商学院故事

25.01.2019

Banking on a FinTech Future

 “As data is the oil of the 21st century, we can see that there is an increasing demand for data scientists, who are knowledgeable and skillful in refining and transforming data into useful and meaningful insights.”
ZHONG Xiangqun, Chief Operating Officer of Bank of China (Hong Kong)

ZHONG Xiangqun, Chief Operating Officer of Bank of China (Hong Kong) (BOCHK), believes we have entered a golden age of FinTech. “Recent advances in technologies such as Artificial Intelligence (AI), biometrics, Open Application Programming Interface (API), big data and blockchain are driving a new landscape in the banking industry,” he says.

Banking services have been redefined with the advent of new technologies. It is evident to Zhong that technology is changing the way people and companies conduct their banking. “Most customers will transfer funds, make payments and check account balances through their mobile app.” 

For the banks themselves, technology is having a transformative effect throughout their operations, he says. In the front office it is enhancing customer experience via big data analysis and AI, while operational efficiency in the back office is being boosted, thanks to blockchain, cloud computing, big data and cybersecurity.

And Zhong only expects further digitalization and “mobilization” of banking services. “We also see the increasing use of biometric authentication technology in identity verification, enabling banking services to be more securely and transparently integrated into our daily lives.”

Driving business with FinTech

“BOCHK is the first bank in Hong Kong to introduce finger vein authentication on ATMs,” he notes, with fingerprint and voice print authentication also used for mobile banking and by call centers. The bank also launched BoC Pay, the first cross-border e-wallet with QR code payment in Hong Kong to enable mobile payments both in Hong Kong and the mainland.

But it is Open API and AI that Zhong sees as having the greatest impact on the bank’s operations.

One of the Hong Kong Monetary Authority’s (HKMA) seven Smart Banking initiatives, Open API promises a secure, controlled and convenient operating environment which will allow banks and third-party service providers to work together to improve customer experience, Zhong explains. “Through Open API, information on diverse products and services offered by different banks can be integrated within the same website or app, for comparison and financial planning by customers.”

“AI has been adopted to improve customer experience and enhance operational efficiency and risk management,” he says, citing, by way of example, the fact that BOCHK is the first-ever bank in Hong Kong to provide a 24/7 Online Chat service via the interactive chat platform of Internet Banking.

In addition, Zhong says BOCHK has successfully applied blockchain technology to speed up valuation and loan approval elements in the mortgage application process. More than 85% of the bank’s property valuation cases are now processed using this technology.

The application of blockchain has also recently been extended to trade finance services through eTradeConnect. Developed by a consortium of banks in Hong Kong, this blockchain-based trade finance platform aims to improve trade efficiency, reduce risks and help parties engaged in trade to obtain financing through the digitalization of trade documents.

Balancing risks and benefits

Though new technology can help enhance customer experience, Zhong cautions that this entails new types of risk. “One of our major challenges is to respond to calls from customers for greater mobility, connectivity and convenience, while ensuring the solutions delivered are secure and reliable.”

It is also now possible to use big data analytics to gain deeper insights into customer behavior. “As a result, we are able to formulate more personalized sales and marketing strategies while conducting more accurate risk and fraud detection monitoring,” Zhong says.

To strike a balance between benefits and risks, BOCHK adopts the “early and pilot implementation” approach in order to stay competitive in the industry, he explains. “The FinTech Supervisory Sandbox introduced by the HKMA allows us to go beyond proof-of-concepts and conduct pilot trials of various FinTech initiatives, while managing relevant risks. To strengthen our capabilities in expediting digital transformation, we are collaborating with the industry, academics, and research institutes, especially start-ups, and building a research and development center for innovative initiatives and pilot projects.”

Developing Hong Kong and its talent

Zhong believes that there are both functional and geographic reasons underpinning Hong Kong’s status as an international financial center. The city’s well-established financial infrastructure, its strong regulatory and legal systems, and the diverse mix of international talent it can boast, have all helped maintain its competitive advantage. But equally important, he adds, Hong Kong’s strategic location has enabled it to act as the mainland’s gateway to the world, and is now promising to make it a key hub within the Greater Bay Area network of cities.

“However, there is a shortage of FinTech skill sets in Hong Kong,” Zhong warns. “As data is the oil of the 21st century, we can see that there is an increasing demand for data scientists, who are knowledgeable and skillful in refining and transforming data into useful and meaningful insights.”

The bank ran its “BOCHK FinTech Hackathon” earlier to help identify those with outstanding levels of knowledge and innovative skills in this field, but Zhong also urges greater investment in Hong Kong’s universities and schools, to nurture home-grown FinTech talent from an early stage.