Banking services are playing an increasing role in companies' corporate management and people's everyday life on the back of fast growth of China economy and rising wealth of the general folks. Today, the fast and convenient financial services from banks not only allow companies in China to allocate funds around the world, but offer more alternatives for everyone to manage personal financial affairs. ICBC is a case in point. Besides the 3,200+ financial products available for ICBC customers to choose based on own requirement, they also have the choice to use Internet Banking, Telephone Banking, Mobile Banking, SMS Banking or self-service devices, whichever means to perform monetary transactions fastest and most convenient. Through innovation, banks make the financial services only existed in science fictions become a reality and help people's everyday life.

Banking Innovation Fuels Property Income of People

Nowadays, the different types of wealth management products launched by banks is one key option for companies and general folks to increase their earnings from bank deposits, securities, houses and other personal or family properties. Take ICBC as an example. In 2011, ICBC paid more than RMB 30 billion to customers as earnings for their wealth management products bought. ICBC continued to embrace innovation in line with the different needs and risk appetite of customers. So far, ICBC offers 8 lines of wealth management products - no fixed term, fixed income, stock, private equity (PE), commodities, FX, alternative investment and value-added services. Investments cover interbank market, foreign markets that are largely inaccessible to retail investors for direct investment, and private equity market for companies not going public yet, a market which is difficult for retail investors to make independent judgment. ICBC wealth management products allow retail investors to gain profits from investments in these markets.

Meanwhile, ICBC is sharp to keep pace with the increasing need of the general folks to invest in precious metals and rolled out nearly a hundred precious metal products under 4 categories - physical metals, trading metals, precious metal financing and wealth management metals. ICBC is now a commercial bank in China offering the most complete range of precious metals. ICBC service for customers to trade gold via account has been warmly received due to its unique advantages: different channels to trade, fast and convenient trading options, real-time gold price in line with international market. ICBC is the first bank in the country to launch services and offer a wide variety of choices for customers to buy/sell silver, platinum and palladium via accounts. A lot of customers have little knowledge about precious metals. On this ground, ICBC launched "Accrual Gold" in 2011, the only financial product currently available in the domestic market for customers to buy gold at daily average price. "Accrual Gold" is designed to spread the investment cost through investment in fixed sums over a long period, and reduce risk brought by the fluctuation of gold prices. ICBC's precious metal business is growing at a respectable clip backed by the launch of a range of innovative precious metal products which have been warmly received by the customers. In 2011, ICBC traded 162,000 tons of precious metals, 160 times the turnover of that in 2009.

The thriving wealth management business demonstrates the critical role of innovation for banks to rejuvenate. As the new century unfolds, people are saying that banks will be a dinosaur in the 21st century. Yet, banks emerge in a cloudburst of splendor amid the dazzling technological progress in recent years, while gathering momentum on financial innovation exemplified by internet banking around the world. Chinese banks also jump on the bandwagon to pull ahead international peers in terms of setting up IT platforms and applications. ICBC was the first bank in China to centralize all data and launched the world-leading data center and business processing system. ICBC adheres to a strategy of independent innovation. To ICBC, the team of 13,000 ICBC IT staff means to own a large software company. Since restructuring and going public, ICBC leverages its technology leadership to launch a wide spectrum of new products, new services to customers based on their needs. Statistics shows that, ICBC had 3,243 products by end-2011, 2.6 times more than 2005's 887 products. ICBC products cover all business areas in capital markets, monetary markets and insurance markets. Today in China's financial market, ICBC is the financial institution with the widest, most complete range of products and the strongest service capability. Among these innovative products, a majority of them are created by ICBC. The 48 new patents to ICBC in 2011 added the total to 178 and represented over 60% of all patents in China banking sector, putting ICBC far ahead of the peers. Worthy of note is that, these innovations were quickly turned to applications to serve the real economy which was a big push to drive the competitive edge and service capability of ICBC.

