Online Wealth Management Solution for China Market
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Online Wealth Management Solution for China Market

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As the online financial services market in China heats up, traditional joint venture or local financial services providers are eager to seek an expedited path to move online too. Here the author tries ...

As the online financial services market in China heats up, traditional joint venture or local financial services providers are eager to seek an expedited path to move online too. Here the author tries to explore a viable strategy from the empowering technology perspective for those financial services firms.

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  • CAP Gemini report
  • CAP Gemini report
  • 2013 private enterprise report:Units: 3.44 millionRegistered capital: 4,214,600,000,000 CNYWhere51830 large size businessentities>10 million;5 million <= 10 million
  • Google.com.hkBaidu.comTencentAlibaba
  • Major Chinese internet giants Baidu, Alibaba, Tencent and Jindong Mall launched their financial products this month, hoping to grab as much as of the market share as possible in China's online financial market, reports our Chinese-language sister paper Want Daily. Baidu offered a group-buying financial product called Baifa on Dec. 23, which offers a product guaranteeing a 8% monthly interest rate for deposits, which is higher than the 6.8% to 7.2% market rate. The company, China's largest search engine, will also provide short-term products which have durations of two months, 14 days and seven days. It also plans to launch a product to target currency funds. The company's first financial product, Baidu Wealth Management B, sold more than 10 billion yuan (US$1.6 billion) worth within four hours after it was launched in October. The lucrative business has attracted the attention of fellow internet giants Tencent and Alibaba. Tencent has been testing its financial product, WeChat United Fund, which could be launched soon, insiders said. Its popular messaging service WeChat has worked with four funds, China AMC, E Fund Management, GF Fund Management and China Universal Asset Management in an attempt to launch financial products in the near future. Tencent is also considering offering high interest rates for its online payment service Yuebao. Meanwhile, Alibaba plans to purchase a 51% share in Tianhong Asset Management to increase its stake in the online financial management market. It has also removed the WeChat share button from its online music service Xiami and microblog Sina Weibo>>>>>http://www.jingdaily.com/4-chinese-internet-companies-betting-on-mobile-wealth-management/40955/The number of mobile banking users in China topped 150 million in 2012, with major banks seeing more than 100 percent growth in mobile and online banking users. Chinese regulators are also looking to shake up the country’s slow-moving financial industry by allowing more types of companies to apply for banking licenses, which has Chinese internet companies with massive user bases and deep pockets looking to get into the banking game.With lines starting to blur between banking, internet retailers, and social media, here’s four companies that are betting on banking:1. WeChatWeChat, the mobile chat app that had more than 300 million users within two years of being started, is now working on distributing wealth products via smartphones, and offering payment options for fund managers, according to Chinese media.Launching mid-December, WeChat’s financial product will allow users to store their savings straight from their smartphones via TenPay, Tencent’s very own third-party payment system. Their money will be accessible at any time and there will be no limit to the amount of money they can deposit (unlike Baidu’s product).WeChat will now double as an e-wallet with a major advantage over its competitors—it already has 600 million registered users.2. AlibabaWay back in 2008 Jack Ma, founder and chairman of Alibaba, vowed to change the banking industry. Now the internet retailer is offering micro loans, securities investments, and payment services. They’ve also co-founded a company that sells insurance policies and settles claims online.Alibaba employees believe the old way of banking is already dead. “The model where people must deposit their money with a bank and the bank lends to borrowers is based on a “decadent, waning philosophy of traditional finance that has been left behind by the Internet age,” Jack Ma said. Many analysts currently believe the only thing separating Alibaba from “real” banks is a license.3. PandaiFounded in July of 2012, Pandai is a Chinese “peer-to-peer” lending start-up with a model similar to that of popular P2P site Prosper in the West. Pandai