China’s fintech giant is cooperating with China's largest bank ICBC, with the aim of improving customer experience through the integration of innovative technologies.
Ant Financials (蚂蚁金服集团) and Industrial and the Commercial Bank of China (中国工商银行) have signed comprehensive strategic cooperation (in Chinese) in Beijing, on December 16. With this agreement, these groups will accelerate the construction of the new ecosystem of digital financial cooperation and development based on the principle of ‘openness, reciprocity and mutual benefit.’
In the field of financial business, they will continue to optimize the cooperation model around the customer experience, exploring potential aspects of electronic payment, cross-border financial cooperation and scenario-based finance.
In terms of science and technology, cooperation will focus on key areas such as big data and financial technology, and speed up the development of innovative financial products through digital technology.
Collaboration between Ant Financial and ICBC dates back as early as 2005. ICBC was the first commercial bank in China to cooperate with Ant Financials to deliver online payment services.
With the advancement of fintech, online financial services have continued to develop at a rapid pace. In order to catch up with the technological innovation, integration into an ecosystem and collaboration with fintech enterprises have become increasing trends for traditional providers.
As stated by Senior Director of Paypal Denise Leonhard, “Nobody is going to be able to do it alone. To get to the next evolution of payments, it’s going to be really partnership driven. Established firms offer fintech at a level of scale they wouldn’t be able to access otherwise. Fintech may have a great unique solution, but they can’t actually scale, and you need scale to drive forward.”
Finding the right strategy of being engaged with fintech enterprises remains a challenge for most banks. Collaboration is the most effective and preferred scheme for more than half of global banks as it allows them to develop innovative technology standards for future adoption.
However, there is still a large number of banks that are not suitable for collaboration model. In general, small institutions find their lack of resources and skills to be the main constraints. Large institutions on the other hand, which typically have a complex organizational structure, are facing operationalizing and scaling partnerships problems.
In the Asia-Pacific region, in-house products and service development is a popular channel; meanwhile, North America prefers investing in fintech firms and European banks that have a more balanced approach. McKinsey reveals that as of 2018, 80% of financial institutions are already engaged fintech start-ups through variety of means.
At the end of the day, banks that will emerge as market leaders are those that are able to take the most advantage from engaging with fintech firms, by improving their agility and reducing cost to construct the strongest ecosystem.