CIB Group Open Bank APIs: An Innovative and Practical Approach

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1 CIB Group Open Bank APIs: An Innovative and Practical Approach May 2018

2 CIB: China's first-rate joint-stock bank and "interbank business leader CIB is a leading joint-stock bank in China CIB recognized as Bank of banks with its Bank-Bank Platform that was ten years in the making Excellent brand Massive scale Strong profitability Diverse licenses Founded in 1988 as one of China's first joint-stock banks, market cap of USD55.5bn 1 No. 21 on the list of world s most valuable banking brands 1 ~USD1tn in total assets - No. 1 among Chinese joint-stock banks, No. 30 among global banks by The Banker 3 USD 22 bn in revenue, and USD 9 bn in net profit in 2017 Top 20 most profitable companies in Fortune 500 Wide spectrum of businesses covering trust, leasing, funds, and consumer finance One of the commercial banks with most financial business licenses 95% No.1 Financial institution business leader, with its client base covering >95% of FIs in China Lines of credit granted to 278 small and medium-sized FIs, ranking No.1 in the market On top of traditional FI business, CIB also provides SMBs 4 with core banking software systems, wealth mgmt. products, clearing & settlement and other services, enjoying great client stickiness 1. Banking report by Brand Finance, a UK independent brand valuation consultancy 2. Global bank rankings by The Banker (UK) as at Q As at the end of Oct Small and Medium-sized Bank Source: literature search Bank-Bank Platform, the largest interbank cooperation platform in China 52,000 network branches for counter agency settlement services, 1,282 partner banks 3

3 Positioning of CIB FinTech: to create a win-win cloud ecosystem and build a financial innovation engine Past: a tech export unit under CIB s Bank-Bank Platform CIB Present: a market-based, independent FinTech company CIB External shareholders 51% 30% 19% ESOP Interbank Business Dept. Bank Cooperation Center 1 CIB FinTech Payment & settlement Wealth mgmt. Financing services Kept As-is Tech output Spin-off Financial Industry Innovation Business Cloud Business Group Group Financial Industry Cloud Innovation squads are formed to Business Group was derived perform fast iterations, develop from the tech output segment innovative FinTech products and of the Interbank Platform build an open bank platform To build China s own Fidelity National Information Services 2 1. Bank-Bank Platform is under CIB s Bank Cooperation Center 2. Fidelity National Information Services (FIS). Its FIS system is focused on serving North American small and medium-sized regional and community banks with core business system solutions Source: internal interview, internal info

4 CIB FinTech develops rapidly, leveraging CIB client base and its own technological advantages 350+ >26% No.1 Partner banks Financial Industry Cloud revenue growth Market share in banking industry 1 Revenues from core banking software system and cloud services topped RMB 200 million 2 1. CIB FinTech is a cloud core banking system services provider with the largest client base in China 2. Data as at the beginning of 2018 Source: internal info

5 Strong client base: CIB FinTech has 300+ banking business partners Financial Industry Cloud clients include city commercial banks, privately-owned banks, foreign banks and rural banks City commercial banks CIB FinTech has wide geographical client coverage and high client stickiness CIB FinTech s coverage of rural bank clients in China Privately-owned banks foreign banks Rural banks clients 5-10 clients 1-5 clients 0 client Source: internal info By May 2017, CIB FinTech had covered rural bank clients in 25 provinces and regions in China Since the system go-live for its first rural bank client in 2008, CIB FinTech has enjoyed high client stickiness, with a retention rate over 95%

6 Industry-leading technology: CIB FinTech has a wealth of patents and copyrights as well as numerous industry accreditations and endorsements No Recognition by various institutions China s largest cloud services platform for banking info systems 7 Comprehensive range of 400+ financial industry cloud services 51 ITSS cloud computing accreditation by MIIT, Finance Cloud Service award from Cloud Computing Summit 2017 Global successful case at OpenStack Summit; China s largest Financial Industry Cloud platform Worked with regulators to formulate the Service Standards for Hosting and Maintenance of Information Systems of Small and Medium-sized Banks With years track record in Financial Industry Cloud services, CIB FinTech has become a cloud services leader in China's banking industry 1 7 core tech patents (issuance in progress) 51 core software copyrights with 28 already approved Strategic partnerships with global tech leaders 1. Gartner report, Jan Source: internal info, literature search