seeks to connect borrowers with lenders through a credit risk management system that claims to better understand different customer demographics within China.Pandai is claiming lenders can earn fixed-income returns as high as 15 percent by investing as little as 100 RMB, while borrowers are offered the ability to build credit with lower priced loans through a convenient online platform.4. Baidu Baidu, China’s leading search engine, raised more then 1 billion yuan of investment for its new online wealth management product “Baifa” after it was made public in October. Baifa was launched in collaboration with Baidu Finance and China Asset Management, and allows users to make investments as little as 1 RMB with annual interest rates of up to 8 percent.Baidu claims that BaiduBaifa will use the power of the internet, big data, and advanced data mining tools to understand the financial preferences of it’s user in order to help them receive the greatest returns on their investments with a minimal amount of time and capital.Many believe that Baidu, much like Alibaba and WeChat, is looking to create a whole suite of online banking and financial service platforms in the future.>>>>>http://www.forbes.com/fdc/welcome_mjx.shtmlInternet Companies Encroach On China's Banking SectorComment Now Follow Comments Jack Ma, Founder of Alibaba Group (Photo credit: Wikipedia)“The whole nation gathers to deposit money, becoming rich and handsome in an instant,” says a message on the webpage of Baidu’s new wealth management product, “Baifa.”Launched today in partnership with a Chinese funds management company, this product is the latest move in the financial services space by a growing number of Chinese internet companies. Earlier this week, Tencent Holdings announced an unknown amount of investment in a wealth management firm Howbuy, while SouFun, operator of a real estate online search portal, rolled out a financial services platform offering easy access to mortgages and loans. Way ahead in the race, China’s e-commerce powerhouse Alibaba Group joined hands with an asset management company in June to launch Yu’ebao, which allows for the investment of the remaining balance on users’ Alipay accounts in a monetary fund.Baidu Set To Expand Its Video Streaming Service Yue Wang Contributor China's Game of Chicken: PBOC and the Banks Oliver Barron Contributor In China, 'Cats And Dogs Are All Opening Banks' Heng Shao Forbes Staff Hershey Hopes $600 Million Candy Purchase Reveals Key To China's Taste Buds Brian Solomon Forbes Staff The relatively high returns on these financial products have attracted herds of consumers and stocks of their savings. As of mid-November, 30 million users has deposited $1.65 billion on their Yu’ebao accounts, which has averaged a yield over ten times traditional banks’ call rate but still allows instant withdrawal. Baidu’sBaifa, locking deposits for a month, advertises for an 8% return, more than three times the three-month deposit rate at Chinese banks. When the same return rate was trumpeted for its first wealth management product in October, Baidu saw an inflow of $165 million in a short four hours.Such enthusiasm has prompted chatter that internet companies are biting into traditional banks’ business and may even kick them aside. Online finance is already on its way to overhaul the operational, profit and service model of commercial banks, and the days that they can simply profit from
  • Google.com.hkBaidu.comTencentAlibaba
  • 1. Direct sales staff and wealth manager engagement model cannot scale2. Tight labor market for skilled workers3. More diversified portfolio4. IT response time is slower than business needs5. Low maturity in process and procedure integration6. Underutilized big data asset7. Independent third party position
  • Business transformation rather than a UI makeover
  • Expand to the broader WM market via online self-service channelsExpand to the broader AM market via online self-service channelsPartnership with Internet/Mobile App companies to treat them as online institutional channelsAgility in rolling out new investment product offeringsFuture online monetization potential
  • Expand to the broader WM market via online self-service channelsExpand to the broader AM market via online self-service channelsPartnership with Internet/Mobile App companies to treat them as online institutional channelsAgility in rolling out new investment product offeringsFuture online monetization potential
  • Expand to the broader WM market via online self-service channelsExpand to the broader AM market via online self-service channelsPartnership with Internet/Mobile App companies to treat them as online institutional channelsAgility in rolling out new investment product offeringsFuture online monetization potential
