(Nov 13): What does fintech mean for Bank of China, Singapore Branch (BOCSG)?
Qiu Zhikun, general manager & country head, BOCSG, explains in detail the bank’s fintech initiatives in Singapore, and some of its leading-edge programmes in China that could be introduced here.

When did Bank of China start to focus on fintech?
Bank of China has always viewed innovation and technology as strong driving forces to promote business development. In 1979, BOC became the first bank in China to use computers to automate manual processes. BOC continued with many firsts, launching China’s first credit card in 1985, China’s first ATM service in 1987, as well as launching the first online banking platform in 1997.

In recent years, BOC has fulfilled the Chinese national agenda’s focus on driving innovation and investment in fintech. BOC has experimented with the use of big data, artificial intelligence, blockchain and mobile payment, and commercialised some of these.

These initiatives prove that BOC is constantly embracing, incorporating and introducing the latest innovations into our range of products and services.

How has fintech changed the way BOC serves its customers?
On the retail front, we now use fintech for mobile payments, biometric authentication and online shopping, among other services. Technology has enabled BOCSG to use the atm5 shared network and equipped us with over 240 self-service facilities in Singapore. In addition, BOCSG uses fintech to provide high-net-worth customers with personalised products and services.

BOCSG also uses fintech for corporate banking. We have been able to provide a wider suite of products and services that enable our customers to be more efficient in their businesses.

How has BOCSG collaborated with the Monetary Authority of Singapore?
The Financial Services Industry Transformation Map (ITM) released by MAS on Oct 30, 2017 demonstrates the Singapore government’s determination to develop Singapore into Asia’s fintech hub.

BOCSG is and has been very supportive of the Association of Banks in Singapore as well as MAS, and we were also very much involved in the process of ITM-related discussions, research and consultations. We will do our very best to support the implementation of ITM.

While MAS is developing and promoting fintech vigorously, BOCSG is already a leader in using technology to transform banking services. We liaised with MAS on the pilots and proofof- concepts of our BOCSG Financial Technology Innovation Lab, which we set up in early 2017.

What are Capital and Credit Risk Manager (CCRM) and G3 real-time platforms? How do they help your processes? Why is this important to BOCSG?
CCRM is one of the three major electronic platform systems that MAS has been strongly promoting. The CCRM system is able to aggregate information and match business needs. It is able to help automate functions in global trade finance, supply chain finance and many other related asset management services and transactions. The platform enables financial institutions to link their trade finance and distribution activities with a digital solution, driving down risk, cost and agility pains while optimising execution life-cycle and portfolio management.

In April this year, BOCSG became the first foreign bank to transact a ‘G3 real-time payment’ for credit cards. This is a faster and more secure payment method. This is a FAST real-time transfer system and has greatly facilitated payment in allowing real-time money transfer. BOCSG was the first Chinese bank to join FAST. (Fast and secure transfers are an electronic funds transfer service that enables customers of the participating banks to transfer Singapore dollar funds from one bank to another in Singapore almost instantly.)

What are the new blockchain initiatives BOC has undertaken? When do you think these could be implemented?
The use of blockchain has expanded from cryptocurrencies to payment and settlement, smart contracts and financial audits, and many more services.

In China, BOC is using blockchain for corporate social responsibility, where we have built a public service platform allowing bank employees to purchase agricultural products to help low-income families, many of whom are farmers. BOC is also exploring the use of blockchain for Know Your Client processes in China.

Bank of China Hong Kong uses blockchain to value property for its mortgage business. This has improved efficiency and helped reduced fraud.

What research has BOC done on artificial intelligence? When will you be using AI to help service your customers? What type of products are you likely to launch with the help of AI?
BOC is using AI for anti-money laundering processes, data analysis, image recognition and machine learning. AI is useful to identify and cross-verify goods in trade finance as well as the authenticity of the cargo vessel, and generate a verification report. AI has reduced some processes in the trade finance chain from two hours down to two minutes. BOC has successfully experimented with smart banking, facial recognition, anti-money laundering detection, credit card fraud and risk prevention, and we will be rolling out these initiatives in due course.

What is the nature of your collaboration with Tencent?
Recently, BOC signed a cooperation agreement with Tencent to jointly promote cloud computing, big data, block chain, mobile payment, AI and many other areas of new advanced technology initiatives and innovations. Hopefully, we can roll out these new initiatives to BOC’s customers soon.

We have also actively explored using technological innovation with Tencent for a range of financial services such as WeChat Banking (which BOCSG is launching soon) to bring greater convenience to customers.

How do you think fintech will help serve your customers in some of the areas in which BOC is taking a leading role, such as the debt capital markets?
BOC launched its Debt Capital Market Centre (Asia) in Singapore in June 2017. The new Centre will allow BOC to capitalise on the growing debt capital markets in Asia-Pacific, which reached a record volume of US$1.45 trillion in 2016, up 16% from 2015. BOC is using technology to ensure a smoother, more efficient book-building process. We use MUREX, which improves the bond book building process, including the tracking, clearing and settlement of bonds.

The new DCM Centre will also support the bank’s strategy to broaden its investor base by delivering an expanded range of quality investment products, promoting the Chinese market and unlocking further underwriting opportunities for Panda bonds in the region.

The Centre has also provided underwriting services for a number of issuers such as the Haier Group, Singapore Prime Asset Holdings and China Construction Bank Singapore Branch, and has successfully participated in the issue of US$2 billion bonds for China’s Ministry of Finance.

What can Singapore learn from China’s e-payments framework?
An increasing number of countries in the world are learning from and taking China’s mobile payment and ‘cashless society’ as references for their own building blocks. The development of China’s mobile payment platform is a good opportunity for innovative collaboration with many countries, including Singapore. The enormous success of China’s mobile payments is in fact a result of a liberal, open and innovative environment. The government has ensured a regulatory framework that is open, yet secure and stable. With this, Alipay and WePay, two e-payment giants, have emerged.

What can Singapore learn from the way Alipay and WePay are becoming ubiquitous in China?
China’s services such as e-commerce, mobile payment and the use of big data opens up room for technological partnership with Singapore. In China, we adopted an innovation-driven development direction led by consumer demand and the response from industry. The establishment of nationwide e-commerce and mobile payments platforms were born from customer demand.

BOC benefited from China’s rapid development in fintech, and we will be introducing cashless payments as part of our participation in Singapore’s Smart Nation initiatives. For instance, BOCSG launched the new BOC Sheng Siong Visa paywave card in July, and there are more of such innovative products and services in the pipeline. These include a new-to-market mobile payment programme and providing international financial services in crowdsourcing for e-commerce merchants.

This article appeared in Issue 805 (Nov 13) of The Edge Singapore. Check out our Fintech Special this week!

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