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The digital economy has become a driving force for China’s economic development for the post-pandemic era, said Jessica Tan, Co-CEO and Executive Director of Ping An Group, at the recent 4th China Digital Bank Forum in Shenzhen. Digital transformation could mean the difference between life and death for many financial institutions.
The consolidated return on value of the banking industry is in decline. The return on equity (ROE) growth rate of the banking industry globally has dropped from 17.4% in 2006 to 9.5% in 2018. Similarly, the ROE growth rate of the Chinese banking industry dropped from 20.51% in 2012 to 10.04% in 2020.
In the digital era, customers need omni-channel, seamless and customized services focusing on the customer experience. However, digital transformation presents four major challenges: attracting and cultivating cutting-edge technology talent, commercializing technology applications, making strategic investments over time, and developing multi-sourced data infrastructure and leading data governance capabilities.
"Digital application includes digital marketing, digital risk control and digital services," Ms. Tan said. True digital transformation will reshape the front, back and middle office.
Ping An has invested RMB100 billion over the past decade and will invest twice that in the next five years.
Ping An has already established industry-leading perceptive capabilities such as facial recognition, voiceprint recognition and semantic analysis. It has developed a complete Know Your Risk (KYR) knowledge system that uses AI to identify opportunities to drive sales growth.
Ping An has also implemented a purely online credit approval system built on a suite of technologies, including micro-expression analysis to assess the likelihood an applicant will repay a loan, anti-fraud technology, and intelligent voice robots. These technologies improve approval efficiency, reduce credit losses, and replacing manual processes in order to provide high-quality customer service.
OneConnect, an associate of Ping An Insurance Group, is supporting the digital transformation of the financial services sector with Gamma O, an open platform that links developers, fintech services providers and financial institutions. Gamma O provides a sandbox testing environment to drive the innovative transformation of financial institutions.
The evolution of the digital economy will also transform the real economy. Technology can promote the "logistics, capital flow and information flow" between the government and regulatory agencies, financial institutions, and enterprises.