  • Expand to the broader WM market via online self-service channelsExpand to the broader AM market via online self-service channelsPartnership with Internet/Mobile App companies to treat them as online institutional channelsAgility in rolling out new investment product offeringsFuture online monetization potential
  • Big Data is a key requirements
  • Architects:ClientBig DataCloudPerformanceSecurityTransaction integrity
  • Executive’s buy-in and strong sponsorshipSecure budget commitmentCome up with a near-term roadmapTake action
  • Executive’s buy-in and strong sponsorshipSecure budget commitmentCome up with a near-term roadmapTake action
  • Wealth acquisition rateAsset growth rateUser base increate rateActive daily usersActive weekly usersActive monthly usersUser churn rateMarket shareUser trafficUser satisfaction levelLocalized->Regionalization->GlobalizationMerger & Acquisition

Online Wealth Management Solution for China Market Online Wealth Management Solution for China Market Presentation Transcript

  • ONLINE WEALTH MANAGEMENT SOLUTION Yiwei  Chen   Updated  on  2014   yiwei_chen@yahoo.com   For  China  Market
  • Individual Wealth Management Market Size Chinese HNWI had the largest growth in 2012
  • China Mainstream Urban Income Structure Courtesy  of  McKinsey  Inc. Chinese mainstream income ratio will grow into 51% by 2020 View slide
  • Enterprise Asset Management Market Outlook 3.44 million private enterprise units in 2013 with 51,830 large size units (>¥10 million registered capital) and 84,620 medium size units (¥5 to $10 million registered capital) ¥4.214 trillion in registered capital View slide
  • Online/Mobile Partnership Outlook 2013 Search Market Shares Categorized Top Sites
  • Online/Mobile Partnership Outlook 2012 Top 5 Apps on iPhone Categorized Top Sites
  • Challenges from Burgeoning Online Players Baidu’s Baidu BaiFa §  Launched on October, 2013 §  Partnered with China AMC Tencent WeChat United Fund §  Launched on December 2013 §  Partnered with China AMC, E FM, GF FM, and China Universal AM Alibaba YuErBao §  Launched on June, 2013 §  Partnered with Tianhong AM NetEase TianJin §  Launched on December, 2013 §  Partnered with Tianjin Jingdong网银在线 to be launched
  • Online New Player’s SWOT Analysis Strength §  Huge user base §  High brand awareness §  Fully self-service §  Successful partnership with AM/FMCs Opportunities §  Competing with banks once the licenses are granted §  First move advantage §  Technology power houses Weakness §  Simple product offerings hard to meet sophisticated users’ needs §  Guaranteed high return offerings are more like marketing gimmick Threat §  Government policy shift §  Conventional WM/AM/FM firms going online too §  Partnership goes wrong
  • Challenges for Sustainable Growth Technology Challenge §  Lack of deep online experience §  Underutilized big data asset §  Low agility to business changes Business Challenges §  Overly customized portfolios §  Lack of reach to online users §  Expected to play a truly independent 3rd party role Resource Challenges §  Hard to hire and retain top sales and wealth managers §  Labor cost is proportional to growth Process Challenges §  Lack of process maturity §  Processes and workflows are not fully integrated with other enterprise applications
  • Strategy to Transform from Off-line to Online Step 1. Set a High Bar for New Online Business Step 2. Think from a fresh business perspective Step 3. Focusing online Step 4. Strategizing Step 5. Implementing the strategy
  • 1. Set a High Bar for New Online Business Technology Positioning §  Agile to business needs §  Cloud based to provide SAAS/PAAS §  Big Data for business analytics §  Scalable to support huge user base §  High performance §  High security §  Adaptable for oversea expansion Business Positioning §  To become the market leader in the targeted user segmentation §  Organizational transformation and alignment to improve efficiency §  Elevate the capability maturity in process management §  Improve the customer satisfaction From off-line to online is a business transformation rather than a UI makeover
  • Technology to Serve the Business HNWI Online Subscriber Reseller Online Partner Private Enterprise
