Privately owned Chinese banks will need to use big data if they hope to compete with rivals backed by internet companies in the growingly important online market, according to an executive at business software company SAS.
These private banks rely mainly on an "asset-light" business model with fewer brick-and-mortar outlets and a relatively strong focus on online operations, said Irene Xu, practice lead for customer intelligence at SAS North Asia, in an interview with China Entrepreneur. But they now face stiff competition from rivals backed by such internet companies as web portal Tencent's WeBank that have a strong online presence, Xu said.
The improving access to the internet in China, especially through mobile devices, has expanded the sources of user data for businesses, but much of these data are fragmented or false, said the report.
Some online peer-to-peer lending platforms that tried to build their businesses on big data bombed because of their inability to establish a comprehensive database, said the report.
Several companies, including SAS, have been developing technologies to comb through data collected by businesses and exclude less credible information, SAS has made a breakthrough by analyzing audio recordings of phone calls made by customers, which can reduce the time needed to categorize potential problems with incoming calls and service costs, said the report.
The software company has provided Chinese PC company Lenovo this kind of audio analytics solution and believes it can also be applied to the banking sector, according to Xu.
Xu said that banks, along with e-commerce operators in China such as the Alibaba Group, control more comprehensive and accurate user data than other businesses and are seeking to profit from it, but will need the help of third-party big data solutions. Privately owned banks, for example, are currently relying on cross-selling the products of other financial services institutions to increase their fee income, but that has also increased their client bases to an unmanagable size, said the report.
Those client bases can be better managed and exploited by big data solutions, which can help banks build client-centered operations that more precisely choose the most appropriate products for different clients, Xu added.
There will soon be a trend among financial groups in China to acquire licenses in banking, insurance, securities brokerage and asset management so they can offer a full portfolio of financial services to their clients, according to Xu's predictions.