The Open Banking Journey at China Construction Bank (Shen Zhen) (A)

This case describes multiple open banking initiatives made by China Construction Bank, ShenZhen (CCB-SZ) between 2016 and 2018 in an effort to remain competitive in the retail customer market against online financial services provided by big tech companies such as BATJ (Baidu, Alibaba, Tencent, and JingDong), in China. In particular, CCB-SZ was facing severe competition from mobile payment technologies provided by Alipay and WeChat Pay in individuals' and SMEs' payment markets, which were traditionally underserved by incumbent banks. With new regulations enacted in 2016 to encourage incumbent banks to provide online financial services to individuals and SMEs, especially through mobile phones, CCB-SZ made a number of efforts to regain some of the lost territory, including utilizing its long-term relationship with large enterprises as a bridge to reach their customers, collaborating with existing and popular apps, and being creative in terms of offering innovative payment services and redesigning the corresponding business process. Its open banking strategy was to break down its financial services into smaller units and embed them into customers' daily financial needs, wherever and whenever they arose. Such efforts put CCB-SZ back on the playing field of mobile payment, as it was able to catch up with nonbank mobile payment solutions and maintain a similar growth rate after 2016. However, the nonbank payment providers had multiple advantages over incumbent banks, such as better technology, more data, a larger customer base, and less regulation. Hence, the future of incumbent banks' open banking strategy remained unclear.