China is the world’s most important market.
However, it’s still behind in many areas of technology.
Big data is one of them…
This is the time of internet finance and banking.
Western markets have succeeded in the area. They made the full change from old-style banking to online banking.
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But Chinese banks have only started.
I’m talking about online banking. I’m talking about mobile banking. I’m talking about mobile marketing and ecommerce.
These are huge growth opportunities.
Let’s use mobile banking as an example. There has been a strong push towards mobile banking.
The marketing and sales from all the major banks were strong. All wanted to quickly move their customers onto a mobile banking platform.
In the first quarter of 2014, Chinese mobile banking transactions totalled at AU$924 billion. This was a year-on-year growth of 298%!
Chinese banks have created the basic mobile banking platform. However, there will be more transactions and more functions. This will lead to more storage needs and new services.
Overall, there is still a lot of room for growth in the mobile banking sector in China.
Plus, there are other services developing. They include: Wechat banking, mobile payment and mobile marketing.
These services are the base for future financial applications. Spending in these areas will be even bigger than before.
Banks react
Chinese banks are changing their thinking. They’re reacting to growing pressure from the internet. The internet has changed their customers’ behaviour.
This is challenging the old banking way. It means banks really need to accept the online way.
The old banking way is ‘reactive’. Savers and borrowers come to the bank for services.
The new way is ‘proactive’.
Bankers now compete to ‘hit’ the customers first and market a range of services to them. Needless to say, the banking industry has become much more competitive than in the past.
Banks need to have more awareness and knowledge of their customers. Business intelligence creates that. That makes them ‘proactive’.
Banks have a lot of customer data. (Also extra cash for handing out bonuses!)
But to make business intelligence work, banks need to have ‘Big Data’.
Suddenly, banks’ big databases have become the most powerful resource available to them.
This will earn profit, grow market share, reduce costs and help the banks to compete.
Banks can do a number of things with this customer and transaction data.
On the data level, it means making good use of the data. It’s processing the data. It’s creating models on the data. It’s analysing the data.
At the end of the day, banks can see the new patterns and try to create opportunities.
From this, banks can better target customers. They can innovate in the right areas. They can convert customers better. They can also produce more value-add products.
This can help the banks to better compete.
On the risk side, data analysis can improve credit, operational, and market risk management.
It can also improve efficiency and cut costs
In Australia, business intelligence and big data for banks are ‘hotter’ than ever. Consulting companies and data analytics companies have made a fortune out of it.
This is a key area where China can improve. China’s big banks are still at the early stage of building business intelligence.
And the smaller banks, joint-equity banks, regional city banks and credit unions have only just begun to look at it.
This means investment into business intelligence infrastructure and big data will rise a great deal in the coming years.
A growth market for tech
That’s great news for companies in the tech sector that provide these services. I know that Sam Volkering has written a lot on this subject in both Tech Insider and Revolutionary Tech Investor.
But there is a high barrier to entry in the big data business.
A company can get into it by hiring the best people in the field. Or they can use M&A to buy into the market.
The famed Alibaba has grown their hiring in big data hugely in recent years. This is how it has entered the field.
Data analytics will be the most competitive area this year in China.
In business services Baidu, Tencent, Alibaba and other tech giants are starting to use their own customer data to produce analytics.
In the coming years, big data analytics will continue to grow at 30% around the globe.
And in China it’s just starting. That means growth will be much stronger.
This will be a key high growth sector to follow.
In fact, technology in China in generally will be a high growth sector in the coming years.
Ken Wangdong+
Emerging Markets Analyst, Money Morning
Ed Note: The above article was originally published in Tech Insider.
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