CMB experiments with emerging technologies and social media channels to boost credit card business

• China Merchants Bank (CMB) implemented Intelligent Micro Service Platform (IMSP) system that integrated social media, instant interactive system, intelligent robot system, and customer relationship management system
• With the use of AI and machine learning the system claims to solve 90% of customers’ queries
• The system facilitated an increase of over five million new credit card customers

Rapid expansion of social media channels with innovative features that go well beyond messaging has seen explosion in number of users and opened new transaction channels for financial institutions.  China is a unique example with an estimated 731 million internet users (with internet penetration rate 53.2%) and 695 million mobile internet users at end of December 2016, an annual growth rate of over 10% according to China Internet Network Information Centre. Of the total netizen population in the country, 91% are users of instant messaging and 63.8% online shoppers. Banks want to be where their customers are. With these statistics it is no surprise that social media channels offer an attractive access point to financial institutions.

As more and more customers expect a real time response, banks are looking to integrate these new digital channels with their customer relationship management. Recent developments in smart technologies such as artificial intelligence (AI) and machine learning are rapidly changing the customer’s digital experience making it more personalised. Yet as the technology is still emerging and most banks are still scratching the surface testing and exploring the potential. As customers become more comfortable with conversation based banking, the competition is heating up among financial institutions to develop new innovative solutions to deliver differentiated self-service features through new digital channels.

 China Merchants Bank (CMB), a leading commercial bank and card issuer in China sought to improve its credit card business growth by optimising self-service through social media channels and enabling the interaction with emerging AI, big data and biometrics technologies. It implemented the Intelligent Micro Service Platform (IMSP) system in 2016 which won the Best Mobile Social Media Engagement project under The Asian Banker Technology Innovation Awards 2017.

Challenges

Most banks in China find that growth and efficiency in product segments like credit card growth is challenged by its limited access to customers through traditional channels and their manual servicing capabilities. As the customers volumes across social media channels surged in China, CMB recognised new opportunity to access and service its customers.

“We realised the urgency to tap the growing internet population and to shift to a light-duty bank model to overturn traditional credit card customer service i.e. the hotline and customer representative service based model. As the customers and business volume increased, the bank not only found it challenging to service customers through manual calls but also to meet the service expectations of faster response time and personalised service,” said Tan Kui, vice president, customer service department, China Merchants Bank.

The bank sought a solution that could facilitate greater market penetration through different channels while enabling effective use of emerging technology to improve precise marketing. Development in social media channels has been led by fintech companies while banks have been a step behind, now seeking ways to exploit the potential of these channels towards real time services.

With proliferation of digital channels and rising cybersecurity issues, building ‘trust’ in banking services remains a key challenge and priority for almost all banks. CMB wanted to offer a differentiated service that met the new age customer expectations of self-service through these social media channels, along with advanced security.

Solution

The bank developed an in-house solution IMSP system in mid 2016 in collaboration with a few point solutions from fintechs that integrated selected social media channels including WeChat App, instant interactive system, intelligent robot system, and customer relationship management system as its core module. The project laid foundation for credit card centre to acquire, service and manage customers by means of external mobile internet platform.

The growth of fintech and social media in China has been exponential, Wechat currently has the largest number of active monthly users of over 960 million while Alipay claims to be the leader in online and mobile payment in China. IMSP accesses leading third party channels such as Wechat, Alipay, Zhihu, Toutiao, UC, QQ, NetEase and other channels to expand user contact area through content propagation. Wechat, Alipay, Xiaomi provide core credit card service, while channels like Zhihu, Weibo, Toutiao, UC and NetEase expand the contact points and scope for promoting services to users via content and brand moulding. The bank created micro customer service matrix relying on the official website of mobile phones and official WeChat account, Alipay service window, QQ and Zhihu as portals.

With this new system , credit card users can avail functionalities such as self-audit, amount adjustment, repayment, new card application, payment by instalments, inquiry, etc., at the third party channels.

“We created a new model of human-computer integration through robot, using intelligent search engine to solve the problem and at the same time improve service efficiency by combining it manual personalized judgment,” added Qian Luyi, president, customer service department, China Merchants Bank.

The system can also send real-time transaction reminders and transaction alerts through WeChat and Alipay. In addition, it has a 24-hour real-time detection at the backend for timely protective measures against threats to customers’ credit card security.

Technology

The platform is divided into two key systems - unified access platform and intelligent service background. Unified access platform actualises fast access to third party channels and offers service that is personalised. Intelligent service background on the other hand covers self-service products, manual service products, intelligent recommendation centre, event management centre and other modules (Figure 1).

