WMP companies rely on online channels to expand their sales

Online distribution of wealth management products through live webcasts, mainly for investor education and product promotion, has been gaining ground with commercial banks and their wealth units tapping this channel during the novel coronavirus outbreak because the government has been encouraging more people to stay at home to avoid infections.

Analysts said such efforts have helped open new channels for investor education, in addition to expanding distribution channels and improving efficiency.

CCB Wealth Management Co Ltd, a fully-owned subsidiary of China Construction Bank Corp, was one of the first companies to embrace the new medium when it conducted a three-day online wealth management course through a webcast platform last month.

Investment managers from CCB Wealth Management introduced several products including index-linked wealth management products, open-end WMPs, and a fund of funds, which is a pooled investment fund that invests in other types of funds, said company officials.

BOC Wealth Management Co Ltd, a unit of Bank of China Ltd, conducted similar online livestreaming classes in February, informing investors about the impact of the novel coronavirus outbreak on China's capital markets, as well as the features and investment strategies of its new products. Its first livestreaming session drew more than 26,000 views.

Wang Xiang, president of Shanghai Jiyu Fund Sales Co Ltd, said companies that launch online wealth management courses must make sure that the practice is in compliance with regulations and simplify transaction procedures, to overcome the temporary negative impact of the epidemic.

To meet clients' growing demand for online wealth management products, banks' wealth management subsidiaries should strengthen online services, establish digitized marketing and distribution systems, and emphasize the importance of using financial technologies in the long run, Wang said.

A survey conducted by Jiyu Fund last month of 478 asset management professionals at different levels of the industry from 318 financial institutions nationwide found that 65 percent of the senior executives are considering the electronification of investment transactions and services. Electronification is a term used to describe the process of taking an item or process from paper-based form and electronically producing it.

Several commercial banks' wealth management subsidiaries, including ICBC Wealth Management, PSBC Wealth Management and CMB Wealth Management, have started allowing first-time buyers of wealth management products to assess their risk tolerance through the online channels of each subsidiary from last month. Till then, first-time buyers had to take a risk tolerance assessment at bank branches.

"The lifting of the restriction on first-time buyers to have face-toface interviews with investment managers offline eliminated the first barrier for banks' wealth management subsidiaries to entrust third-party distribution channels to sell their products. The subsidiaries will form close partnerships with internet platforms," said Liu Yinping, an analyst at Rong360 Big Data Research Institute, in an article posted on the institute's website on March 13.

Alipay, the online payment arm of e-commerce giant Alibaba Group Holding Ltd, and 30 financial institutions jointly launched a weeklong event on Feb 18, allowing these financial institutions to sell some of their bestselling deposit and fund products on Alipay. Participants of the event included Industrial and Commercial Bank of China Ltd and Agricultural Bank of China Ltd, two of the country's four largest State-owned commercial lenders by assets.

"The proportion of online wealth management products in the overall total will increase gradually, and the epidemic is speeding up the process. We will see more bank deposit and wealth management products on internet platforms soon," Liu said.

China is actively promoting a transformation toward digital and smart banking based on the development of blockchain, cloud computing, artificial intelligence, big data and the fifth generation of wireless network technology.

Last year, the mobile transaction volume of the Chinese banking sector increased by 38.88 percent year-on-year to 335.63 trillion yuan ($47.4 trillion). The volume of the off-counter business accounted for 89.77 percent of the total volume of business for the whole sector, the China Banking Association said in a report.