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Supplement: Personal finance focus pays dividends for BOC

(China Daily)
Updated: 2009-03-10 09:35

Maintaining a focus on personal banking has long been a key strategy for Bank of China (BOC). Its senior management has been ever-conscious of the need to ensure that the interests of its everyday customers remain paramount and that servicing these requirements is an integral part of the bank's service ethos.

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This deeply "customer-centered" approach to High Street account holders has seen rapid growth in this sector in recent years. Nowhere is this more clearly apparent than in the bank's booming savings and loan business.

Growing momentum

Since 2005, the renminbi savings of Bank of China has witnessed an annual growth rate of 17.35 percent. By the end of 2008, the outstanding balance of local currency savings, held by BOC, exceeded 2 trillion yuan ($292 billion). This represented a year-on-year growth of 383.8 billion yuan, a surge of some 23.73 percent.

During the same period, the balance of foreign currency savings held by the BOC enjoyed the eighth month of consecutive growth since the reform of the renminbi exchange rate. In terms of both foreign and domestic currency deposits, the bank maintained its number one position on the Chinese mainland.

During 2008, the bank's outstanding loan portfolio grew to some 63 billion yuan. This included some 540,000 individual housing loans and some 180,000 car loans.

By the end of January 2009, the total outstanding balance on individual housing loans was 516.7 billion yuan. These figures included an outstanding balance in the second-hand housing loan sector of 119 billion yuan, marking BOC's dominant position in this market sector.

BOC also ranked first in the car loan sector - with its outstanding loans here representing more than 30 percent of the total across all financial institutions in China. It scored a similar coup in the area of national education loans where its 9.8 billion yuan worth of lendings again saw it take the top slot.

Improving service quality

Bank of China prides itself on developing its business through continually finding competitive advantage over other players in the financial services sector. This attention to business innovation allows it to swiftly react to changing market priorities and has ensured that its personal banking sector has continued to thrive.

Its foreign currency exchange activities are a prime example of how it has identified and addressed market needs. Back in 2007, spotting a niche in the market, it launched BOC Exchange, still the only individual foreign currency exchange business product available in China.

BOC Exchange provides a series of foreign exchange services, including the provision and conversion of foreign currency for individual purposes, global remittance, traveler’s checks, study abroad loans, certification for study abroad funding, bank drafts, clean bill collection, foreign currency transport authorization, deposit and loan certificates, the Great Wall international credit card and overseas bank account opening. It also provides foreign currency insurance for people traveling abroad and requiring foreign exchanges facilities.

In a number of other areas, the bank provides value-added services - including foreign exchange and study abroad consultation. It has systematically set about integrating its BOC Exchange Services with its standard network operations. This has allowed it to simplify its procedures for business acceptance and subsequent processing. To date, it has set up nearly 1,500 BOC Exchange centers across China, with many of its branches providing dedicated counters for foreign exchange customers.

Another innovation by the bank, which has won it widespread recognition, has been its "Ideal Family" retail loan package. This flexible lending scheme saw it win both the "2008 Asian-Pacific Outstanding Housing Mortgage Loan Award" titled by “The Asian Banker” magazine and the "2008 Housing Loan Outstanding Innovation Award" at the Sohu.com Financial Network Gala.

This focus on innovation and meeting market demand has seen Bank of China's personal finance sector grow rapidly. During the course of last year, the bank further refined its offering with the introduction of a three-tier financial management system.

Through its BOC Finance, Finance Management and Individual Banking initiatives, the bank has been able to provide personalized finance packages across a range of age groups and property ownership status. Promoted as part of the bank's policy for customers of "making a fortune through a win-win strategy", the bank saw a rapid uptake of these new services.

Network service transformation

By continually refining its business structure and processing capability, Bank of China has established a solid foundation for enhanced customer service. Its easily-accessible service network has now become the main conduit for customers to manage their finances.

The bank began a major overhaul of its customer service network back in 2005. This saw it moving away from its previous focus merely on in-bank transactions to more of a consultative and support role. These changes have boosted levels of customer satisfaction and given the bank a considerable edge over its High Street rivals.

The bank has also heavily invested in its ATM network. In 2008 alone, it provided its customers with more than 6,200 new ATMs. It also worked to refine the customer interface of its ATMs in order to reduce queuing and service time. This resulted in 6,762 service points being upgraded during 2008.

Whilst focusing on business development, the bank didn't neglect its risk management or internal accountability responsibilities. Each loan application was the subject of an "honesty" audit with subsequent post-acceptance analyses conducted to further refine the bank’s vetting process.

Statistics, dating from the end of October 2008, show the bank only incurred a bad debt performance of 1.65 percent across its retail loan portfolio. Additionally, the non-performance asset rate of its bank cards was 4.73 percent, 0.53 percentage points lower than that at the end of 2007.

Supporting the Beijing Olympics

As the sole banking partner for the 2008 Beijing Olympic Games, the personal finance department of Bank of China adhered to the precept of "promoting development thought the Olympics and helping the Olympics through its own development." This saw it strengthen its bankcard information system and ensure service levels for all of its customers. It also simplified the set-up process for its self-service and payment facilities, giving cardholders greater flexibility and control over personally managing their finances.

Bank of China also launched China's first pre-paid card product – the Great Wall Pre-paid Card. This allowed Chinese nationals and foreign visitors to “charge” their pre-paid card with various amounts of reminbi, which could then be spent at any site offering Unionpay facilities.

This initiative proved hugely popular with individuals who did not want to carry large amounts of cash around during the games. It also provided much needed relief funding for residents of the Sichuan earthquake zone by levying 1 yuan from customers for every successful application for the pre-paid card. In total, BOC raised nearly 4 million yuan toward the rebuilding of Sichuan schools during the course of the Games

The "Great Wall Pre-paid Card" and "Great Wall Payment Card" won two of the "2008 Top 10 Awards for Financial Products in China", as chosen by readers and staff of "The Banker" magazine. The two products were singled out for their innovative approach to meeting the financial needs of Olympic visitors and their outstanding market performance.