CTBC Bank vice chair shares insights on disruptive innovation at WCIT 2017
Speaking at a panel discussion at the World Congress on Information Technology (WCIT) 2017, the first held in Taiwan in 17 years, Li said that the biggest case of disruptive innovations — innovations that create new markets or values that disrupt existing ones — in recent years take place in China. Chinese financial institutions have long enjoyed stable and ample profits thanks to the country's rapid economic growth, he pointed out. At the same time, the development of personal finance has been restricted by China's size and the higher relative profitability of institution finance, leaving many yet to be serviced by banks in the country. The advent of digital finance, however, subverted the entire financial market, with non-financial institutions promoting the development of inclusive financing business. For example, Alibaba created Alipay at first as a way to facilitate payment at its Taobao online store and the solve the trust issue. Yet as the clientele expands, it extended the business to wealth management, consumer loans, credit rating, P2P money transfer and even mobile payment, infiltrate many aspects of life for the Chinese public and eroding businesses for traditional banks, which are even forced to lower prices in response, Li said, adding that similar cases can be seen in emerging economies with a large population such as Indonesia and India.
Li said banks should use AI, blockchain and biometric to face the challenge of disruptive innovations. AI can be utilized in customer service, wealth management, and risk management, Li pointed out. The use of AI in smart and automated wealth management opinion generation and clients investment management can lower labor cost for financial institutions, he said. The general public can also enjoy better wealth management services such as fraud detection and risk management using big data and AI.
The blockchain is mainly used in cross-border transactions including global trade financing, cross-border money transfer and currency trade including digital currencies such as bitcoins, Li said.
Li stressed that traditional banks much integrate rapidly and apply new technologies to the industry to focus more on customer experience and comprehensive digitalization enhancement. Traditional bank branches and human resources can be reallocated to sales and consultation services, he said.
At the discussion - moderated by Greg Unsworth, risk assurance and digital business leader at PWC Singapore and participated by Nigel Jacob, co-Founder of Boston Mayor's Office of New Urban Mechanics, Stephen King, partner at Omidyar an Ming-Kai Tsai, chairman of MediaTek - Li called on the government to establish sound regulations, environment and infrastructure to encourage innovation. For example, Singapore and the UK have relaxed regulations to set up a flexible “sandbox” approach to fin-techs regulations.
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