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Promoting Variation Development of Financial Sector with the “Constant New” Idea
ReleaseDate: 2017-10-18

 

Wang Junjin, Chairman of the JuneYao Group proposed the business philosophy of “perseverance and constant new in the Methodologies, which is proven to be of great significance to the long-term development of the financial sector. Innovation is the basis and condition for the variation development of financial institutions. The financial sector of JuneYao Group is born in the Internet age. In addition to business model and product innovation, it is necessary to keep pace in terms of financial technology, risk management and organizational mechanism, in order to fit in the new economy and the new financial age, stay right and innovative.

- Hou Funing, Vice President of JuneYao Group

1. Financial technology innovation

Financial technology refers to modern technology that is closely related to financial innovation and development, including modern digital communication, mobile Internet, Internet of things, biometric identification and big data, artificial intelligence, block chain, cloud computing and so on. The combination of these modern technologies and finance not only can greatly improve the efficiency of financial services, change the basic business model of finance, but also can effectively expand the field of financial services, greatly enrich the connotation of financial services, and provide a huge space for the variation development of financial institutions. To promote financial technology innovation, financial institutions must not follow the crowd and hit out in all directions  they must have a profound understanding of the significance of financial technology to better, improved financial functions and leverage that combining its own variation development strategy. For example, as limited by branch resources, for private banks the Internet path has become an inevitable choice. And that will include three goals: first, traditional banking business goes online, including online payment, online banking, online investment and financial management; second, new financial products and risk control technology developed by leveraging big data, artificial intelligence, identification and other new information technologies; third, integrate the internal business processes of banks into the ecosystem trading scenarios, so that for private banks “Internet +” is not simply “Internet + finance”, but “Internet + traditional industry + financial”. Those seemingly singular user demand scenarios often require cross-border integration of multiple industries, and finance is the most important link in achieving this integration.

Financial institutions’ efforts to promote financial technology innovation shall not be limited to the client. Overall planning should be made at the front, middle stages and backstage to ensure systematic advance. At the same time, development strategy shall be considered to take priority and advance step by step. The foundation of system construction must be reinforced especially: first, flexible and secure IT infrastructure shall be designed to support the client’s flexible product innovation and combinations, meeting the risk control requirements in the internet era as well as regulatory requirements; second, strengthen the data management and manage data as an important asset, in order to broaden the field of Internet financial services and lay the foundation for building a “smart bank”; third, to ensure a complete system security and protection measures. For private banks, advanced information systems and the capacity of using financial technology will determine how far private banks can go in the innovation path.

2. Risk management innovation

Risk management is the core competitiveness of financial institutions and the guarantee of sustainable development. At present, the risk management system of licensed financial institutions mostly follows the risk management guidelines of the regulatory authorities, which lays a solid foundation for the effectiveness of financial institutions’ risk management. JuneYaos financial institution is of a short history, for which the risk management capacity and experience are relatively weak. Risk management should first meet the basic requirements of the regulatory body on the risk management system, structure and process. Only by consolidating the risk management foundation can innovation be implemented effectively. Innovation should focus on three aspects: First, risk management market innovation based on variation development strategy, targeting specific scenarios, customers, specialty products and services; second, risk management technology innovation revolving around financial technology; lastly, risk management tool innovation based on risk management informatization.

Market-based risk management innovation is an important part of the implementation of variation strategy by financial institutions, the key to represent the core competitiveness, and the possible core “unicorn” competency in certain industries or fields. The purpose of innovation is to increase risk insights, effectively identify, control and manage risks, and obtain risk premium while enhancing competitiveness. Risk management technology innovation around financial technology aims to improve the risk management insights and precision through the combination of information technology and risk management technology, and, based on big data, artificial intelligence and other financial technologies, to establish an internally and externally interactive risk rating management system, quantitative model and IT system. The aim of the risk management tool innovation revolving risk management informatization is to improve the efficiency of risk control and reduce the operation costs, and through informatization, to standardize risk management process, so that information becomes transparent, risk decisions more intelligent, and management responsibilities properly assumed  the whole risk management system will function effectively.

3. Organizational design innovation

Organizational design of traditional financial institutions has gone through three stages: the first is small but complete workshop-type organizational structure and management methods; the second is the pyramid-type organizational structure and hierarchical management; the third is the flat organizational structure and matrix management. The evolution of these three forms of organization is closely related to information technology development and market changes, and the operating mechanisms formed as a result are quite different. “Flat” is a product of highly developed information technology, with an aim for improved efficiency. However, the essence is vertical and professional management, moderately centralized with better efficiency, while internal control requirements must be met on the basis of specialization. The key lies in the form matrix management of scientific design is realized, to define the scope, content and form of vertical management, to balance the possible contradictions between the front, middle stages and the backstage and to prevent organizational rigidity brought by centralization and the departmentalization of public resources. That will require innovation in organizational mechanisms, organizational forms and benefit-sharing mechanisms, improved fitness between organization system and development strategies and increased flexibility and centripetal force in the organizational system. Meanwhile, digital management and assessment system are to be established, using numbers, rather than feelings to manage, in order to achieve digital, standardized and refined institutional management.

Also platform thinking will be introduced to build the operating mechanism and the core concept is to position the role of the organization as the builder of value platform, so that the platform “demands (including clients and employees) will be met to the greatest extent. The essence of the platform is to serve the value exchange activities on the platform and explore the operating mechanism of the financial institution as a platform. The key are: innovate the financial service tools and add new value to the customer’s transaction behavior through the combination of industry and finance; innovate incentive and restraint mechanism and stimulate the entrepreneurial passion of personnel driven by interests; innovate management rules and improve customer and employee experience through a scientifically designed workflow.

Each financial institution are facing different market environment and endowed with different resources, which leads to different development paths. The only things that stay the same are exploration and innovation. We believe that with genuine perseverance and continuous innovation, JuneYao Group’s financial sector will finally usher in development and prosperity.