Citi: The importance of digitalization to reduce branches. Continue to position wealth management and compete with rivals to win competition

In the face of the development of digitalization and the emergence of virtual banks, banks in Hong Kong are concerned about whether traditional banks will be affected. Lin Chigang, the general manager of Citibank in Hong Kong, believes that it depends on the positioning of the banks. He believes that banks must look outwards and “go out”. It is a future trend to follow the needs of customers. “It is better to compete with others than to cooperate with others (to do business).” Regarding the operating environment of the banking industry in the new year, he said that uncertainties still exist. Although the market expects the pace of interest rate hikes in the US to slow down, if the US raises interest rates twice this year, he expects the Hong Kong interest rate (best interest rate) to follow the upward adjustment.

Digital channel revenue increased by 50%

With the financial technology, the digitalization of banking business and the virtual banking license issued by the HKMA in the first quarter, he admits that the role and positioning of the bank may change. The size of the branch network in the past is very important. The current branch network has not affected customer service. A single important element, if the bank digitalization is done well, the business will not be affected by the branch network. He stressed that the most important thing for banks is to adapt to the new business environment and to go with the needs of the guests.

Lin Zhigang pointed out that Citi has already adjusted itself, in addition to continuing to position itself as a wealth management business, and making good use of technology and creativity to provide customers with the services they need. Although the market has new players such as virtual banks and other technology companies to increase competition, his credo is “competing with people, it is better to work with others to do better.”

For example, in the past, customers had to go to the bank to seek services. At present, banks have to look for customers’ “pain points” to provide better services. For example, working with other partners to allow customers to access banking services on the other’s platform.

Leading the open application interface platform

He revealed that Citi is the first bank in Hong Kong to launch an Open API development platform. Currently, it has cooperated with eight organizations in the API project to enable Citi credit card customers to use credit card points to offset when they check out the website. The amount of spending, and help Citi to find some customers who have not been able to get involved. For example, after the mobile phone foreign exchange service launched by the bank more than a year ago, 70% of the customers were foreign exchange services that had not used Citi.

Lin Zhigang analyzed that 30% of the bank’s new customers in the past year were from digital channels; more than 60% of new customers with personal loans came from digital channels. In the past three years, the revenue of digital channels has increased by 50% every year. Now it accounts for the low double digits of the overall personal banking business income, which can reach 20% within 3 years.

In the face of the development of digital and virtual banking, whether the branch network is large or small and medium-sized banks will be greatly affected, he thinks that depending on the positioning of the bank. Although virtual banking costs are small, but only for certain customers or certain types of services, customers still need some services that must be handled by the account manager. The most important thing for banks is to provide different services to customers.

Virtual Silver Storage Limits Only for some customers

In addition, he expects that the banking industry will face an uncertain business environment this year, stock market volatility, financial market environment, and even the uncertainties of Sino-US trade, how it will affect the customer’s financial orientation.

In terms of interest rates, members of the US Federal Reserve Board have recently raised more pigeons on interest rate hikes. He believes that there are still variables. Citigroup predicts that the United States will raise interest rates twice this year. Although Hong Kong banks did not raise the prime rate with the US interest rate in December last year, he expected that if the US raises interest rates as scheduled this year, the Hong Kong interest rate may follow. In the first half of 2018, the banks benefited from the widening of the net interest margin. Since then, many current savings deposits have turned to fixed deposits. Although the relevant situation has stabilized, this year we should pay attention to the trend.

The port of Hong Kong raises interest rates with the US

He also said that in the absence of new news, it is expected that the number of transactions in the property market will not change much this year. Interest rates will rise, there will be no major changes in interest rates, and demand will be reduced. The overall market may slow down according to the market. The bank analyzed that property prices will still fall this year, but the market has a bearing capacity. It is estimated that property prices will fall by 10 to 15% this year.