Ping An Group's financial technology sector is experiencing a major asset transfer between its two subsidiaries.
Today, OneConnect Financial Technology Co., Ltd. (hereinafter referred to as "OneConnect") announced that it will sell 100% of its wholly-owned subsidiary, Ping An OneConnect Bank (Hong Kong) Limited (hereinafter referred to as "OneConnect Bank" or "PAOB"), for a consideration of HKD 933 million. The counterparty to this transaction also comes from Lujinsuo Holdings Limited (hereinafter referred to as "Lujinsuo Holdings") under the Ping An Group system.
Lightly packed, OneConnect focuses on improving technology driven products
According to the announcement, Ping An One Account Bank is the first virtual bank in Hong Kong, China to focus on providing flexible and efficient banking services for small and medium-sized enterprises. Its total revenue in the first half of 2023 was 66 million yuan, a year-on-year increase of 45.2%.
At present, the capital adequacy ratio of Ping An One Account Bank is 100%, significantly higher than regulatory requirements. All of its loans are for small and medium-sized enterprises in Hong Kong, and a significant portion of the outstanding balance is supported by the Small and Medium sized Enterprise Financing Guarantee Scheme.
A senior financial technology industry practitioner analyzed to reporters that based on its positioning of "light capital, heavy technology", Financial One Account's choice to sell banking business with heavy capital consumption is in line with its long-term market plan; Moreover, the business sector controlled by Lujin Holdings itself includes loans for small and medium-sized enterprises, so from the perspective of target customer groups and business synergy, it is reasonable for Lujin Holdings to include this virtual banking license in its portfolio.
From the current statements of official figures from Financial One Account, such analysis is not unreasonable. Shen Chongfeng, Chairman and CEO of Financial One Account, stated that the decision to sell PAOB this time is in line with the company's overall strategic layout and shareholder interests. In the next stage, the company will continue to focus on improving its technology positioning and technology driven product services, and is committed to steadily promoting deep cooperation with global financial institutions through digital solutions of "two improvements and two reductions".
In the future, Financial One Account intends to use the obtained funds as general working capital, including but not limited to improving the company's main business operations, optimizing the allocation of resources for technology products and services, etc.
The strategic direction of "light capital, heavy technology" in Financial One Account has already emerged.
Business structure adjustment, a 60% year-on-year decrease in losses
On the same day, Financial One Account released financial reports for the first three quarters, with the biggest highlight being a 60% year-on-year decrease in net loss attributable to the parent company in the first three quarters.
Specifically, in the first three quarters of this year, Financial One Account achieved a revenue of 2.74 billion yuan and a gross profit of 990 million yuan; The net profit margin attributable to the parent company increased from -21.6% to -10.3%, a significant optimization of 11.3 percentage points compared to the same period in 2022, and the gross profit margin increased by 0.9 percentage points year-on-year to 36.1%.
According to the financial report, Financial One Account Tong suffered a year-on-year loss of 410 million yuan in the first nine months of this year, with a 60% reduction in loss. This can be attributed to the company's achievements in strengthening customer expansion, focusing on product upgrades, and adjusting business structure. It indicates that at present, we are accelerating the iterative upgrading relying on Ping An Group and self-developed technology, and concentrating resources to create products and solutions that meet the digital transformation needs of financial institutions.
Shen Chongfeng, Chairman and CEO of Financial One Account, stated that, Under the guidance of value creation, the company continued to improve its product capabilities in the three major sectors of digital banking, digital insurance, and the Gama platform in the third quarter. At the same time, on the basis of accelerating the exit of high customization and low gross sales businesses, we further strengthened customer expansion and expanded business opportunity reserves. The proportion of third-party customer revenue increased year-on-year, laying a solid foundation for the deepening adjustment of the company's overall business structure
He further pointed out that in the next stage, the company will focus on the upgrading and growth of standardized products, and continue to deepen the "pay as you go" type of business. At the same time, adjustments will be made to the research and development cost structure, including tilting more resources towards the research and development of core flagship products, and steadily increasing the revenue share of new products. Thanks to this, the iteration speed, standardization level, and delivery efficiency of the company's products have been comprehensively improved since the beginning of this year, "said Shen Chongfeng.
With business structure adjustment and product iteration upgrading as the core focus, Financial One Account has further deepened its strategic cooperation relationships with multiple domestic and foreign commercial banks and insurance companies in the first three quarters.
In the digital banking sector, in the third quarter, Financial One Account joined forces with a joint-stock bank to comprehensively carry out digital transformation practices based on financial management scenarios. By simulating the optimization of multi-objective constrained asset burden planning through combination strategies, the transformation from experience driven to digital driven is achieved. The budget scenario calculation is shortened from 1 week to 30 minutes, and the tracking of key indicator execution is changed from monthly report to daily frequency.
In addition, combined with the concept of "light asset operation and light capital consumption" in the Capital Management Measures for Commercial Banks, Financial One Account has assisted a large state-owned bank in implementing an economic capital management project, using Risk Adjusted Return on Capital (RAROC) as the core basis for resource allocation, providing a core measurement tool for the bank's headquarters and branches, We have created a benchmark example for the implementation of the Financial One Account Economic Capital Management System in state-owned large banks.
In the digital insurance sector, since the beginning of this year, Financial One Account has tilted a large scale of resource investment and technology research and development towards the car insurance business. Focusing on the pain points of small and medium-sized car insurance companies in risk assessment, cost management, and other aspects, the company has comprehensively upgraded its existing product matrix based on Ping An Group's over 30 years of car insurance management experience. It plans to launch an end-to-end solution covering "claims+underwriting+services" by the end of the year, and plans to officially launch it in the market in 2024.
In the Gama platform sector, Financial One Account has fully applied AI capabilities in various business processes, further improving risk control capabilities and sales conversion efficiency. In the retail loan approval scenario, the AI video face to face review robot product created by Financial One Account has comprehensively applied technologies such as intelligent dialogue, digital human, and visual risk control, helping a certain auto financing company increase its automatic approval diversion rate by 30%; In the online wealth management service scenario, the AI text wealth management robot product created by the company has increased the online wealth management service sales conversion rate of a city commercial bank by 40% through technologies such as knowledge graph and intelligent recommendation, as well as scenario based functions such as script factories and card templates.
Provide technical support for the FINI platform of the Hong Kong Stock Exchange
Since the beginning of this year, Financial One Account has made a series of breakthroughs in digital ecology and overseas business, creating multiple heavyweight industry benchmark projects. The FINI platform, a digital IPO settlement platform under the Hong Kong Stock Exchange, will be officially launched in the near future, with technical support provided by Financial One Account. It is understood that after the official operation of the FINI platform, the time between the pricing of new shares and the start of stock trading will be shortened from T+5 to T+2, greatly improving market efficiency and consolidating the competitiveness and attractiveness of the Hong Kong IPO market.
Public information shows that FINI is built on a cloud platform, and different stakeholders such as sponsors, underwriters, legal advisors, banks, settlement participants, and regulatory agencies in the initial public offering will collaborate electronically to fulfill their respective responsibilities in the IPO project. The platform will also introduce a new pre payment model for public offering funds, which will help reduce the amount of funds frozen due to oversubscription of new shares.
In August of this year, Ping An One Account Credit Reporting (PAOCCRA), a subsidiary of Financial One Account, announced that it had officially joined the "Business Data Connect (CDI)" platform launched by the Hong Kong Monetary Authority, becoming the first data provider in Hong Kong to primarily serve data processing and alternative data products.