AI gives China Merchants Bank competitive advantage

Artificial intelligence (AI) has given China Merchants Bank (CMB) an edge and helped the financial institution cut losses, according to Michael Gui-Wui, Chief Credit Risk Officer, China Merchants Bank Retail Finance Group & Credit Card Center.

Gui-Wui shared how CMB designed an end-to-end customer security interaction system, consisting of a self-service way to lock cards, a security centre, as well as a self-service way to handle credit card dispute updates at the Visa AP Security Summit 2018 in Singapore. The use of the system has led to fraud losses decreasing by three to five times, he said.

"Last year we had the highest number of transactions in dollars in the whole of local and overseas

(markets)," he said. "Technology has helped CMB not just in risk management and customer experiences but also in (maintaining) a very good competitive advantage."

Gui-Wui. 

According to Gui-Wui, CMB has 65 million customers, more than double numbers in 2014. The bank has diversified payment products and continues to test and use mobile technology and data to meet stiff competition and give customers improved experiences. Among the technologies that CMB deployed is a near real-time fraud detection system.

Gui-Wui said the system has been four to five years in the making, and includes an AI transaction management system and biometrics. "We are using everything, we are using facial recognition, we are using voice prints, we are using fingerprints as well," he said.

The system was conceptualised in 2014, Gui-Wui said. At the time, the wishlist revolved around end-to-end customer security interaction, with an AI to anticipate and interact with customers. Today there are three modules: a self-service card locking service; a fraud scorecard to show if customers are using their credit cards safely; and a self-service dispute module.

The system debuted in early 2015, when there were no industry best practices. System stability was a challenge, Gui-Wui recalled, as it worked on mobile phone apps and through WeChat.

Early hiccups included customers forgetting they had locked the card, impacting transactions. "We (now) send reminders to unlock the card when if we see that they have shown interest in a travel package on our app, or during major sales days like November 11 and June 18," Gui-Wui said.

"Our latest functionality is in risk management, we allow customers to use the card even if the card is compromised and the card replacement is in process."

Gui-Wui shared that self-locking is not enough. "Security modules should be managed or designed by the fraud management guys," he said.

Deep learning and determining emotions through facial and voice recognition are planned, he said.

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