WeBank: Banks Must Open Capabilities to Market

To stay competitive in the fintech era, traditional banks must open their capabilities to the market and work with partners to co-innovate, said the vice-president and chief innovation officer of WeBank.

For banks to be able to run a robust business in the long-term, they need to be able to open up their capabilities to the market and let other players co-innovate with them, WeBank vice-president and CIO Henry Ma said at the panel discussion «How Fintech and AI Change Finance in Asia» at the Nikkei Innovation Asia Forum in Singapore on Thursday.

WeBank, backed by gaming and social media giant Tencent, is China’s first digital bank. According to Ma, it has a cost structure that is much lower than traditional banks because it has built its IT infrastructure in-house using open-source software.

In 2018, WeBank's average IT operating cost per account per year was only 3.6 RMB (US$0.53), which has allowed the online bank to experiment with different business models, he said.

«In the long-term, banks will actually become more like fintech companies. In terms of technology, banks are making a lot of investment. But most of the time, they are not willing to open them up. They try to be the main player, but if banks are willing to open up their capabilities to the market, that would attract a lot of new opportunities,» Ma said.

«Open Innovation»

Ma cited «open innovation» as the key to attracting more opportunities, saying that the success of tech giants like Google and IBM, which have opened up their technology stack and are going open source. WeBank is doing the same by opening its application programming interface (API) and software programming toolkit (SPK) to partners so that its financial capabilities can be embedded into their ecosystem.

«That's the major trend moving forward,» Ma said.

He added that if that banks want to stay competitive in the new economy, they first need to understand the requirements of different industries – retail, manufacturing, etc. – and be able to collaborate with the different players and innovate together.