Visionary Chinese Banks Show How Customer-Oriented Architectures Support Innovation

Five of the top 10 companies in the latest Forbes Global 2000 company list (published in May) are from China, and four of them are commercial banks. If you think this is only due to China’s massive consumer base, and that you can easily apply your global innovation strategy to the Chinese market, you’re almost certainly wrong. Enterprise architecture (EA) professionals at companies doing business in China should take a look at what the country’s banking and financial services industry (BFSI) is doing to enable customer-centric innovation.

I recently published two reports focusing on China’s BFSI. In these reports, I analyzed the Chinese banking landscape and the business challenges banks face, described a systematic approach to innovation that EA pros should consider when planning their transformations, and shed light on how they use both mainstream and emerging technologies to unleash the power of innovation around products, operations, and the organization. Some of the key takeaways:

  • Chinese banks suffer from their own customer experience issues. As a longtime monopoly, China’s BFSI has suffered from inefficiency, quality problems, and an uncompetitive ROI — and thus can no longer meet the high bar for customer satisfaction in the age of the customer. EA pros must find innovative ways to resolve these issues.
  • Internet companies and regulatory changes are challenging BFSI players. Visionary Internet companies like Alibaba and Tencent have launched financial services products, including innovative products like Yuebao, that are disrupting China’s BFSI with higher profits, lower barriers to entry, and better flexibility. The government is also making regulatory changes that will open up the market and intensify competition.
  • Innovation should focus on products, operations, and organizations. Product innovation involves Internet finance, personal financial management, supply chain finance, and small-business lending. Operational innovation involves mobile banks, process banks, and community banks. Organizational innovation connects the two. EA pros must strike the right balance among these dimensions to achieve customer satisfaction.
  • Understand your peers’ innovation practices. CITIC has embraced Internet finance; Ping An Bank and ICBC have disrupted supply chain finance; CMB is drivingpersistent differentiation for personal financial management; China Construction Bank has established amobile bank for customer engagement; China Minsheng Bank is focusing on process for efficiency and agility; CMBC, Industrial Bank, and ACM have built community banks for wider local experiences; and CMB and PAB have aligned EA with their business strategy for high impact.

For details on the market landscape and the specific practices that we recommend, please take a deep dive into these two reports.

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