China Development Financial Holdings, a Taiwan-based institution incorporating banking, brokerage, and insurance, is quickly digitalizing under a recent change of leadership.
Last year the board appointed Steve Bertamini as president and CEO. Bertamini recruited Ketan Samani to serve as chief digital officer and chief innovation officer, among other hires.
“Our transformation agenda allows us to use digital to expand our footprint over the next five years,” Samani told DigFin.
Expanding and centralizing
Digital is just one aspect of the group’s ambitions. In 2021 it acquired China Life Insurance, the fourth-largest insurer in Taiwan, for $2.65 billion. That was the fifth-largest deal in Asia-Pacific financial services last year, according to S&P Global Market Intelligence.
It adds an insurance business to CDF’s other major arms, including CDIB Capital, a $2.54 billion private-equity and venture-capital asset manager; KGI Securities, a regional brokerage; and KGI Bank, a domestic consumer and corporate bank.
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For the past year, CDF has focused on putting all of these businesses’ data onto a single cloud-based platform. That remains a work in progress, as harnessing diverse data sets, some with their own regulatory requirements, is not simple. Samani says the foundation has been completed, however, which will allow for big-data analytics across the group.
Another aspect of centralizing data is creating a single marketing interface. Samani’s other main job last year was to consolidate individual company websites into a single group site.
Growth via relationships
Despite these efforts to streamline operations, data, and websites, Samani says the organization’s culture is to grow through strategic relationships.
“The company focused on partnerships and alliances,” Samani said. Like other banks, CDF has to navigate the rise of competing fintechs and neobanks. “How do we build these digitally? Financial services can maintain its expertise but it new forms.”
Samani’s previous roles include chief digital officer for Asia Pacific at UBS, head of regional e-business at DBS, and global head of internet channels for Standard Chartered’s transaction bank. He also advised Singtel on a superapp strategy.
CDF has existing digital practices. KGI Bank’s retail business has engaged in API-based, open-banking relationships with consumer-facing companies since 2017, including loans and payments. CDIB has invested alongside Chunghwa Telecom in Next Bank, the third institution granted a local digital-banking license, expected to go live this year. CDIB is also looking at fiat-to-crypto transactions with local exchanges.
Samani declined to comment on what kind of partnerships or acquisitions the group is negotiating. “All I can say is there are a lot of irons in the fire, and these are strategic deals, not short-term.” The first results may be visible later this year.
Asian banks are still figuring out how to turn digital platforms into competitive advantages. Unlike fintechs, banks are locally licensed, so expanding cross-border is difficult. Digitization has been largely domestic, as is the case with KGI Bank. But banks perceive bigger growth in regional markets.
“We want to partner with fintechs that bring us customers, because we do have a balance sheet,” Samani said. But he also says that, outside of mainland China, embedded-banking models have yet to prove they can deliver a sustainable advantage.
“Hyper-personalized advice remains elusive, despite gains in A.I.,” Samani said. “I haven’t seen anyone consolidate wealth management and advisory products in an intelligent way.”
He says Singapore’s banks offer a useful template as they extend their digital arms into overseas markets. Taiwan’s financial institutions have footprints in Southeast Asia (such as KGI Securities) but they haven’t built a unifying digital template.
“In Taiwan, people in their 20s and 30s buy everything online,” Samani said. He says there is an opportunity for a few banks to crack this on a regional basis – and a “reckoning” for those that cannot.
He believes targeting small businesses is one way to achieve a regional, profitable business, because banks can already amass plenty of data from their invoices and payments history.
Navigating among the fintechs
This means taking on some big fintechs head-on. Samani argues some of the region’s largest tech players took this business away from banks because they offered lower fees, but they have now become too powerful.
“Fintech power and value dilutes when they go IPO,” Samani said.
This gives banks an opening if they can help small businesses that want to grow cross-border.
Samani says the group will spend the next several months getting to grips with its new cloud-based data structures. The group operates an innovation lab supporting about a dozen fintechs in Taiwan, but Samani says the management team is moving deliberately to ensure it creates something with a sustainable edge.
“Digital is a way to think about and execute the traditional business in a more customer-centric way,” Samani said. “Our customers are changing, so we have to refine and rebuild our proposition. Once we have the full operating model in place for all parts of the business, I can begin to create APIs and build partnerships, both within the group and externally.”