Standard Chartereds technology focus in China: advantages of foreign banks in the market

Asian Banker, 16 May 2012, by Baron Laudermilk

Ericson Chan, chief information officer of Standard Chartered Bank China has indicated that local Chinese banks have some obvious market advantages over foreign banks. It is not solely because the big four banks are backed by the state, they also have very strong branch and ATM networks. Most importantly, domestic banks are allowed by the central government to invest in domestic bonds and other financial instruments that are only slowly opening to foreign banks. There is no doubt that banks are heavily regulated in many ways. Branch licensing laws are stringent and the local regulators monitor the location and the rate at which foreign banks open establishments. The wealth management products that foreign banks are permitted to offer to customers are also closely supervised. Despite this environment, there are still plenty of opportunities for foreign banks with an innovative approach to customer service to grow in the market. According to Chan, Standard Chartered drives innovation to differentiate its offering and to ensure the bank is building a sustainable advantage. Our focus is on closing the gaps in our basic offering and at the same time, investing in technologies and collaborating with other more progressive industry partners that allow us to better service our customers and lead the market in terms of capabilities. said Chan. Chan also noted that China is developing at such a fast pace, that it can learn from other markets, and develop particular areas faster than counterpart countries. In some cases, there is no legacy technology to be migrated from, compared with the situation in other more developed markets. In China, for example Internet usage has become so commonplace so quickly that online shopping has increased in sophistication very quickly. Customers might even be skipping the retail shopping experience and moving directly to online shopping. Similarly, banks can go straight to mobile solutions. said Chan. Any bank not investing in and innovating around online and mobile banking platforms and solutions is at risk of falling behind its competitors. Not only does Standard Chartered Bank have a suite of lifestyle and banking apps called Breeze, which is now also available in the China market, but it has also customised an online payment solution specifically for local needs. Standard Chartered recently became the first international bank in China to partner payments giant Alipay, to bring their customers the Alipay Express Payment Service, which allows

customers to link their Standard Chartered debit card to an Alipay account, and to shop at over 460,000 online stores including Taobao, Ctrip and Yihaodian. Standard Chartereds approach to customer service innovation is to take measured risks in introducing new technology to offer a value-added service experience for their customers. One of the key advantages that Standard Chartered has in the China market is that we can learn what works and what doesnt from other countries across our footprint. Standard Chartered has roots in 70 countries, and we continue to grow from strength to strength. If something works very well in India or Singapore, we are able to adapt it for the China market. For the most part, Chinese banks have narrower references to draw upon, but they are starting to expand their presence in other markets now. said Chan. Standard Chartereds engine powering banking for its customers in China International banks with a presence in China are required to customise their core banking systems and applications to be compatible with local clearing systems. Chan indicated that naturally, when it comes to this type of expertise, Chinese vendors are especially qualified, and adept at bringing banking systems in line with local payment clearing systems, and with other government regulations. Foreign banks should focus on crossborder and globalized solutions, while leveraging local vendors for local requirements for speed of execution and cost effectiveness. The majority of Standard Chartereds core banking systems are built in-house, with the ability to integrate and support virtually all the new applications they add to the system. Standard Chartered is expanding rapidly, especially in its key markets of Asia, Africa and the Middle East. Chan mentioned that the banks core banking systems are the same across many of the Banks markets, with each system customisable to comply with local regulatory requirements. Chinas reporting regulations, set by regulators including the Peoples Bank of China (PBOC), the State Administration for Foreign Exchange (SAFE) and China Banking Regulatory Commission (CBRC) at national and local levels, as well as other local-level regulators have specific requirements for local needs. Standard Chartered has implemented specific modules into its core banking systems so they are able to meet these requirements. A specific example of this is a module that tracks money laundering. The government has requested that banks implement anti money laundering software to curb investment abroad by Chinas HNWI. According to Chan, such a module does not negatively affect any of their systems, and it runs smoothly alongside the core banking system and the rest of the applications. Chinese banks including the big four are using foreign vendors such as SAS, SAP, Oracle, and IBM to help them create databases, integrate their core banking systems, and to analyze their big data. Storing huge amounts of data is all well and good and we do this very well with security and confidentiality. However, the challenge has always been how do we use big data to help better understand our business, allowing us to better provide service or to design financial solutions for our customers. said Chan. Use of technology to differentiate offerings Chan highlighted that Standard Chartereds main focus is on applying technology to improve the customer experience, and invests in technology to be at the forefront of doing business. Breeze, which was recently launched in China allows users to check balances, transfer funds and pay bills with an innovative user-friendly interface. Another app, Breeze Places, allows users to look up the location of the closest branches or ATMs. This is where Standard Chartered is ahead, as most Chinese banks are focused more on migrating Internet banking functionality to mobile than on delivering an enhanced mobile banking user experience. Enterprise mobility is also an important part of the banks technology strategy. Standard Chartered is the first bank to adopt iOS as its main mobile platform to replace Blackberry. As a direct result of the adoption of this platform, the bank is better empowering frontline service staff with more tools through its dedicated Standard Chartered App Centre. According to Chan, Being able to improve the efficiency with which we can securely process transactions is an advantage for our customers and something we will continue to strive for as we leverage the iOS platform. Additionally, the iPad interface provides new ways of interacting and engaging with our customers never before possible. As some banks are working on getting loans out the door, Standard Chartereds emphasis on customer experience, specifically for the online and mobile channels, as well as its international core banking system that is implemented across the majority of countries in which it operates, has given it the leverage to meet the needs of

the modern lifestyles of Chinese consumers. Standard Chartered is growing, and is expecting to expand in the next few years despite the competitiveness in the Chinese market. By understanding customer needs and adopting innovative technology solutions to offer differentiated services, the bank believes it has the keys to excel in the Chinese market. Chinese banks are catching up fast, especially in terms of scale, and understanding all the banking regulations and complying with them is not an easy task. Ericson Chan, chief information officer at Standard Chartered Bank China has spent the last 13 years working in various technology and operations-leadership roles, including head of infrastructure development for North Asia, group head of consumer banking technology as well as CIO of group consumer banking sales and services. In 2009, Ericson became head of wholesale banking operations for Standard Chartered Bank China. Shortly afterwards, he was promoted to chief information officer.

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