Banking Innovation Supports Development of Real Economy

First, continuous and high quality new products help customers save time and capital, and bring considerable value-loaded benefits as well, which translate to higher efficiency to the real economy. An example is the fund settlement services used most frequently by corporate clients. In the past due to technological limitation, the payer's bank had to send mail or telex to inform the payee's bank. It usually took several days before the money was credited into payee's account, low efficiency, many errors. To a company, this means low efficiency because of tight liquidity and billions of idle cash "in transit". Starting from 2000, ICBC and other banks in China have centralized all data for real-time transfer of funds for customers to fully address their "transit cash" which is a major hurdle to a company's financial management. On top of this, ICBC made research and launched cash management service. Any corporate company can use this service to pool in a fraction of a second the funds in hundreds of accounts in China or even worldwide to one account specified by the headquarters. The service helps companies save financial cost substantially while improving the management on fund usage.

Second, product innovation boosts ICBC's capability to serve real economy. In lending support to micro and small enterprises (MSEs), the innovative online loan services of ICBC allow borrowers to apply, draw and repay loans online without running to the bank, anytime, anywhere, very suitable for MSEs to obtain financing "in a short time, in a frequent and quick fashion". Xu Qin, the General Manager of Hangzhou Haoshan Furnishings Company Limited was deeply impressed: "Merchants use every opportunity to make money. ICBC's Online Loan Link allows me to 'borrow and repay anytime'. No need for me to run to the bank to complete the formalities. Moreover, no interest when I don't use the loan. I save a lot of money from this". Since the launch of Online Loan Link in end-2009, ICBC has provided loans to 32, 000 MSEs totaling over RMB 300 billion.

Another point, besides responding to the common market needs, ICBC focuses on financial innovation that is relevant to distinct client needs. For example, in 2010 ICBC was the first bank in the country to launch "Butler service for collection", a very convenient tool for corporate clients to get an accurate picture about payments of counterparties, cash flow in subsidiaries and pooling of funds from distributors. This little service addresses a big issue of customers. A financial manager of a telecom operator's branch in Chongqing said: "After we sign up Butler service for collection, whenever there are cash receipts, we know exactly the payer details, which outlet making the payment. The service addresses the previous issue that it was difficult to check which distributor/subsidiary remitting the money from which banks. It offers great convenience for us to manage the fund transfers and relieves the workload of the financial person to check each remittance".

Banking Innovation Brings High Quality Life

While providing more support of higher level to real economy, product innovation also allows banks to serve people's everyday life. An example. In the past, when a large company paid salary to hundreds of workers, the financial person of the company had to check the amount for each employee and put the salary into "wage bags". It took several days just to count the cash. Later banks launched the payroll service. The financial person of a company just supplied the data to the bank every month, no more troubles. In fact, payroll service is only a relatively simple innovative service among the many product innovations of banks in these years. Yet just to ICBC, this very simple service as viewed today brings RMB 1.37 trillion of business turnover in one year, saves time and effort of financial persons in 450,000 companies and enables 107 million personal customers to check and withdraw salary by the most convenient way.

Moreover, ICBC focuses on innovation in chip card business to provide many convenient financial products and value-added services for chip card holders. ICBC promotes the use of chip cards in transportation management, railways ticketing, highway toll, commercial co-brand, social security/medical insurance or property management. For example, the ICBC co-branded chip cards for cardholders to pay highway toll also include the electronic toll collection (ETC) function. In other words, cardholders spend less time at a toll gate, highway management company does not need to hire toll booth staff or spend money to change/expand the toll gate passage, drivers can also save their fuels as well. Besides the financial services and functions offered by ICBC, an ICBC Eastern Airlines co-branded card has all the functions of an Eastern Miles membership card and value-added services such as free insurance and double bonus points. To keep pace with the new market conditions and customer requirements, ICBC was the first bank in the country to launch a service for chip card holders to pay small sum of money easily and fast using e-cash in contactless payments, less cost, simple steps. ICBC mobile credit card is an example. ICBC adds financial applications into mobile phone SIM card for mobile phone users to make fast and small payments by e-cash. Customers welcome the new service, which heralds a new way of payment. At the end of 2011, ICBC has issued more than 20 million chip cards, accounting for over 90% market shares. In 2011, total amount of transactions made using ICBC chip cards reached RMB 331.8 billion, ranking No.1 in the domestic league table.

