Bank on Digitalization

Jan 10-2019   

China’s digital finance has been growing by leaps and bounds and leads the world in such areas as payment and loaning. While much of research and reports have been focused on tech firms’ impact on digital finance, NSD Prof. Xie Xuanli and PhD candidate Wang Shihui have moved away from the beaten path and studied the digitalization of 136 Chinese commercial banks. Data from their annual reports from 2010-2016 were crunched to delineate the trends in their cognition (understanding of digitalization), organizational transformation and product development with regard to digitalization. The report finds that digitalization of Chinese commercial banks as a whole grew steadily from a composite index of 9.39 in 2010 to 95.17 in 2016, at an annual clip of 50%. Joint-stock banks were the forerunner in the early stages from 2010-2014, yet the national ones had jumped ahead since the wording ‘Internet finance’ was adopted by the central bank’s China Financial Stability Report in 2014. Among the three indexes, cognition grew the fastest, followed by product development. Organizational transformation lagged behind, laying bare the fact that a big quantity of Internet products still relied on traditional business department. To bank on digitalization for growth, each bank has tasks cut out for it.