7 Build two types of development venation, focus on key technical fields Core Strategic Development Key technical fields trunk Continuing Development: Strengthen Financial Industry Cloud and CIB s IT service Steadily invest and enhance service on the existing basis Regurgitatio n-feeding interbank business Exploring the trend of global fintech Specifying the key technical fields of CIB FinTech branch coordinatio n Radical Innovation: Build third party open bank API Develop micro innovation via API Becoming the connector of banks and clients Regurgitatio n-feeding retail and corporate business Big Data UX Data Science RPA Distributed Ledger Cloud Computing Cyber Security API Radical innovation does not mean blossoming everywhere, instead, it needs to be innovated based on the advantages of clients, data and ability in terms of Financial Industry Cloud. 7

8 From 1.0 to 4.0: the transformation of banking industry Bank 1.0 Bank 2.0 Bank 3.0 Bank 4.0 8

9 Open bank APIs: utilize bank API, connect commercial ecological scenes, realize financial energizing Leading Third Party Open Bank APIs Commercial Ecology Front-end Partners can quickly link to banks, integrate bank services and develop innovative applications via connecting to open bank APIs Third Party Open Bank APIs Middle-tier Build modularized third party open bank APIs based on open APIs of financial institutions Help financial institutions utilize partners' innovative ability to attract customers; Meanwhile, help commercial ecology parties utilize financial institutions' service ability to offer integration services to customers Banks etc. Financial Institutions Back-end Banks offer fundamental services such as systematic and standardized accounts, payment and financing etc. in the form of open APIs based on open bank APIs 9

10 Open bank APIs and practice: Bank-Bank Platform 银银平台商业模式 Partners Joint-Stock banks Rural Credit Unions City commercial banks Rural commercial banks Village and town Banks Securities companies Insurance companies Bank-Bank Platform Payment Settlement Training Wealth Management Fund and Asset Allocation Tech Service Capital, Assets, and Liability Optimization Financing International Settlement Agency CIB Group Bank Securities Trusts Fund 10

11 CFT Cloud: the most professional Cloud service for financial industry 银银平台商业模式 SAAS Distribution/ Channel Mgt Risk Management Customer Service Info. Management Core Banking Supporting Functions Product Basic Applications % PAAS Blockchain Database Deep Learning Middleware Traditional Applications Application Development No.1 Computational virtualization Software Defined Storage Software Defined Networks 52K IAAS Cloud Resource Adaptation Layer Mainframe Minicomputer PC Server Storage Networks

12 CIB FinTech s innovative practice in terms of open bank APIs Value for business partners Easily and quickly build connections with banks Clearly understand services provided by banks Integrate financial services and provide better customer experience Value for banks Quickly implement the strategy of digital banking Greatly save costs by connecting to CIB FinTech s open bank APIs Ability of attracting partners 12

13 CIB FinTech s innovative practice in terms of open bank APIs End Users Bill-holding firm A Bill-holding firm A Logistic firm A Logistic firm B Business Ecosystem Bill platform A Bill platform B Logistic IT provider A Logistic IT provider B CIB Fintech Open bank APIs Bill fund deposit management fund deposit MGT Virtual Account Logistic storage MGT Payment Aggregate financing for Logistic firms Risk controlling Partners/ Banks Account Payment Credit Customer 13

14 Innovative Products Cases Explanation: Internet bill circulation platform (Zhi Jian Ren + Ju Piao Ying) funds funds bank notes straight up trade bill asset management finance companies factoring companies P2P platforms wealth companies matching platforms all kinds of enterprises Financial Institutions Private Funds Dian Piao Bao Banks-Ju Piao Ying Industries-Ju Piao Ying CIB branches bank members of Bank-Bank Platform core enterprises in supply chain supply chain management and service enterprises source source of bills of bills CIB Hangzhou Branch CIB Xi an Branch Bank of Tianjin City Commercial Bank of Hami Far Eastern Leasing Yuantong Beijing Jinyunlian Ufida Cloud 14

15 THANKS