CMB uses a combination of service across channels and intelligent technologies

Figure 1: Key technology features of IMSP

The bank uses big data to construct user’s multi-dimensional profile and uses predictive analytics to identify and predict customers need. This enables the bank to present targeted offers with higher chances of lead conversion and towards better relationship building.

The system provides self-service experience while introducing assistant service model based on text interaction. The bank claims that the system is able to automatically address over 90% of customer queries, reducing manual interaction only to cases where machine could not address the customer problems. Globally, robotics technology is becoming ‘smarter’ and is now being explored for more advanced functions, such as virtual assistants for payments, cross sell and even advisory, something that the bank can possibly explore in future.

To ensure security in transactions the bank has enabled the system with voice recognition, voice print recognition and face recognition biometric identification. In addition the bank uses location based services to track the user location and analytics insights to manage the risks and offers for credit card transactions.

Business impact

The new project enabled the bank to improve its business performance. It is one of the few leading banks in the country that have enabled payments, credit card application, inquiries and other features through third party social media channels bringing credit card business growth. The system has over 94 million followers across social media channels and of these 29 million are now cardholders with the bank.

“In 2016, the system facilitated an increase of over five million new credit card users, amounting to 36% of new users across all channels. More than 45million followers (46% of the total) use WeChat self-service and 30 million (32%) use Alipay. The system provides access to the bank to wider customer reach from which we hope to continue to convert a significant number of visits to profits,” explained Qiu Jian, general manager assistant, credit card centre, China Merchants Bank.

With machine learning and AI integration the bank believes that  the customer experience has improved while reducing the costs. With customers becoming increasingly comfortable by self-service features, the call rates dropped by 10%, bringing significant manpower and cost savings to the bank. With AI integration the bank is able to respond to 90% of customer queries automatically and it now receives a significant component of its credit card instalments through these self-service channels.

Through the use of big data analytics the bank has managed to develop predictive insights into customer needs that can facilitate targeted offers and promotions to the customers. This coupled with improved real time location based insights can assist the bank to improve the risk management and cross sell capabilities in future.

The bank has entered in collaborative model with fintech companies to improve security in transactions by implementing biometric authentication which adds to the customer experience.

The Asian Banker SWOT Analysis of IMSP project

Figure 2: The CMB project comes with unique features and challenges

Global benchmarks and best practices

Leading banks across the globe are looking to improve their customer access, offerings and interactions through social media channels with innovative technology to build stronger relationships and differentiated experience. Some of the other recent initiatives by banks include-

Absa: Barclays Africa subsidiary, Absa launched its chat banking services on Twitter and unveiled Facebook Messenger, allowing customers to do banking without needing to leave the social media platform. It authenticates customers via Facebook Messenger to allow them to do their banking transactions such as making a beneficiary payment from Facebook page.

Westpac: Westpac customers can access banking features through social media messaging apps as the bank recently integrated the digital banking environment with high-frequency social sites including Facebook Messenger, Twitter, and Snapchat. Customers do not need to exit a social messaging or SMS screen to log into Westpac Live to make payments, or send their account details to their friends and family. Among other features on social messaging and SMS screens include ability to create and send a cardless cash code (six-digits) to their contacts, which can be used to withdraw cash from ATM.

HDFC Bank: HDFC Bank introduced a conversational banking chatbot to facilitate ecommerce and banking transactions. Currently available on Facebook messenger, HDFC chatbot is available to any visitor and it lets the user recharge phone, book cabs, pay utility bills etc.

American Express: Links a client’s Amex card with his or her social media profiles on platforms such as Facebook and FourSquare, and then delivers deals based on activity such as likes and check-ins. It has announced a new Amex bot for Messenger feature, a resource for card members looking for quick answers to commonly asked questions

Caixa Bank: Launched a chatbot on Facebook using AI to present non-financial offers to customers.  The chatbot is linked to the Facebook page of imaginBank, CaixaBank’s digital-only bank, and enables customers to view more than 200 exclusive offers and discounts.

Exploring the potential

A combination of self-service based simple transactions and enquiry functions through social media channels along with emerging smart technologies facilitated CMB to offer wider access and differentiated  customer experience in credit card business. However AI and machine learning technologies are still emerging and it still remains to be seen how effective they will be in intelligent and contextual communication with the customers and how extensively these can be explored to successfully meet needs of more complex transactions. The system would also need to constantly improve its capabilities and keep pace with the changing expectations of digital customers today.

Note: This article was wrtten by The Asian Banker in partnership with CMB.