Ping An Bank: Change everything
One to watch in China is this transformed financial institution, which claims not only that it knows what its customers want – but how to give it to them, too, in a digital world.
Peter Ma Mingzhe, chairman and CEO of parent organization Ping An Insurance
At the end of 2015, the Shenzhen-based Ping An Bank had Rmb280 billion ($39.1 billion) of retail deposits – representing just 13.2% of its total deposits – and 13.95 million mobile users. These numbers would be the envy of smaller rivals but Ping An Group’s executives, led by Peter Ma Mingzhe, realized something was wrong.
In a country where customers have come to expect flawless service from banks and, in particular, from the fintech disruptors trying to steal their business, Ping An had a standard of service that Xinfa Cai, its retail banking chief executive, viewed as “very bad”.
In 2016, the bank’s management asked McKinsey to assess the damage. They found weak customer engagement, with alarmingly low net promoter scores. They were also forced to admit that the digital offering was not up to scratch, both in terms of the service offered to clients and the time it took to make improvements.
Fast forward to 2019 and the bank is barely recognizable. It has reduced its reliance on corporate lending and shifted towards retail customers. By June of this year, it had pushed its number of mobile app users up to 28.35 million and its retail deposits to Rmb540.8 billion, or 23.1% of overall deposits. Perhaps more importantly, Ping An executives finally sound confident that they know what their customers want – and how to give it to them.
Ping An followed a three-stage plan to pull off its transformation. First, it decided to focus on developing its all-important mobile app, investing in support and development staff. The bank tried to learn lessons from China’s biggest technology companies, rather than rival banks.
“We want to reach the same level as the e-commerce companies,” says Cai. “When people talk about their banks, they should rank us the same way they do Taobao, JD.com or Didi. But right now, banks are still a few levels below that.”
Next, Ping An gave its branch network a dramatic makeover, creating a swathe of ‘smart branches’. Customers of Ping An insurance can open a bank account in the branch within just a few minutes. The bank uses facial recognition to help speed up the process and artificial intelligence to suggest appropriate products.
Ping An’s investment in artificial intelligence has given it valuable insights into new account holders
But reworking its mobile and physical offering was not enough, according to Cai. The focus next shifted to Ping An Bank’s internal culture. That came from the group level, in particular from Ping An Group’s chairman Ma.
“We have created a sense of internal competition,” Cai says. “Peter Ma has told us to always ask three questions. Are we better than our rivals? Are we better than we were in the past? Are we gaining market share? We have always kept our focus on these three questions. That’s created a culture that other banks don’t have.”
Ping An’s investment in artificial intelligence has given it valuable insights into new account holders. When clients set up their accounts at Ping An, the bank’s algorithms use salaries, job titles, financial history and even hobbies to generate a product-per-customer (PPC) prediction. If a customer should have a PPC of eight but only uses two products, Ping An’s relationship managers immediately get an alert flagging up the opportunity.
This is not just important for short-term profit. Cai says customers with a PPC of four or above tend to be the most loyal, so figuring out which customers can be pushed beyond this benchmark can bolster the long-term strength of the bank.
Cai, the former chief technology officer of the hotel division at internet travel firm Ctrip, typifies the sort of hire banks are making to push through their technological transformation. A self-described ‘tech guy’ with almost perfect English, he brought along an interpreter to meet Asiamoney only because he did not know the English words for some financial terms.
He has made sure to hire like-minded people. Every major department in Ping An Bank’s retail banking department has its own chief technology officer. That has brought down development time dramatically. It previously took as long as six months to make the changes demanded by customers to Ping An’s app. It now takes a matter of days.
Of course, digital transformation will not necessarily provide an enduring advantage for banks. Several CEOs interviewed by Asiamoney admitted that their rivals could catch up within a few years, if they really tried. The trick is to acknowledge this and make sure that the culture of the bank encourages a state of permanent change rather than a few landmark initiatives.
This is why the prospects for Ping An looks so strong. Despite the considerable time, energy and money it has already committed to digital transformation, the bank appears to have plenty more to do. “We’re leading in digitalization in China’s banking sector but we’re still in the middle of our transformation,” says Cai.