  • Operational Roles §  Sales manager §  Marketing manager §  Customer WM advisor §  CSR §  Financial analyst §  Online partner account manager §  Reseller account manager §  Regulator relationship manager Operational Services §  Financial product planning §  Customer acquisition planning §  Sales management §  Marketing campaign management §  Risk analysis §  Reporting generation §  HNWI prospect lead generation §  Client behavior monitoring and analysis §  Regulatory compliance checking §  Research & analysis Business Processes §  Prospect attraction §  Customer profiling §  Customer financial analysis §  Customer investment planning §  Plan implementation §  Routine account management Business Services §  Client enrollment §  Account opening §  Asset allocation transaction §  Portfolio construction §  Performance projection §  Risk alerting §  Simulation §  Portfolio monitoring §  Client reporting Servicing Channels §  Branch office §  Customer support center (Call centers, social network, etc) §  Customer self-service (Kiosk, online, phone, etc) §  Internet/Mobile partners (B2B) §  Institutional resellers (B2B) Servicing Recipients §  Direct HNWI customers §  Direct online subscribers §  Internet/Mobile partner’s online users §  Institutional reseller’s customers §  Regulatory auditors Interactive WM Servicing Model
  • 2. Think from a Fresh Business Perspective AM Customer Deep Penetration §  Self-service WM as employee benefit Retain Biz-owner §  Single view of multiple accounts Customer Satisfaction §  Attract young HNWI Aggressively Acquire Mainstream Income Customers §  WM Self-service Brand and Service Awareness to Vast Online users §  Through partnership
  • 3. Understand the servicing targets URE 19. HNWI Preference for Direct Contact vs. Digital Contact by Age Band, Q1 2013 Age 60+ Age 50-59 Age 40-49 Under 40 Global30.7% 20.2% 24.0% 32.0% 38.2% 23.7% 29.1% 24.8% 22.9% 21.7% Direct Contact Digital Contact FIGURE 19. HNWI Preference for Direct Contact vs. Digital Contact by Age Band, Q1 2013 (% Respondents) Question asked on a 10-point spectrum: Please indicate whether direct and personal contact is more important to you than digital contact (internet, mobile, email) gital contact (internet, mobile, email) more important to you than direct and personal contact? Courtesy  of  Cap  Gemini   Young wealthy generation prefers digital contact
  • WM Products & Services Priorities Online  Partner   Cloud  APIs Young  Affluent   Professional     Online  WM  Requirements HNWI  WM  Know-­‐how Online  WM   Product  Suite HNWI  Premium   EdiDon Online  Partner   Requirements
  • Cloud-based Architecture Model HNWI Online Subscriber Reseller Online Partner Private Enterprise Content/ Media Provider Regulator Trading Exchange AM  Business  Services  Management WM  Business  Process  Management Common  Services  PlaGorm AM  Business  Process  Management WM  Business  Services  Management Self-­‐service   Channel Branch  Office   Channel Reseller  Channel Online  Partner   Channel Call-­‐center     Channel Web  Browser  Client Mobile  App  Client B2B  Web  Services OperaDonal   Services   Desktops Big  Data  PlaGorm Financial  Product  PlaGorm Trading   Compliance   Cash  Mgmt   Billing   Client  DB   CRM   SFA Research   Content   Mgmt MoneDzing   PorGolio   Mgmt   Risk  Analysis   DistribuDon   Investment   Channels Compliance   ReporDng Wealth Advisor Researcher CSR Partner Manager Backend Enterprise Applications Sales Manager Executive IntegraDon  Bus Investment Firm Financial Service
  • Engineering Organization Alignment Product  &   OperaDon   Team OperaDonal   Tools   Team Client  App   Team Data  AnalyDcs   Team Partner   Engineering   Team Architecture   Governance   Team   PlaLorm   Services   Team QA  Team   Financial   Servicing/ Modeling   Team OrganizaDon   Development   Office
  • 5. Implement the Strategy Business Strategy Implementation Guidelines §  Executive’s buy-in and strong sponsorship §  Secure budget commitment §  Come up with a blueprint to guide through the implementation §  Strong governance and review constantly on the state of the business §  Fine-tune the plan when needed Products & Services Strategy Implementation Guidelines §  Fast time to market §  Scalable operation §  Secure & robust quality of services in the first place
  • Implement the Strategy (Cont.) Technology Strategy Implementation Guidelines §  Start from a smaller scope to address immediate business needs §  Balance among open-source, commercial out of the shelf, and home-grown technologies §  With long-term technology blueprint in mind for cost-effectiveness Organization Strategy Implementation Guidelines §  Gradually develop and grow the engineering organization with business justification §  Address business continuity and succession planning in longer term §  Maximally leverage and cooperate with other existing organizations
  • Key Success Factors to Track Online Business KSFs §  User base growth §  Daily active users growth §  User stickiness improvement §  Market share growth §  User traffic growth §  Paying customer base growth §  User satisfaction level improvement §  Lower technology TCO §  ROI Overall Business KSFs §  Total portfolio capital growth §  Lower user acquisition cost §  Online monetization growth §  Ease of regional expansion §  Ease of global expansion §  Per employee revenue contribution improvement (business scalability)
  • THE END yiwei_chen@yahoo.com