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On July 18, China Merchants Bank held the "Co-building Capabilities, Co-creating Value, and Win-Win Future—2024 Wealth Partner Forum" in Shanghai. More than 80 fund, wealth management, insurance, private equity, and gold institutions attended the forum to discuss the new journey of high-quality development of large wealth management.

Two big news came out at the meeting. China Merchants Bank, which leads in retail business, announced that it would implement a preferential policy of 10% discount on the purchase fee of retail agency sales of public funds; at the same time, it disclosed that the total assets under management (AUM) of retail customers exceeded 14 trillion yuan.

At the end of 2023, the total assets of retail managed customers of China Merchants Bank were 13.32 trillion yuan, which means that in the approximately six months since the beginning of this year, the total assets of retail managed customers have increased by more than 5%, continuing to maintain good growth.

Among the indicators reflecting the quality of the bank's retail AUM, at the end of 2023, the balance of retail customer deposits of CMB was 3.31 trillion yuan, accounting for only 24.85% of retail AUM. The low proportion of deposits in retail customers' assets indicates that customers have more allocations in wealth management, funds, insurance, etc., which not only reflects the wealth management awareness of CMB customers, but also reflects CMB's ability to serve customers' wealth management.

Why did China Merchants Bank, the "king of retail", suddenly announce that it would implement a 10% discount on all purchase fees for agency sales of public funds, and why did it continue to lead in the field of wealth management? This article will find out.

Adhere to the "customer-centric" principle and sell public offerings at a 10% discount across the board

At the forum on July 18, China Merchants Bank announced that it would implement a preferential policy of 10% discount on the purchase fee of retail agency public funds. The discount on the purchase fee means that China Merchants Bank will earn less commission. Why did it suddenly make such a big move? China Merchants Bank said that this move is to promote wealth inclusion, actively promote the healthy development of the wealth and asset management market, and benefit the people's livelihood. This is also a practical manifestation of China Merchants Bank's practice of the "customer-centric" concept.

The scale of retail customer assets of CMB has also reached a new level. According to reports, CMB currently serves more than 200 million retail customers, including more than 50 million personal wealth customers, and the total assets of retail customers under management have exceeded 14 trillion yuan. It has carried out in-depth cooperation with 157 partner institutions on the wealth open platform, and the scale of agency sales of public funds and wealth management ranks among the top in the industry, among which the scale of retail agency sales of wealth management has exceeded 3.8 trillion yuan.

As China's economy enters a new stage of high-quality development, the transformation of domestic large wealth management to high-quality development is also accelerating, and presents four significant characteristics. First, building a financial power requires building a strong wealth asset management institution; second, as China's economy shifts toward high-quality development, my country's wealth management and asset management are also shifting from scale growth to quality improvement; third, wealth management and asset management are important directions for the transformation of my country's financial industry, with huge development space. In the current low-interest rate environment, residents and enterprises have huge demands for wealth preservation and appreciation; fourth, the differentiation of financial institutions has intensified, showing a trend of oligopoly at the head and marginalization at the tail.

According to reports, the total scale of my country's asset management products will exceed 14.2 trillion yuan in 2023, an increase of nearly 7% over the previous year. It is expected to reach 30 trillion yuan in 2030, which contains a lot of opportunities for wealth management institutions.

In order to jointly promote the high-quality development of large wealth management, CMB has put forward five initiatives to its wealth management partners, which also reflect CMB's philosophy and direction in wealth management. First, we insist on customer first and continue to create value for customers; second, we insist on winning through professionalism and continue to improve professional service capabilities; third, we insist on innovation-driven and continue to improve service quality and efficiency; fourth, we insist on risk-based and continue to strengthen security; fifth, we insist on win-win cooperation and continue to build a large wealth management ecosystem.

In order to better implement the "customer-centric" concept, grow together with customers, adapt to industry trends and changes, and promote the wealth and asset management industry to continue to move towards high-quality development, China Merchants Bank has focused on improving the "four major capabilities" of large wealth management and has made significant progress.

The “four major capabilities” include value creation capabilities, “people + digitalization” service capabilities, risk management capabilities, and the ability to co-prosper and co-exist in the ecosystem.

Continuously improve value creation capabilities, continuously upgrade the "TREE asset allocation service system" and enhance product strength

Being "customer-centric" requires understanding customer demands. Preserving and increasing the value of wealth is the core demand of customers; creating value for customers is the survival of wealth management. To this end, China Merchants Bank continues to promote the transformation from a "product-centric" sales model to a "customer-centric" asset allocation model, and continuously upgrades the "TREE asset allocation service system."

Nowadays, almost all financial institutions are talking about asset allocation, but how to move asset allocation from theory to practice and ultimately implement it in customer investment behavior and profit experience is a common problem faced by the industry and the key to the differentiation of wealth management institutions in the future.

China Merchants Bank's TREE asset allocation service system starts with building 13 underlying models such as customer portrait KYC, wealth product KYP, and market conditions KYM to improve the accuracy of customer demand matching. Since 2023, China Merchants Bank has further strengthened the "dynamic review and rebalancing" service to establish a standardized service work paradigm for account managers, help customers cultivate correct investment concept cognition, and implement it in asset allocation and investment behavior optimization.

Judging from the operating data, the effect of TREE's asset allocation service system is also showing. Customers who make allocations according to the TREE system have better risk-return and higher customer stability, achieving the unity of customer interests and bank interests.

