Skip Ribbon Commands
Skip to main content
Sign In

In focus: Inclusive 21st-century banking in China

In focus: Inclusive 21st-century banking in China

​​​Banking experts from six countries explore at workshop in Janin how to embrace technology to promote sustainable inclusive finance

>​> See event info


​JINAN, China, 28 August 2019  –  ​More than 100 participants from China and throughout the world took part in the Sustainable Finance - Inclusive Finance Technology and Risk Control International Workshop yesterday in Jinan, China. Done in partnership with WSBI, German Savings Banks Foundation for International Cooperation (SBFIC) and Shandong City Commercial Banks Alliance (SCCBA), the workshop focuses on how locally focused retail banks and new challenger banks embrace technology to deliver micro and small-enterprise lending sustainably. 

The event also covered how new technologies overcome challenges presented by high operational cost and significantly reduce the cost of small-size lending. Attendees also explored how  new technology and big data help banks better assess client credibility and improve bank risk control. 

Pre-workshop opening dinner kicks off three-day event

Mr. Yuefeng Shi, Chairman, Shandong City Commercial Banks Alliance (SCCBA) provided on 26 27 August the Day 1 welcoming remarks. He emphasized that small and medium size banks in China are not able to compete with the biggest commercial banks in areas such as investment in fintech and cost of funding. However, the small and medium size regional city commercial banks can unit and partner, for example, they can rest on the technology and banking system that the Alliance has built up. He was followed by WSBI Managing Director Chris De Noose, who thanked attendees and organisers during his 10-minute opening address at the evening dinner, including participation by WSBI's membership in China and Asia region. Member taking part were Postal Savings Bank ofChina, Philippine member ASKI, Bank Asia in Bangladesh, and Vietnam's Lien Viet Postbank. 

Commenting on the workshop, De Noose (pictured below, right) said: "There is no better place than China to hold a workshop that addresses inclusive finance technology and risk management at international level. China is well on its way to taking a leading role in the world when it comes to artificial intelligence and big data. They are doing this by placing focus on a core set of best practices that allow banks here to pilot and apply artificial intelligence and big data for unique uses."  

​Inclusive FinTech applied in China, Asia

The workshop showed how China is taking a global lead in digital financial inclusion and how it can be applied to finance SMEs, agent banking and agricultural finance and remote areas, including the Inner Mongolian prairie. Both morning and afternoon sessions gave attendees an opportunity to learn from SCCBA and a handful of regionally driven Chinese banks on practices in inclusive finance and technologies applied to deliver instant financial services. Those examples were complemented by expert presentations, including from Asian WSBI member success in inclusive FinTEch from the likes of Bank Asia and Lien Viet Postbank. 

The last of the three-session featured an expert report presented by Ms. Huicheng Zhang, former director and research fellow of finance bureau, The Development Research Centre of the State Council (DRC), deputy secretary general of the China Institute of Finance and executive director of the Institute of China International Finance Association. She gave an overview of inclusive finance development in China since early 1990s. The fact is that China has achieved a great success in inclusive finance, although challenges in SMEs finance is still not fully resolved by today. The regionally focussed city commercial banks have played a key role. 

Artificial intelligence, machine learning & Big Data: Applied to credit scoring, building trust

One set of topics heavily talked about was AI, Machine Learning and Big Data – three big areas within 21-century banking. In a modern and industrialised world, banks are searching for better ways to get the best technology and harness it. Many argue the future of banking is not only about technology, and cannot be a replacement for people and people connecting with people. De Noose noted in his address that relationship management, trust and technological innovations need to go hand in hand to provide good customer service. Banks need to define the original purpose of serving the local community and the social value of banking. He added that responsible lending is one area where purpose and social value need to be defined.  

He noted: "Artificial intelligence, machine learning and big data should be deployed responsibly, notably ensuring that: systems are tested sufficiently according to purpose-designed procedures for their output to be in line with agreed principles or guidelines. Complex trade-offs have to be managed by policymakers between competitiveness on the one side and ethics on the other."

​21st century regional banking: Focusing on '3Rs'

WSBI members' share a common approach to locally and regionally focused banking outlined in the associations three “Rs" approach. which means WSBI members banks approach banking from three areas:

  • Retail: Focus on financing the real economy: individuals, local governments, as well as micro, small and mid-sized companies;

  • Regional: Maintain close relationships with ​the local communities they serve; and

  • Responsible: Employ a responsible approach to business balancing the need for financial sustainability and a return to society.

Founded in 1924, WSBI represents the interest of more than 6,000 savings and locally focused retail banks worldwide. It supports its member banks in policy dialogue, fosters exchange of international practice, facilitates business cooperation and provides market intelligence. We help savings and retail banks in some 80 countries thrive. WSBI is now a member of the Shandong City Commercial Bank Alliance​.

Visit to Qilu Bank in Jinan

Attendees visited also Qilu Bank in Jinan to see how it addresses inclusive finance. Participants learned of the regional bank's loan products, such as agriculture lending products. That included how the bank conducts product positioning, feature design, outreach, repayment rate, service channels, NPLs, and loan management. They also learned about the bank's "Qilu E-Lending” product as well as how the bank uses “Internet plus Big Data” to approve loans. A demonstration occurred​ showing how customers submit online applications and receive online approval. Qilu also shared its direct banking platform with guests.​

Regional banking in China, links with German Savings Banks Foundation

Regional city commercial bank​s in China have become one pillar of the Chinese banking system. Those regional city commercial banks count for about 13% of total banking assets in China.[1] In the past few years, they have broken through the monopoly of the Chinese banking industry. They have solved a financing gap faced by local micro and small enterprises, playing a big role in strengthening the local economy and a big role in China's banking reform. The success of their business model has well reflected the importance of a diversified banking system. 

Regional city commercial banks in China share exactly the same business model as some of WSBI membership, such as savings banks in Germany. This shared way of banking brought together WSBI and the Alliance by Nicklaus Bergmann, managing director of the German Savings Banks Foundation for International Cooperation. Mr. Bergmann (pictured at left) also spoke at the Day 1 evening event. 

De Noose added: "long-term tie of partnership and friendship between the Alliance and the German Savings Banks Foundation has made the workshop possible. WSBI will have a flourishing relationship with the Alliance."

About the Shandong City Commercial Banks Alliance

Shandong City Commercial Bank Alliance (SCCBA) is a non-bank financial institution established in 2008 by the China Banking Regulatory Commission. Due to lack of sufficient resource and talents, technical transformation was a challenge for small-size city commercial banks. The Alliance was established to provide small banks with comprehensive IT solutions, such as core banking system, internet banking, big data services as well as training, consultancy and collaborative innovation.

As of now, 41 city commercial banks are supported by SCCBA with its IT system. It is a shared financial technology service platform in China. The Alliance is a new consortium jointly funded by 14 city commercial banks in Shandong province. In China, there are about 90 city commercial banks.​

[1] http://file.caixin.com/images/citycommercialbankreport.pdf



Innovation Hub; Innovation; Digitalisation; Financial inclusion