The Inside Story of Banking & Financial Services in China

Mainland China, a superpower known for many superlatives in the global economy, has been responsible for the rapid development in AI technology and being home to a third of the world’s corporate unicorns. It is also arguably a strong contender to Silicon Valley as the world’s mecca for the tech industry, and a global force to be reckoned with where capabilities in the life sciences arena are concerned. To further fuel its behemoth of an economy, Mainland China’s Belt and Road Initiative (BRI), a project that is perhaps unprecedented in ambition and scope in the modern era, looks externally to the development of neighbouring countries as a way of simultaneously encouraging its own productivity. Industries along the length and breadth of the ‘road’ – and beyond – are looking into ways of taking advantage of the vast profits that the scheme may produce. And at the heart of all of this, is the banking sector.

The BRI has been key to driving engineering and construction sectors in Mainland China, benefitting Chinese engineering procurement construction (EPC) providers while compelling them to improve their business models and operating systems in response to heightened demands for international standards.

According to the Global Times, as far as funding EPC projects go, Liu Jingsheng, Managing Director at investment bank China International Capital Corp, said that as EPC projects typically span for a prolonged period, “project financing should be more market-oriented.” She added, “Many EPC projects are still largely funded by bank loans, but more diverse and innovative financing models should be introduced into the EPC industry in the near future.”

CIB SENIOR RELATIONSHIP MANAGERS AND EXPORT FINANCE MANAGERS WITH EXPERIENCE IN SERVICING BOTH SOE AND POE CLIENTELE ARE HIGH IN DEMAND

As a result of heightened EPC activity, both Asian and European banks across the country have been seeing a greater need to service State-Owned Enterprises (SOEs) and Private-Owned Enterprises (POEs) in the infrastructure, power, and energy fields. Corporate Institution Banking (CIB) Relationship Managers and Export Finance Managers with experience in dealing with such clientele are therefore extremely sought after. Candidates with banking product knowledge for project and export finance, DCM, cash management, trade finance, and syndication loan are even more coveted by employers.

Be that as it may, the banking talent pool within Mainland China remains small, and employers are in a heated rivalry to attract and secure top candidates in the market. In particular, there is also a notable trend of medium-sized, regional Asian financial institutions ramping up their efforts to venture into new client portfolios, thereby requiring candidates with strong business development capabilities. This unique mix of skillset and experience may be significantly challenging to obtain as most of the suitable talent would come from bigger players who are more mature in the market.

Along with impressive technical aptitude, candidates in this field must also possess a strong network of state-owned enterprise (SOE) and private-owned enterprise (POE) clients from the aforementioned industries. In particular, candidates from Mainland China Policy banks, such as the Mainland China export and import banks, would have strong connections with SOE and POE clients in these fields, making them the ideal choice to drive new client acquisition plans.

PRIVATE EQUITY INVESTORS ARE DRAWN TO THE PROMISE OF MAINLAND CHINA’S BOOMING HEALTHCARE INDUSTRY, MORE PE/INVESTMENT BANKING CANDIDATES REQUIRED

Over the past decade, Mainland China’s life sciences industry has faced a major transformation in efforts to bring the country to pharmaceutical and biotech superpower status. With an average annual sales revenue growth of 21.4 per cent, the Chinese pharmaceutical market appears to be fast reaching its USD 220 billion-dollar goal by 2020 according to Deloitte, parring with the US as the largest contributor to the global pharmaceutical market.

On those grounds, private equity (PE) firms and hedge funds are drawn to the promise of the country’s healthcare industry. PE and investment banking candidates with strong financial analysis and aptitude in financial modelling, on top of experience or education in pharmacy or biochemical, are therefore highly sought after. Most venture capitalists are more inclined to employ candidates with skills and experience related to the industry over finance skills.

A good fit for a mid-level PE/investment role should have had proven investment track record within the employer’s specific sector in the life sciences industry. For more senior-level associates, a strong industry network as well as the ability to raise funds and manage a team would be crucial for their success in their role.

REGULATORY CHANGES IN RISK AND COMPLAINCE ARE LEADING TO INCREASED HIRING OF RISK AUDITORS AND COMPLIANCE SPECIALISTS

In the face of growing risks in the financial system throughout Mainland China, banking and insurance regulators had merged in 2017 to form the Financial Supervision and Development committee. Since then, many regulations have been in place to address such risks. The recent wave of cases on corrupt P2P platforms has led to a tightened regulatory environment, thereby leading to a heightened emphasis on risk control and fine-tuning regulations.

In addition, banks across the country have been stepping up their Artificial Intelligence (AI) game. In fact, in a Deloitte report, when asked about the areas in which AI has had the greatest impact, 29 per cent of banks and 56 per cent of insurance firms said ‘risk management’, while 22 per cent of the latter also said ‘compliance’. The report also concluded that, “overall, the adoption of AI in FS is still in its infancy. Of the firms surveyed, 40 per cent were still learning how AI could be deployed in their organisations, and 11 per cent had not started any activities. Only 32 per cent were actively developing AI solutions.”

As such, there has more emphasis on securing adept risk audit and compliance talent with the right knowledge and expertise of the most updated regulations. Being in the know about how AI affects the risk and compliance function would also benefit them greatly, especially with the increasing adoption of AI in work processes. In South China, this trend has been picking up alongside the “significant opportunities” in innovation, business development and regulatory control that the Greater Bay Area presents.

Because of the longstanding talent-short market in the areas of risk and compliance, financial institutions have been pulling out all the stops to grow the candidate market. Many firms have eschewed foreign talent and instead launched management trainee programmes to coach entry-level employees and fresh graduates.

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