In-depth Interview with Director and CIO John Yung, the Shanghai Commercial & Savings Bank, LTD.

A brief history of this unique bank founded in 1915 by Mr. K.P. Chen
John-OBUThe Shanghai Commercial and Savings Bank (SCSB) is one of the first privately owned modern banks in China. Mr. Chen created the bank upon returning to china from the United States upon graduation from the Wharton School of Finance at the University of Pennsylvania. The innovative products he introduced into the market which included emphasizing long-term returns and offering one dollar savings boxes, microfinance loans, and supporting SME and international trade allowed the bank to prosper in 15 years to become largest non-state owned bank in China. Serving as a conduit for remitting and exchanging money abroad and to service the needs of customers to do business abroad SCSB began a travel division. This became the first Chinese owned travel agency in China, “the China Travel Service Company”, in 1927. The China Travel Service Company encouraged trade and ensured travel by assisting with ground travel, lodging, traveler checks and foreign exchange. After World War ll SCSB was the only private bank to reopen in Taiwan. SCSB was the first bank to do direct remittance cross strait between Taiwan and China in 2002. The bank is a public unlisted company with over 10,000 shareholders, all SCSB employees are shareholders. With the shares, employees have the option to retire after 25 years allowing for the continued hiring of a new generation of workers. Over the years the bank has expanded its offering and improved quality of services while centralizing the banks functions.

What products and services do you offer?
SCSB has 5 business units, corporate banking department, Personal banking department, Securities department, treasury department and Customer Finance General Department. The core of the business is commercial banking, especially corporate banking. The main services of the bank have always been SME, remittance and trade finance. The bank with its subsidiary, Shanghai Commercial Bank in Hong Kong, does over 200 billion US dollars a year in remittance and trade finance. The products that we offer are similar to those offered by other banks but the key differential is that we are able to offer quick decisions due to the size of our management and our experience in remittance and trade finance. Remittance and trade finance have always been key to our business and we have always advised client’s on compliance. We also offer retail products for SMEs’ owner and senior management.

The Customer Finance General department developed about 10 years ago. We approach wealth management from the Wealth preservation vs. wealth growth aspect. We look for products that perform well long term and offer more security. While many companies look at the gain we set up to look at all the products and look for selective vendors allowing us to understand the products fully and provide less volatile opportunities. As a result, in 2008 during the Global Financial Crises our customers did not experience as much loss as some others and quickly recover and turn profitable. At this time we received from the regulators and the industry, “Best customer satisfaction in wealth management”.

What initiatives have led The Shanghai Commercial & Savings Banks commercial banking success?
We continue to reinvent ourselves and strive to provide innovative solutions for our customers. We have avoided a lot of financial crisis in the past because had a very strong capital reserve and asset quality which allowed us time to recover bad loans without having to be sold to AMC. In 2006 we implemented ISO9001:2008 for Remittances of Offshore Banking Services and ISO10006:2003 for project team and were the first in Asia to adopt it. In 2007, we began using ISO 27001 security, an Information security management system. These have set up a good frame work to meet the directives of regulators.

IT does play a significant role in banking these days, how does The Shanghai Commercial & Savings Bank meet the challenges of the IT development?
Technology is very important for competitiveness and having a proper SOP set up is key. In the 70s while we were unique in setting up remittance services we also set up and created our own core banking system. Most of our IT products are in-house. Recently, we have introduced our next generation core banking system. We have moved our datacenter due as a natural disaster preventative and because of amount of power used in 2012. Our bank staff, including the president is extensively trained in technology. This extensive training allows all employees to have a greater understanding of the technology including big data, statistical training and how banks are using technology. With this training our employees are able to see the advantages of technology to both the bank and our clients. It assists in understanding the customers’ needs and understanding how the customers are using the technology. Also our IT staff is trained in banking so they understand the business which helps them to build the best products. Taiwan is very technology oriented. Having the right technology is the key to future success.

How does SCSB approach Corporate Social Responsibility?
Because of our history and our motto “servicing society”, we approach corporate social responsibility from an active standpoint and do not just write checks.

Our Cultural and Educational foundation hosts 40 events a year that offers information on; lifestyle habits, medical care, and books. We help people gain knowledge and lead a more balanced life. This event is highly attended by both our customers and residents in the community.

We provide over 100 scholarships for students from the hotel, travel, finance and technology field. In the future, we help set up internships so that students get experience in the field and gain opportunity to learn.

Charity foundation deals with our volunteers. Staff will go to orphanages, to elderly homes. During natural disasters we respond. We have adopted a school, cleaned it up, and helped obtain shoes for the children. We take hands on approach and because our main purpose is to be involved we do not usually promote these events as media coverage.

Are there any other programs, services or initiatives you would like to share with us?
We opened up a historical department in the bank a couple of years ago that shows how banking used to be and to promote traditional banking.

RMB businesses: By September of this year in Taiwan there will be a full time RMB center. Domestic banking opened this year we have been able to obtain a portion of the market.

We are also planning on offering more customized services for our high value clients. Focus will be on ensuring customers are receiving the correct product and ensuring that SMEs continue to be supported.

What are The Shanghai Commercial & Savings Bank aspirations for continued success?
The primary responsibility of the bank should be that the deposit is secure. Customers who put money in and they should be able to take it out. Because of our size we are not able to open branches all over the world but we have to service our clients wherever they are having subsidiaries. One example of how this works: When Thailand had the disaster, we needed to understand how our clients were affected have subsidiaries there allowed us to be gain more knowledge of how our customers were being affected. We are selective in where we open location overseas. We have branches in Vietnam, Hong Kong, rep office in Thailand and also through our subsidiary SCB’s branches in New York, San Francisco, Los Angeles, London, Shenzhen and Shanghai. Also with our partnership with Bank of Shanghai, we established a partnership branded as “The 3 Shanghai Banks” which gives us almost additional 300 branches in China. The 3-Shanghai Bank is comprised of three separate entities that operate in a joint effort. Our clients view us as one entity. Soon we will be launching a new mobile application for our credit card, over 3000 merchant discounts and offer in the Greater China region area customers stand to benefit from this service. Finally, now that China has opened up for direct travel we will be able to offer our clients with the direct assistance they need. Because our travel agency is part of the bank we are able to provide superior service. Our VIP customers are able have the best experience.

 

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