Postal Savings Bank of China Wealth Management Co., Ltd. (hereinafter referred to as PSBC Wealth Management), a wholly-owned wealth management subsidiary of the Postal Savings Bank of China (PSBC) held its opening ceremony and product release conference in Beijing on December 5. This newly founded company marks the significant transformation of PSBC wealth management business towards a modern asset management company. Meanwhile, it means that all the 6 State-owned large commercial banks have established their own wealth management subsidiaries.
Yin Yong, Vice Mayor of Beijing, and Liu Aili, Chairman of China Post Group attended the ceremony and delivered speeches. Zhang Jinliang, Chairman of PSBC, presided over the ceremony. Zhang Xuewen, Vice President of PSBC, Chen Yuejun, Chief Supervisor of the board of PSBC, Xu Xueming, Vice President of PSBC, attended the event. Wu Yaodong, Chairman of PSBC Wealth Management, and Bu Yanhong, President of PSBC Wealth Management, introduced respectively the corporate positioning, development direction, and the product system.
Increase direct financing efforts and fully support the real economy
According to Yin Yong, the establishment of a bank wealth management subsidiary is an important measure to regulate the development of the asset management industry, which is conducive to the increased proportion of direct financing and the prevention and control of financial risks. As the national financial management center, Beijing has unique advantages in terms of regulatory compliance, customer resources, scientific and technological innovation, open market, and business environment. It has been at the forefront of the whole country in terms of the development of wealth management subsidiaries, with a total of four large State-owned commercial banks including PSBC having established wealth management subsidiaries in Beijing, with a registered capital of 42 billion yuan (about $6 trillion). These institutions will become an important support for the national financial management center, and will further consolidate and strengthen the unique advantages of the asset management industry in Beijing.
Senior executives of PSBC Wealth Management said at the conference that the company would consolidate the advantages of fixed income investment and use bond investment to meet the financing needs of national key areas and major projects as well as medium, small and micro enterprises. The company will utilize its late-mover advantage and increase the equity market investment to safeguard the sound development of capital markets at different levels. Besides, it will leverage its license advantage to seize alternative investment opportunities and enrich corporate financing forms and channels through debt and equity plans and other methods. As for the cross-border investment business, it will explore to cover both domestic and overseas markets, seeking high-quality targets, accumulating cross-border investment experience and helping Chinese enterprises with their oversea expansion and development.
Mr. Liu Aili said at the opening ceremony that the establishment of PSBC Wealth Management is an initiative China Post takes to implement the central government’s decision to “deepen the supply-side structural reform of the financial sector and serve the high-quality development of the real economy”. PSBC Wealth Management should make full use of China Post’s advantage in its integrated flow of mail, information and capital, to build a scenario-based service platform, enhance cooperation with fintech companies and peers in financial industry, and build a large interdependent and mutually-promoting asset management ecosystem.
Promote new retail strategies and meet people’s needs for wealth management
Retail banking has remarkable advantages such as stable growth, broad space, dispersed risks, and strong resistance to periodicity, which has therefore become the focus of industry transformation. As a retail bank, PSBC has nearly 40,000 outlets, ranking first in China's banking industry and covering 99% of counties (cities) in China. Currently it serves 600 million individual customers, which accounts for more than 40% of the total population in China.
Statistics have shown that as of the end of September 2019, the total assets of PSBC had reached 10.11 trillion yuan (about $1.44 trillion), ranking fifth in China's banking industry. PSBC’s individual deposits accounted for 87.20% of its total deposits, and its individual loans accounted for 54.35% of its total loans.
Mr. Zhang Jinliang mentioned that the establishment of PSBC Wealth Management marks the significant transformation of PSBC wealth management businesses towards a modern asset management company, which would become a strong supporting force for the Bank’s New Retail strategy. PSBC Wealth Management should fully rely on the channel and customer advantages of PSBC, adhere to the path of innovation and development, and strive to build a trustworthy and outstanding professional asset management agency.
