Insight
Lenders derive synergies from e-commerce platforms
Last Updated: 2016-08-23 13:56 | CE.cn
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By Rui Xuan

China's commercial banks have been engaged in e-commerce development for a long period. However, given that the several e-commerce tycoons have become the preferred choice of most customers at present, it is hard for banks' e-commerce business to gain competitive advantages rapidly. As the Internet finance develops, most e-commerce platforms are rolling out consumer finance services, while commercial banks can make utilization of the synergistic effect generated by e-commerce platforms and explore the operation pattern appropriate for banks' features by relying on banks' advantages in docking with credit reference systems and better knowledge in customers' capital.

Days ago, China Everbright Bank (CEB) released the overall e-commerce solution of "edianshang" and fulfilled the breakthrough from operating self-owned platform to exporting e-commerce solutions. Many commercial banks have introduced their own e-commerce platforms in recent years, such as "mall.icbc.com" of ICBC, "buy.ccb.com" of CCB, "e-mall BOCOM" of Bank of Communications, "e.abcchina.com" of ABC, "beta" of CMBC and "mall.cebbank.com" of CEB. With the development of e-commerce platforms of commercial banks, increasingly more products and services are rolled out for option, such as payment, money management, traveling and various other commodities. What outcomes will be achieved on e-commerce platforms of commercial banks? What is its development tendency in the future?

Extending traditional financial services

It is reported that from the earliest credit card mall or credit mall to the establishment of independent and comprehensive e-commerce platform at present, China's commercial banks have been engaged in e-commerce business for a long time. According To Yang Bingbing, general manager of E-banking Department of CEB, e-commerce platform business is an extended service from traditional financial service in an effort to cut in individual life scenes and enterprise's production scenes.

According to an insider, development of e-commerce platforms by commercial banks is mainly to provide such diversified financial services as financing and payment for customers and provide decision-making references for loan services.

Compared with traditional e-commerce platforms, that of commercial banks enjoys certain advantages in customer base, payment and reputation. Yang Yue, an economic analyst of China Zheshang Bank, said that commercial banks possess huge corporate and individual customer base that have inherent demands for commodity transaction or purchase of individual consumer's goods. Meanwhile, banks' stepping into e-commerce will integrate payment and settlement with management of product suppliers in transaction and various financing methods embedded in e-commerce business can satisfy the financial demands of transaction parties and would be favorable for improving customer experience.

The invisible credit endorsement of e-commerce platforms of commercial banks will improve the credibility of transaction parties on the platform. "However, such credit endorsement is a "double-edged sword", that it is can incur adverse influence on banks' reputation once problems arise though it can improve customers' sense of trust", said Yang Bingbing.

At present, commercial banks' e-commerce platforms are also confronted with challenges in development. "The winner-take-all effect is prevailing in e-commerce business, several tycoons on the market have become the first choice of most customers and thus it is hard for newcomers to proceed ahead. It is noticeable that homogeneous competition is rather apparent in e-commerce business", said Yang Yue. Restrained by the traditional management idea of commercial banks, weak external advertising of banks' e-commerce platform and single import means of customer flow lead to lower vitality in platform trading.

Yang Bingbing believes that marketing and data analysis and technologies of commercial banks are focused more on the financial field. Emphasis on stability and controllable risks makes it difficult to bring "surprises" for customers. However, e-commerce enterprises make constant efforts through marketing and hot spot marketing methods to attract customers and thus improve customers' attention to their platforms.

Producing synergies with e-commerce platforms

According to Qin Hailin, director of CCID think tank Institute of Industrial Economics, to develop e-commerce platforms, it is necessary for commercial banks to break through systematic and institutional constraints and explore the operating mode suitable for their own characteristics. However, to achieve this, it will take a long time.

The profit model of e-commerce platforms of commercial banks is different from that of traditional e-commerce platforms. Yang Bingbing said that incomes of traditional e-commerce platforms are mainly from commission charges and advertising expenses of selling products and diversion expenses. Banks' e-commerce platforms mainly receive incomes from rendering financial services, such as income from payment channels and from financing services. "The income channels of our e-commerce platform will be richer more that of traditional ones", said Yang Bingbing.

Currently, leading e-commerce platforms are also making efforts to roll out consumer finance services and also prepare for engagement in Internet finance. "Compared with higher cost of traditional e-commerce platforms to obtain capital, commercial banks have sufficient funds and thus have advantages in lending rates. Meanwhile, commercial banks can dock with the credit reference system directly and therefore have deeper and more comprehensive understanding on customers' funds." Yang Bingbing said that for commercial banks, financial services rendered for buyers and sellers on the platform not only include financing, but also equity investment, leasing and bonds, thus with more comprehensive and diversified financial service modes.

As for development of commercial banks' e-commerce platform, Yang Yue suggested that commercial banks give overall consideration to integral development layout of Internet finance from the strategic level rather than solely developing certain Internet finance products or business modes. Meanwhile, banks should specify their development goals. The purpose of commercial banks to develop e-commerce platforms is to provide better financial services for customers. The e-commerce platforms of commercial banks should achieve high blending of banks' basic functions relying on information technology, such as fund settlement, loans and deposits as well as management and dispersion of financial risks so as to serve the finance business of banks.

"Pursuit of being large and all inclusive should be avoided. Commercial banks should give full play to its advantages to integrate the advantageous business or services with e-commerce business and should also give full play to the synergistic effect generated by e-commerce platform." Yang Yue said that for example, given the large retailing consumer groups, CMBC has developed "beta" e-commerce platform for business travelers.

Yang Bingbing said that to achieve sustainable development of banks' e-commerce platforms, the transaction volume should be increased firstly in an attempt to effectively follow up the following financial services later. "CEB has its own "mall.cebbank.com" E-shop and is still making efforts to expand its marketing platform through exporting e-commerce solutions rather than making efforts in a single platform to improve the transaction volume. CEB will further promote the overall e-commerce solution of "edianshang" and correct and improve it in practice."

 

 

 

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