Good asset allocation also requires comprehensive improvement of product strength, which is the core key to creating competitive advantages in wealth management. In today's increasingly serious product homogeneity, creating differentiated products requires both strong awareness and quick action. Specifically, China Merchants Bank has corresponding work arrangements in fund, wealth management and insurance products: for example, in fund products, a branded closed loop of "customization + management" has been formed. In terms of wealth management products, in addition to Duobao Wealth Management, China Merchants Bank is also striving to create the most comprehensive cash management solution in the industry with the best customer experience. In terms of insurance products, on the one hand, we seize the market characteristics of the downward shift of customer risk preferences, actively organize the supply of high-quality insurance products, and better meet the needs of customers for asset preservation and appreciation; on the other hand, we also return to the origin of insurance protection and guide customers to make relevant protection configurations.

The "people + digitalization" service capabilities continue to deepen, creating an efficient and professional service model

In the past few years, China Merchants Bank has featured warm service with "people", improved service efficiency with App self-service, supplemented by remote service, and compiled a 7×24-hour service network to provide customers with an integrated online and offline service experience. As the channel with the widest and highest frequency of contact between China Merchants Bank and users, the App focuses on user products and scenario products, and continuously releases and enhances the professional advantages of wealth management.

In addition, China Merchants Bank's Artificial Intelligence Laboratory is currently investing a group of core forces to accelerate the research and application of ChatGPT-related technologies and explore its feasibility in customer interactive services, internal business management, and other areas.

Through continuous investment, CMB has built a digital and intensive customer management system, established and continuously optimized an online and offline omni-channel service collaboration system, and an intelligent identification and strategy contact system for thousands of people, continuously expanding the breadth and depth of customer service; actively explored cutting-edge technologies such as large language models, and launched a new intelligent wealth assistant "Xiao Zhao", further improving the intelligent and professional service level of CMB's wealth management.

The risk management capability has been significantly strengthened, and the "entry", "sales" and "underlying assets" are strictly controlled.

If risk management is ignored, wealth management will be like a "building on the beach" that will hardly withstand the test of time and cycles.

CMB has strict control over every link of wealth management. On the institution side, it continuously optimizes the management process and hierarchical management mechanism of partner institutions and strengthens the risk management of partner institutions throughout their life cycle; on the specific product side, it optimizes the risk management measures of products at all points in their life cycle, such as before, during and after investment, so as to feed back and guide "pre-investment creation" with "post-investment management".

Specifically, in terms of market access, China Merchants Bank has comprehensively improved its investment research capabilities, strengthened investment research drive and product innovation from multiple dimensions such as macro, micro, industry, and strategy, and provided customers with opportunities for certainty in an external environment with increasing uncertainty. In terms of product selection, it focuses on "diversity" and "strict selection", actively explores high-quality cooperative institutions and managers, ensures product quality, and improves customers' investment success rate.

In terms of sales, China Merchants Bank will continue to strengthen its investor suitability management capabilities, improve the digital compliance management system of the sales process of large wealth management products, and enhance the compliance risk management level of wealth management business. From the dimensions of system, training, supervision, process management, etc., a normalized closed-loop compliance management mechanism will be established from the head office to the branches to promote the upgrading of management capabilities in the three stages of "pre-sales, sales, and after-sales". Focus on key scenarios such as risk matching, audio and video recording, risk monitoring, and follow-up visits to improve the level of risk compliance management; continue to optimize the risk assessment questionnaire system, improve the comprehensiveness and scientificity of the questionnaire, so that customers can have a more comprehensive and clear understanding of their risk preferences and risk tolerance, establish the concept of "sellers are responsible and buyers are responsible for themselves", and guide customers to more reasonably configure wealth products with appropriate risk levels.

In terms of keeping a close eye on underlying assets, China Merchants Bank has established a large wealth management risk view, which uses a penetrating perspective to conduct full-process risk monitoring of all products to reduce customer position risks.

The ecosystem's ability to thrive and co-exist is rapidly expanding, with overlapping capabilities and complementary roles with wealth management partners

China Merchants Bank has always attached great importance to the relationship with its wealth partners, and the annual Wealth Partner Forum is a good example. China Merchants Bank and its partners work hand in hand, moving from "channel sharing, product agency sales" and "information sharing, joint companionship" to a deeper level of "operation sharing, joint service" and "investment research sharing, joint R&D".

Specifically, banks are the hub and reservoir of customer capital flows. In the more than 30 years of interaction with customers, China Merchants Bank has always provided good customer service and has more advantages in customer portrait KYC and matching wealth product KYP. Asset management institutions excel in investment research and investment capabilities. The cooperation between the two parties is constantly advancing to further manage customer expectations and improve customers' profit experience.

It is understood that in the past few years, China Merchants Bank has built a wealth ecosystem along two lines. One line is to select excellent managers, enrich product lines, and build an open product platform. In 2020, China Merchants Bank took the lead in selling the products of Youxing’s wealth management subsidiaries, which is one example.

Another line is to build an open operating platform, by building the "Zhaocaihao" wealth open platform on the China Merchants Bank App, and accompany customers together with partners. Currently, 157 institutions have settled in the "Zhaocaihao" wealth open platform, serving a total of 164 million customers.

In addition, CMB will continue to upgrade its wealth open platform, taking data as the core production factor and technology as the core production tool. Through the "componentization, interface and standardization" approach, it will output CMB's products, systems and service capabilities, and help partner institutions improve operational efficiency and timely iterate operational strategies; build a wealth product collaboration platform, and work with asset management institutions to provide customers with a better solution for returns and risks in a "1+N" manner.

In addition, China Merchants Bank will continue to deepen the branding operation of public funds and promote the evolution of fund distribution business from "product customization" to "product management".

In summary, the reason why China Merchants Bank has been able to maintain its leading position in the wealth management field for a long time is that it has implemented the strategic goal of "value bank", adhered to "customer-centricity", continuously adapted to customer needs and market changes, continuously improved the construction of the four core capabilities, and grown together with customers. (CIS)

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