core system solutions (including core + peripheral system transformation) are continuously obtaining it products and outsourcing incremental business.
Trend 2: financial information innovation has been promoted in an all-round way, with two steps of bank it + basic software and hardware: under the background of Sino US game, self-control (“8 + 2”) has become a general trend, and the banking industry, as the core self-control industry, is promoting the process of financial information innovation in an all-round way. Considering that the current industry still has a high degree of dependence on the underlying infrastructure provided by overseas suppliers, it is judged that financial information innovation will go in two steps: distributed substitution first, and then software and hardware remodeling. In this process, the demand for outsourcing services will continue to strengthen. 1) First, bank it will accelerate the migration from centralized architecture dominated by IOE to x86 distributed architecture, that is, the traditional application layer (core system, peripheral system and database) will take the lead in transformation, and bank IT manufacturers will clearly benefit. 2) As banks gradually get rid of their dependence on IOE Mainframe / database, the basic software layer and basic hardware layer will be reshaped on a large scale, and domestic manufacturers such as Huawei, Inspur and dawn will gain market increment.
Digital RMB promotes great changes, and ecological operation activates the bank’s it leader
With the Winter Olympics approaching, digital RMB has become the focus of hot discussion in the market (multi currency Winter Olympics scene display), and bank it is the key industrial link. Since the launch of the digital RMB (pilot version) app on January 4, the number & Activity of users has continued to rise: up to now, Huawei’s application market has downloaded the app more than ten million times. In addition, the number of users pushing the app wallet on the meituan platform has increased by up to 20 times in a few days, and the average daily increase of relevant transaction orders / amount is about 25% (blockchain headline data). The surge in users and transactions reflects that digital RMB is widely accepted by C-end users. In addition, from the expected pilot scenarios of the Winter Olympic Games (359000 have been landed), there are a wide range of application scenarios, including transportation, catering and accommodation, shopping and consumption, tourism, health care, communication services, ticketing and entertainment.
From the perspective of industrial links, large state-owned banks such as China agriculture industry construction diplomatic relations and postal savings bank are the main body responsible for the commercial operation of digital RMB wallet. It is of great value to judge the digital operation links of large banks. Taking into account the attributes of large bank financial institutions and the scale restrictions of IT personnel under their jurisdiction, we believe that the two types of subjects under the banking system are likely to assist in participating in various scenario operations and share the reform dividends together. 1) Develop leading banking technology subsidiaries, such as CCB Jinke; 2) Bank IT manufacturers that may benefit from cooperation, such as Tansun Technology Co.Ltd(300872) , Shenzhen Sunline Tech Co.Ltd(300348) , Global Infotech Co.Ltd(300465) , Digital China Information Service Company Ltd(000555) , Northking Information Technology Co.Ltd(002987) . Taking the Winter Olympics as the starting point, digital RMB is expected to move towards large-scale application within the year and become a key digital infrastructure for serial C-end / b-end / g-end payment. The above-mentioned leading bank IT manufacturers are deeply involved in module transformation and scenario operation, which is expected to continue to benefit and usher in the change of business model.
Investment suggestions:
To sum up, combined with the upward industrial trend of banking IT boom and the catalytic factors of regulatory policies, we are firmly optimistic about the top listed companies: Shenzhen Sunline Tech Co.Ltd(300348) , Digital China Information Service Company Ltd(000555) , Global Infotech Co.Ltd(300465) . Other beneficiary targets include: Tansun Technology Co.Ltd(300872) , Northking Information Technology Co.Ltd(002987) . In addition, the insurance it leader: Sinosoft Co.Ltd(603927) is also expected to benefit.
Risk tips:
The progress of policy implementation is less than expected, and there are systemic risks in the financial market.
