China Merchant Bank President Ma Weihua Shares the Secrets of CMB’s Successes
Ma Weihua: “One decade ago, China Merchant’s Bank (CMB) only had nine branches. In the mid 1990s, we began riding China’s internet wave. Also, in 1995, CMB issued the All-in-One debit card ? a ground-breaking deposit card that pushed the bank into China’s retail banking sector. The card was instantly popular among consumers and became the cornerstone of CMB’s successes in retail banking. Today the All-in-One card brings us 40 percent of our total saving deposits. Among our savings deposits from the All-in-One card, over 50 percent are current deposits.
At present, we still only have 500 outlets nationwide but we use internet banking to expand our reach. CMB is the first bank in China to have launched systematic internet banking, and the product is now growing at a rate of more than 100 percent yearly. We target three kinds of customers: high-potential young people, urban white-collar workers, and VIPs who prefer to make transactions online rather than coming to a bank.
Six years ago, we launched credit cards. At that time, few people thought credit cards would make money in China. Even I thought it would be at least eight years before the business turned a profit. But it began bringing profits after just three years’ efforts.
Surprisingly, overdraft interest contributes 40 percent of the total profits, and the overdraft rate is as high as 18 percent. I used to think Chinese people would not overdraw but even if we provide an automatic return system for our debit card, we find 40 percent reoccurring overdraft for credit-card holders. Among those who overdraw, half are young people and half are wealthy ? a consuming trend similar to the West. I realized suddenly that Chinese consumers, especially those in the coastal big cities, are already Westernized. Why? Because of the internet. We can see that “the world is flat”.
On winning Chinese consumers
“Twenty years ago, China did not have as many banks as we have today. Customers were satisfied to simply receive a smile from the bank staff. When launching our business, CMB provided free soft drinks to customers, served by smiling staff. But this is easy to copy. Soon other banks learned to attract customers with free drinks as well.
With the emergence of the internet, customer needs changed. They needed individualized services and a “financial supermarket” where they can buy things by themselves. CMB launched All-in-One Net to meet the customers’ new needs, especially those in the fast-growing high-end segment. CMB provides different credit cards for different customers. Average customers need security and efficiency; high-end customers need to see their money appreciate and also need to feel valued and respected.”
On adopting East-West business values
“What differentiates CMB from foreign banks? I think it is our management concept. Most small to mid-sized Chinese banks simply pursue scale. We have changed our development model from scale-oriented to value-oriented, our evaluation criteria from book profits to economic profits, and our marketing strategy from extensive to intensive. For example, Chinese businesspeople used to market their products by drinking with clients. Now drinking doesn’t work that well ? it is more important that you provide win-win products. We used to choose our clients by size; now we choose them by quality. Chinese banks used to rely on large companies, but now more and more banks are using mid- and small-sized enterprises. We have also changed from risk control to risk management, from passive pricing to active pricing.
Banks in China must respect the local culture. We cannot copy the Western management methods and concepts blindly, even though they have proven effective in the West. For example, the Asian focus on “face” is important. Also, it is important that the president in a Chinese enterprise is charismatic. If he has a high IQ and EQ, people will follow him and he will build the business up. The goal is to effectively integrate Eastern culture and Western management practices.”
SPEAKER’S BIO
Ma Weihua
President, China Merchants Bank
Known among domestic media as China’s Most Innovative Banker, Ma is acclaimed for tracking and meeting market trends, using new technology. His media recognition includes being named China’s No. 5 Most Influential Corporate Leader by Chinese Entrepreneurs (2006) and received an international “Star of Hope” award by the UK-based publication The Banker (2004).
After joining China Merchants Bank in 1999, he oversaw the bank’s launch of the All-in-One internet service later that year, then managed to launch first international credit-card in China in 2002. Ma managed CMB’s growth from small-scale player to its current asset holdings of RMB1 trillion. CMB now ranks among the Top 120 global banks by the UK based The Banker magazine (2006), and has been rated “Best Local Bank in China” (Euro Money, 2007) and “Best Retailing Banker in China” (The Asia Banker )(2007).
