Below are excerpts from an interview of Henry Ma, CIO of WeBank, one of the world’s largest digital-only banks, published on Bloomchain.ru.

WeBank is the very first privately funded bank and digital-only bank in China. It was incorporated at the end of 2014, with a very specific mission to fulfill. We wanted to focus on improving the accessibility and quality of financial services for the underbanked and unbanked individuals and small businesses in China, especially micro-SMEs.

We leverage as much leading edge technology as possible to drive our business model, and to constantly conduct research and deploy applications using AI, blockchain, cloud computing, and big data. We serve more than 200 million individual clients and also 1.3 million SME clients.

WeBank’s largest shareholder is Tencent Holdings, an investment holding company.

We have an in-house built and in-house designed architecture, that in one business day in 2019 processed more than 574 million transactions. This is the scale that you’re probably looking at the largest bank in the world. But, the transactions that we process are quite different from what the traditional bank would process, because we have a lot of low-value transactions.

We have just a little more than 2,000 employees at WeBank, and more than 56% percent of them are in the technology and R&D space. They’re either doing programming, coding, architecture design or are data scientists. We put a very strong emphasis on open-source technology and commoditized hardware so that we can drive down the cost as much as possible.

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We want to serve the part of the market that is underbanked or unbanked. Many of our customers are very small mom-and-pop shops - a market which is highly overlooked by the traditional banking industry. Our goal is to make financial services more affordable for small households.

We try to tackle this financial inclusion topic with technology. The key is to try to tackle this particular market with a vastly different cost structure. Because, if you’re a traditional bank, the reason why they wouldn’t try to tackle this market is because it’s too costly for them to run a sustainable business based on the cost structure that they have. If you look at our costs, the per-account operation cost is only 3.6 RMB, or around $.50 USD. In China, that number for legacy banks is probably 10 times of what we are paying right now. But if you’ve been talking about multinational banks, the number could be 20 or 30 times higher.

The majority of the customers that we serve don’t really bring us a very large transaction size or revenue stream. If you look at the numbers on our annual reports for 2019, the average revenue per user is only around $10 USD. If you compare that to other incumbent banks, they are typically more than 10 times higher in China, and for foreign banks, it is probably 20 or 30 times our revenue per customer. And yet we have been able to make profit since 2015.

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When a customer tries to apply for credit from us, it typically takes them less than five seconds. In fact, five seconds is the commitment that we give to the customers. The second part is when they try to do a draw down, it’s only a few clicks away and they can do a draw down and the money will be deposited into the associated bank account within minutes. In fact, typically the money will go out of our bank within a second. It actually takes a while for the receiving bank to process the transactions.

This is the customer experience that we are trying to offer to the market. This is also the customer experience that our target segment would expect from services like ours, because they are very much used to the internet experience. Everything is only a few clicks away and everything happens in real time.

We work with a lot of internet platforms. Essentially, we embed our financial products into our partner platforms. And we also work with our partner platforms and leverage the data and the user base that they have, and do a lot of pre-underwriting on the users.

When we work with a particular platform, the user will get pre-underwritten and receive an invitation from us. Once the user accepts the invitation, we have already gotten some idea of what kind of a credit worthiness this user deserves. When the prospect accepts the consent, we start trying to grab external data sources, and then put all those data into a real-time combination model and come up with the final number to show to the customer. And everything is happening on the mobile device. They don’t even have to interact with any real person to apply for a credit.

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Artificial intelligence, blockchain, cloud technologies and big data allow us to better interact with users. We run a customer service very much based on artificial intelligence. For instance, we are handling more than 1 million inquires on a regular day. These inquiries are being handled by our chatbots for more than 98% of the total incoming customer inquiries.

With the blockchain, we record a lot of the transactional details as digital evidence onto blockchain. With cloud computing, everything runs on a private cloud and we don’t rely on proprietary technologies. This allows us to achieve the scalability that we have today.

Finally, we use big data to do precision underwriting and marketing, reaching out to a very specific audience who may be in need of the financial products that we offer. So these are the ways that we apply this technology to address the business requirements that we have.

For reference: As of the end of 2019, WeBank’s net profit was 3.95 billion yuan (almost $600 million), a year-on-year increase of 59.7%. Total assets of the bank grew by 32%, reaching 300 billion yuan ($4.5 billion).

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