Business Transition of Commercial Banks from the Perspective of China Everbright Bank Winning the “Best Innovative Bank” Prize

    Recently, in annual financial and economic appraisal that involves numerous well-known medias in China, China Everbright Bank has won the honors of “Most Innovative Bank”, “Most Recognized Wealth Management Brand” and “Most Favored Wealth Management Product”, etc.

    The media and non-governmental organization have different perspectives and standards in their annual appraisals. However, it is worth noting that the media and anonymous netizens and readers that participated in the appraisal have “unanimously” crowned China Everbright Bank with these honors, including “Most Innovative Bank”, “Most Recognized Wealth Management Brand”, “Most Favored RMB and Foreign Currency Wealth Management Product”, “Outstanding Innovation Prize of China’s Banking Sector” and etc. Behind such “coincidence” is the reflection of a joint-stock commercial bank’s strategic restructuring and business operation transition in recent years. Facing the common topic of commercial bank transition, China Everbright Bank has expanded its business space with innovation and sketched the fade-in outline of “elite bank” with its practice and business performance.

    The topic of China banking sector’s business transition can be traced back to 2005.

    On 2 September 2005, at the Joint Chief Conference of Joint-stock Commercial Bank Presidents held in Tengchong, Yunnan, the theme of “capital restriction and commercial bank business transition” was pushed forward to the front stage, where the presidents of the 12 joint-stock commercial banks reached an agreement: efforts shall be made to carry out business strategy transition to realize the early transition from the traditional extensive growth to intensive growth with lower capital consumption and higher business performance. This conference is a landmark incident marking the initiative of China’s banking sector to promote business strategy transition, which has also pulled up the curtain of the commercial banks’ business transition.

    Bankers attribute the incentive of this strategic transition of China’s banking sector to the following four aspects: 1. The banks’ development is subject to the reality, imperativeness and duration of capital restriction; 2. As the traditional business mode is heading toward its end, it is difficult to adjust to the changing market; 3. The implementation of strategic transition is the key for joint-stock commercial banks to capture major opportunities; 4. The promotion of strategic transition is the objective need of commercial banks’ response to risk management challenges.

    It is driven by the internal and external factors that China’s commercial banks, particularly joint-stock commercial banks have turned to the exploration of business transition.

    During the process of the transition, some banks have targeted at personal banking business, some banks have adjusted their customer strategies and some banks have been exploring the credit card market regardless of costs and manpower. The commercial banks have been interpreting the connotation of their transitions with theories and practices, and there are some experts that have put forward the issue of “isomorphism” under the background of the transition.

    “With the vision of an elite bank and trusted partner and for the purpose of becoming a leading commercial bank in China and a standardized IPO company, China Everbright Bank positions itself on the middle-end market with a leading position in the selected area.” – Facing the transition, China Everbright Bank has sketched the future of the Bank with the new strategy and planning of comprehensive development.

    “As a medium-sized joint-stock commercial bank, in order to realize the strategic objective of ‘becoming the leader among other banks in the selected areas’ under the capital restriction mechanism, it is unwise for us to confront other banks in the area of traditional business. We shall make continual efforts to launch new products the best suit the customers’ demands through innovation and strive to maintain the “one-upmanship” against our competitors and develop our comparative competitive advantage by taking the first move.” A director of the Bank made such interpretation abut the relationship of development strategy and innovation during an interview.

    With the concept of “Giving Priority to Innovation”, China Everbright Bank has made continual efforts in recent years to strengthen product innovation and service innovation and launched a number of new products close to the customers’ needs and has captured the first moves in some most observed business areas:

    One of the first to be qualified for main underwriting of short-term financing bills with a leading position;

    One of the first to be qualified as enterprise annuity fund custodian and account manager;

    The first to launch RMB wealth management service with an accumulated sales volume of over RMB100 billion and the sales volume in the current year has topped RMB50 billion; its wealth management brand takes a leading position among other banks;

    The first to launch housing loans at fixed interest rate; currently, the Bank has extended over 3,000 loans and the balance of loans has topped RMB1 billion, with a remarkable advantage on the market;

……

    The most worth noting is Sunshine Wealth Management. As the first one to “try tomato” in the domestic wealth management market, many people are still very impressed by the warm welcome and strong repercussion of China Everbright Bank in the market with its initial launch of Foreign Currency Wealth Management Plan A and RMB Wealth Management Plan B. Therefore, the year of 2004 is regarded as the beginning year of China’s wealth management. In the following two years, the Bank has made continual efforts to strengthen product innovation to meet the market demands and has successively launched a number of wealth management products with different themes, including Sunshine Wealth Management Plan A, Plan B, Plan C, Plan E, Plan A+, Plan T, Package Plan, Stock Linkage Wealth Management Plan and etc.; as of the end of 2006, the accumulated sales volume of the Bank’s Sunshine Wealth Management products had topped RMB100 billion and the sales volume in the current year has reached RMB50 billion, with a leading market share.

    A series of innovative acts and such heavy statistics highlight the business development and transition of China Everbright Bank, some of which have even been recorded in the history of China’s financial industry with their innovative implications.

    The remarkable accomplishments have also won a good brand reputation for China Everbright Bank and its products of Sunshine series. At the turn of the year, in the appraisal campaign carried out by the two major portal websites of sina.com and sohu.com and the appraisal of the most influential news media in China, the Bank carried off various prizes of “Most Innovative Bank of the Year” in the 2006 web pageant, “Annual Banking Wealth Management Product”, “Most Recognized Wealth Management Brand”, “Most Favored RMB Wealth Management Product”, “Most Favored Foreign Currency Wealth Management Product”, “Annual ’Golden Brand’ of China’s Banking Sector”, “Most Individual Credit Card”, “Outstanding Innovation of China’s Banking Sector”, “Most Valuable Investment of Wealth Management Product” and etc. China Everbright Bank has made frequent appearance under the spotlight and has been honored “Bellwether” and “Wind Vane” by the financial sector.

    With such honors come flying in crowns and reputation as well as contributions and benefits that business transition and innovation have brought for China Everbright Bank. Driven by the accomplishments of its wealth management business, the balance of China Everbright Bank’s personal deposits reached RMB101.9 billion in 2006, an increase of 26.9% from last year, accounting for 19.6% of the general deposits, with further optimization of its liability structure; the Bank has also taken the initiative to launch fixed interest rate housing loans, whose year-end balance has topped RMB1 billion, with the largest market share; the number of enterprise annuity customers reached over 120 at the end of the year, with its assets of over RMB2 billion and over 200,000 personal accounts in its custody, maintaining its leading position on the market; the Bank has underwritten 43 issues of short-term financing bills for 31 companies in the year, with the largest number of customers in the market. Moreover, the Bank has achieved remarkable accomplishments with its efforts in the area of credit card in 2006, when the new increase in credit card issuance topped 757,400; the Bank has won the honors of “Best Customer Experience”, “Most Individual Credit Card” and “Top 10 Brand of Credit Card Customer Satisfaction” selected by the media and various institutions.

    Innovation expands the space and moves the market, bringing a wide development space for China Everbright Bank.

    The requirement of capital regulation and enhancement of capital restriction have profound implications for the operation management and future development of commercial banks; how to accelerate the business strategy transition to realize the change from the traditional extensive growth to intensive growth with low consumption and high returns remains an important topic for the decision-makers of China’s joint-stock commercial banks. China Everbright Bank shapes its transition through innovation and has made positive exploration in the development of joint-stock commercial banks with urgent and prudent steps.