ICBC's innovative products come with an array of customized functions for everybody to use for retail spends and boost the consumption upgrading. An example is the Easy Loan Card launched in 2011 to better serve the salaried customers. Since the benchmark interest rate of personal consumer loan of the same term is used as reference, the fee rate of installment payment by Easy Loan Card is lower than that of current credit cards available in the market. As a result, young cardholders who like to spend whenever and salariat with a moderate income are more willing to use Easy Loan Card. Easy Loan cards are well-suited for whoever wishing to use cards to buy and pay in order to improve their standard of living. According to statistics, in 2011, more than RMB 3.2 trillion has been spent using ICBC bank cards, rising 43% approximately over previous year. Total amount spent by ICBC credit card holders stood at RMB 980 billion, an increase of over RMB 330 billion over previous year, or 50% and above. The total outstanding credit card loans went beyond RMB 170 billion, rising around 94% from the beginning of the year. The results demonstrate the active role played by Easy Loan cards in boosting consumer growth and economic restructuring.

Banking Innovation in Style

Nowadays, banking innovations incorporate trendier, more eco-friendly options on top of providing fast and convenient functions. Banking products become more and more "cool". For example, amid the prevalence of mobile network, set up of gigantic 3G network and intelligent terminal devices, ICBC is the first bank in China to roll out mobile financial services, including SMS Banking, Mobile Banking (WAP), iPhone Banking, Android Banking and iPad Banking. Apart from the comprehensive, convenient and fast financial services available to customers through mobile phones, ICBC leverages innovative products to deliver useful information and navigation directions such as location of nearest bank outlets, banking hours. The mobile terminals combined with gravity sensor and multi-touch let customers experience faster and trendy mobile services. As of today, ICBC has secured over 40 million mobile customers. ICBC iPhone Banking, once launched, ranked No.1 among the financial software available in iPhone APP STORE Asia Pacific. Lately, ICBC announced the new Personal Internet Banking for Apple computer users using Mac OS X operating system to access banking services. ICBC was the first bank in the country to offer services for users of all types of Apple products.

Today, over 70% of ICBC transactions go through Internet Banking or Telephone Banking. More services can be completed without going to ICBC counter, more customers experience faster and more convenient services. Electronic banking is paperless, less consuming and highly efficient. While ICBC is delivering energy saving, eco-friendly "green" financial services, customers also directly benefit from saving large amount of consumables like paper or ink, companies and individuals use less water, electricity and petrol, the concept of modern low-carbon living style. Online bank-enterprises reconciliation, electronic statement, electronic receipts, ICBC Messenging and electronic salary slip are typical resource-saving services. ICBC's Internet Banking, Telephone Banking, Mobile Banking also offer customers direct access to banking services. To customers, there is no need to run to ICBC outlets for non-cash banking transactions such as bill payment, transfer/remittance, wealth management. ICBC electronic banking services help customers save large sum of transportation expense and time, as well as avoiding too many vehicles running on the road and the exhaust gas emission. ICBC was also the first bank in China to launch SMS Banking services. Customers only need to edit the question into a SMS and send to 95588. SMS Banking will send back an accurate reply immediately. At the end of 2011, ICBC SMS Banking has attracted more than 3.4 million customers to use and processed over 7 million SMS. On average, customers only wait for 1 minute for the answers.

To conclude, since the turn of the new century, the innovative products of banks have changed considerably the everyday life of people, a sharp contrast when compared to the few simple services such as deposit, loan or remittance by the banks in China over the years. To find out the reason, the fundamental drive of banking innovation comes from the breakthrough in financial system reform and the competition among the banks. In the next step, as the banking market promises further liberalization, we would see more banking innovations in the future. Financial products offered by banks will definitely give us more and more convenience as well as surprise.