2022 Digital Transformation of Retail Banks: How Tools like WeCom can Help

Financials Author: Mianmian Wang, Xiangru Chen Editor: Tao Ni Apr 26, 2022 01:11 PM (GMT+8)

This is the Chinese version of the report released by EqualOcean Intelligence

retail banking

The rapid development of the digital economy and society, coupled with the adverse impact of the COVID-19 in 2020, has significantly altered the current economic growth model, with China's economy drastically slowing down. 

Particularly, the banking industry has transitioned from the high-interest rate era to the medium-low interest rate era due to multiple macro-adverse factors such as a stagnant economy and asset shortage. In addition, the development of digital technology has prompted a shift in customer behavior, with the number of retail customers reaching an all-time high.

At present, banks' retail business has become the new engine of profit growth by virtue of its high asset yield, dispersed business risks, and large potential customers. Statistically, the retail business of China's banking industry exceeded that of public business for the first time in 2020, with the proportion of retail business reaching 31.4%. The performance of listed banks is the most outstanding, with retail business profit accounting for 45.61% of the total. Hence, retail banking has become the main driver of the overall revenue growth of Chinese banks.

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Meanwhile, the development of online and mobile finance has gained considerable momentum in recent years, and various institutions, including third-party payment, e-commerce platforms and telecom operators, have continuously launched personalized financial products, catering to the advanced digital needs of customers that are difficult to be covered by standardized bank services. Therefore, in the face of fierce competition from peers and across borders, the digital transformation of banks' retail business has become essential and inevitable.

Core Data:

In the process of digital transformation, banks' retail business needs to change from "product-centric" to "customer-centric." Currently, throughout the process from customer acquisition to operation, from the bank's perspective, there are problems such as difficult customer identification, low customer conversion and low staff efficiency; from the customer's perspective, there are problems such as homogenization of services, complex customer journey and poor service experience. The most significant pain point of the bank's retail business lies in its inability to systematically identify customers, accurately detect customer needs and transform clients' information into value, which directly leads to low customer conversion and even customer loss.

At present, banks have been prioritizing the digitalization of retail business, applying it in various aspects such as marketing, operation, risk control and core system to promote the entire transformation, which puts a significant strain on digital management. Consequently, as an unparalleled value-added business communication platform, WeCom, similar to WeChat, has become the best digital tool for banks to improve their efficiency in management and communication. 

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Particularly, WeCom is equipped with light OA applications, providing a wide array of third-party applications and over 200 APIs for banks to access and run their own applications, enabling unified and convenient management of work applications on one single platform. Besides, WeCom, integrated with WeChat, Mini Programs and WeChat Pay, can form a thorough connection between internal and external systems, realizing the integration of omnichannel resources and enabling enterprises to provide customer-centric services to external parties.

With the widespread use of mobile internet technology in the banking industry, customer service is no longer confined to counters, thus normalizing digital retail banking services. In the face of changing customer demographics and behavioral patterns, banks need to focus on the customer journey and select key marketing touchpoints to improve the customer experience, with a view to reaching and addressing the real needs of customers. Customer-centric, superior customer experience will become the moat for banks to compete in the future.

Industry Map:

There are many Chinese based AI and big data companies. Good AI and big data services will boost sales, deliver more personalized experiences and improve the performance of WeCom.This part will showcase our top picks for the best AI and big data business partners for WeCom.

To select companies providing the best user experiences, Equalocean has built a model based on data from expert interviews and Equalocean database. This model assesses those companies from four aspects: technology, customization skills, operational skills and societal impact.

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According to this model, those companies can be classified into three levels. Level one includes Tenwit, Mininglamp Technology and Beta Data; Level 2 includes Yitong and Dustess; Level 3 consists of Tanmarket and Inrice.com.

Among those companies, Beta Data, Tenwit and Dustess are good options for clients who focus on one particular aspect, while Mininglamp is ideal for clients looking for an “all-rounder.”  

Beta data is outstanding for its content creation skills. It has comprehensive content output strategies to provide various content support for both individual and corporate customers. Tenwit provides superior support in all aspects of operation. Its service covers the design of the operational systems and operational strategies as well as the implementation of operational strategies. The client will also benefit from its good brand reputation. Dustess stands out for its technical skills. Based on the SCRM platform and AI and big data technology, Dustess offers closed-loop digital marketing services for banks. Mininglamp has full-stack skills and is the best business partner option in regards to overall performance.

Mininglamp connects customers and banks through WeCom by providing closed-loop services covering all stages of customer relationship management. It builds up personalized customer-centric systems for the bank with security guarantees. Furthermore, with mature AI and big data technology, Mininglamp is able to have more access to client data through processing customer talk and behavior, thereby providing more customized services. 

Partnering with Mininglamp will make WeCom an effective, excellent and legal service provider through its unique operating system. 

Trend: 

Consequently, with the development of financial technology, the relationship between customers and retail banks will be redefined. Different generations of consumers have unique preferences and needs for financial products and services. Banks need to form a comprehensive 360-degree user portrait of their customers based on the integration of private and public data and conduct intelligent analysis accordingly so as to provide personalized products and services to enhance the consumer experience.

By linking to the robust WeChat ecosystem, WeCom conducts multi-channel online traffic attraction and connects the public and private domain traffic with an open interface to build up an exclusive WeCom information pool for banks. By enhancing user retention and stickiness, reducing customer acquisition costs and and tapping into user value through their full lifecycle, banks can more accurately meet user needs and achieve longer-term value extraction. In the future, WeCom, as the largest traffic portal for banks' retail customers, will become the best digital tool to help banks realize full digitalization.

This article contains only excerpts from the report. For more details, please click to download the full report here.