China Merchants Bank Harnesses the Power of Internet Finance
Internet finance continues to have an unprecedented impact on commercial banks. Internet companies adept at harnessing the power of the Internet benefit from advantages in growing the customer base, identifying customer needs, and providing better services to customers. This is largely due to the development of the Internet, Big Data, and cloud computing. Commercial banks without these capabilities are gradually losing their inherent advantages as established financial service providers.
In 2012, conservative China Merchants Bank (CMB) started to build its own Big Data platform based on cloud computing systems, at a time when Big Data was a relatively new concept. In a Big Data pilot project implemented at the Shenzhen branch, CMB achieved startling results. After reducing the number of short messages sent to promote wealth management products to customers by 82%, CMB achieved a remarkably high customer hit rate of 95%.
Value from Data
CMB’s trial use of Big Data looked like a risky move to outsiders. Not so, according to Zhou Tianhong, CMB General Manager for Information Technology: “China Merchants Bank has always treated data as one of its key assets. This was not a rash decision, nor was it due to good fortune that CMB’s attempt at Big Data technologies was rewarded with success.”
Data analysis capabilities have always been a decisive factor in the growth and competition of the banking industry and, as China’s first share-holding commercial bank, CMB long ago made “digging value out of data” a high priority for securing stable growth and maintaining competitiveness. This strategy has helped to cement CMB’s reputation as a pioneer in the banking industry for the extraction of value from Big Data.
Before the Big Data pilot, online queries at CMB were limited to transactions within the last 12 months. After the pilot, historical transaction details from the past five years could be queried. In addition, the bank cut the time spent on credit card investigations from 15 days to less than 10 minutes. What’s more, the error rate in contingent financial asset forecasts was reduced by 50%.
Building on the success of the Shenzhen branch, CMB then took an even bigger step by rolling out a series of innovative financial services nationwide in 2014. The services included real-time credit investigations, real-time event marketing, and precise recommendations of wealth management products, all made possible by Big Data technologies.
CMB succeeded in deploying these Big Data technologies in less than two years, while building an IT team competent in Big Data technologies. Although CMB engineers were experienced in data mining, data analytics, and data warehousing, they knew little about Big Data analytics. To speed up the progress of its Big Data project, CMB sought capable partners and established collaboration with Huawei. Assisted by Huawei, CMB was soon able to roll out a production system based on Big Data analytics. The key to these rapid achievements was Huawei technology and support.
Beyond Traditional Vendors
Big Data technologies were first proposed by Internet companies, while most information technologies were invented and promoted by professional IT enterprises. As a leading global provider of ICT but a relative newcomer to the enterprise market, Huawei is not widely known as a Big Data provider.
However, during the product evaluation phase at CMB, engineers performed stringent Proof-of-Concept (PoC) tests on Huawei products as well as those of other vendors. After more than six months of meticulous technical testing, CMB selected Huawei, a “young player” in the market, for its technical competence and high return on investment.
“As a newly emerging force in the field of enterprise IT services, Huawei has its unique advantages, such as strong learning and technical innovation abilities,” Zhou Tianhong said. “Huawei has proven to be a reliable partner and competent supplier. The Huawei technical team evaluated the results of every CMB test to ensure that the products satisfied both the business needs of CMB and the requirements of financial regulatory authorities.”
As a result of the collaboration with CMB, Huawei launched its FusionInsight Big Data application platform for enterprise in 2013, and in 2014, the CMB system officially went online.
The cooperation with Huawei has helped CMB realize three objectives:
- To build a Big Data application platform based on cloud computing and to provide innovative financial services based on Big Data analysis.
- To manage structured and unstructured data not included in the data warehouse on the Big Data platform and be able to process of massive amounts of data.
- To establish a Big Data technical team to run services on the Big Data platform.
After the Big Data platform went online, CMB started rolling out new financial applications in its branches. Estimates show that the amount of data involved in query applications alone in CMB branches will reach several hundred terabytes a day. And, because other applications collect massive amounts of behavioral data as well, the total amount of data to be processed daily is expected to reach the petabyte level.
Currently, CMB’s data analysis platform runs both conventional and new technologies. For any enterprise, harnessing the power of Big Data is not an easy job — it requires an experimental process to gradually bring the costs of data analysis under control.
“Big Data technologies were first developed by Internet companies,” Zhou Tianhong observed, “and the provision of financial services over the Internet has pushed the application of Big Data to a new stage of development. Banking data, however, is more complicated than Internet data — and, after years of development, banks have developed numerous mature data analysis technologies. These mature technologies will not be easily substituted by anything new. Therefore, CMB expects that it will take some time before Big Data technologies are widely deployed in commercial banking.”
Mr. Zhou is convinced that it is critical for commercial banks exploring the value of Big Data to build a technical team familiar with developing platform technologies and analytics solutions to best exploit the value of Big Data in banking.
Voice of the customer
“Big Data technologies were not possessed by traditional IT vendors. As a newly emerging force in the field of enterprise IT services, Huawei has its unique advantages, such as strong culture for learning and the ability for technical innovation. Huawei has invested more resources in Big Data than most of its competitors.”
— Zhou Tianhong, CMB General Manager for Information Technology