The chief innovation officer of China's first digital bank expounds on its open banking approach, saying that traditional banks should pay attention to this if they want to remain competitive.

The open banking approach, which is low-cost, agile, and high-volume, is an ideal way to tackle the problem of financial inclusion, and is an opportunity for banks to expand inclusive finance, Henry Ma, CIO and vice president of WeBank, said at the Money 20/20 Asia conference in Singapore on Thursday.

WeBank, China's first digital bank, launched in December 2014 with the backing of internet gaming giant Tencent. It has a slate of financial products that include a savings bank and personal wealth management app, personal micro-loan product, car micro-loan product and consumer shopping product. 

WeBank's average length of time from product ideation to launch is only 11 days. «If you want to be successful in this space, you have to be agile. Because all your partners are internet platforms, and they move very fast,» Ma said.

«Three Opens» Approach

«Why open banking? Not because it is easy; it's because it's hard. Early on we identified that the financially understaffed is the target group of customers we want to serve,» Ma said, expounding on WeBank's «Three Opens» approach: open platform, open collaboration, and open innovation. He added that traditional banks should be paying attention to these trends if they want to regain their competitive edge and capture new opportunities in the «new era of collaborative business.»

The use of open source technologies and standardised hardware has allowed WeBank to bring down its IT operating cost to RMB3.6 ($0.54) per account per year, a fraction of the RMB20-100 per account per year outlay among traditional banks. Offering its products in conjunction with industry partners has allowed WeBank to leverage their user base, traffic and user data, which has allowed the bank to scale rapidly.

Advice for Banks

To making financial inclusion and open banking sustainable, he advised banks to focus on traffic by partnering with high traffic volume platforms to offer scale. He also advised banks to look at how they can new technologies to create the appropriate cost structure.

Ma explained WeBank's «golden rule»: any technology it applies has to either optimise processes, improve customer experience, help scale, or reduce cost and mitigate risk.