It is said that among the top 20 asset management agencies in the world, the bank-based ones account for half of the total, with the total asset management scale of each accounting for more than 30% of the total assets of each respective bank. At the end of 2018, the wealth management business scale of China’s banks was 32 trillion yuan (about $4.58 trillion), accounting for 12% of the total assets of the banking industry. While the PSBC wealth management balance accounted for 9% of its total assets, together with its huge number of outlets and enormous customer base, the wealth management company has a great potential for growth.
It is reported that PSBC Wealth Management will benchmark the product architecture of public offering funds, lay out a product innovation blueprint from three dimensions of product elements, portfolio and development strategy, and build a full-spectrum product system that can cover all market segments. As a main force of the asset management industry, PSBC Wealth Management will fully leverage PSBC’s extensive network and large customer base to meet the needs of urban and rural residents for wealth management. In addition, it will actively construct a wealth management system and add value to both customers and the Bank.
Promote the transformation towards net value products and construct a full-spectrum product system
Wu Yaodong said that with the advantages of corporate strategy, branded channels, customer funds, business structure, and talent mechanism, PSBC Wealth Management will shoulder the responsibility of constructing a first-class large-scale bank-based asset management company and explore a path of transformation, innovation, collaboration, cross-border and technological development.
It is reported that since PSBC launched its wealth management business, its cumulative sales have reached nearly 12 trillion yuan (about $1.71 trillion). Its various types of products have covered 99% of the counties nationwide, with their prudent feature widely recognized by the market and customers. The business structure features three high and one low proportions, namely, high proportions of retail products, open products and non guaranteed products, and low proportion of non-standard debt assets. Since the release of the new asset management regulations, the wealth management products of the Bank have undergone steady transformation. As of November 2019, net-value products accounted for nearly 30% of the total.
In the future, PSBC Wealth Management will push forward product innovation and development in an orderly manner based on the idea of “consolidating foundation, enhancing advantages, filling gaps”. First, traditional products are to be consolidated, strategy types enriched and added on. Second, management capabilities of alternative products are to be enhanced, and new advantageous products cultivated. Finally, blank fields are to be filled and alternative investment businesses expanded so as to create new business growth points.
At the conference, Bu Yanhong announced the brand-new product system of PSBC Wealth Management, and introduced the two-dimensional structure of "wealth management plus asset management".
Accelerate transformation and upgrading through the two-wheel drive of technology and talents
In the digital age, financial products are constantly adapting to customers’ needs through transformation and upgrading. Technology-empowered retail finance is one of the development directions for the wealth management subsidiaries.
At present, PSBC Wealth Management has initially formed an overall IT plan for the new asset management platform, and designed the "3 + 2" application platform based on the idea of integrated application, accessible platform, and high-quality service, in which 3 refers to the three business platforms including integrated customer services, investment management and operation support, while 2 stands for the two technology platforms of technology integration and big data.
With its flexible cloud architecture as the cornerstone, its open dual middleground architecture of business and data as the pillar support, and massive, heterogeneous, and multidimensional data analytics as the driving force, PSBC Wealth Management will actively embrace new technologies such as artificial intelligence (AI), blockchain, cloud computation, and big data to construct a comprehensive digital and intelligent asset management scenario, and create a new ecosystem of asset management technology.
In terms of the research and development system, PCBC Wealth Management will rely on the new idea of integrated development and operation system, advocate deep integration of technology and business, practice agile iterative development, build a R&D pipeline with continuous integration and delivery, and improve the efficiency and quality of delivery. In the building of the science and technology talent team, PSBC Wealth Management will set up teams for product demand design, system research and development, data research and development, and financial innovation in accordance with the aim of independent control. Besides, the company will greatly improve the ratio of sci-tech talents, continuously optimize its agile organization model, improve innovation efficiency and achieve a development path led by science and technology.
At the same time, PSBC Wealth Management adheres to the two-wheel drive of technology and talents, strengthen team building, inherit its parent company’s talent strategies, optimize the rank system of the positions, and build an incentive mechanism that consists of bonuses and constraints as well as long-term and short-term incentives.