OneConnect Accelerates Strategic Growth with New “One Body and Two Wings” Five-year Strategy
SHENZHEN, China, Sept. 13, 2021 /PRNewswire/ — On September 10, OneConnect Financial Technology Co., Ltd. (NYSE: OCFT) (“OneConnect”), a leading technology-as-a-service platform for financial institutions and associate of Ping An Group, hosted an open day event with the theme, “Technology Creates Value through Expertise”.
During the event, OneConnect CEO and Chairman, Ye Wangchun officially unveiled the company’s five-year strategy to fuel growth in the future. Mr. Ye highlighted that the development plan would place a core focus on strengthening the company’s customer base, products and ecosystem.
“At OneConnect, we are committed to building a world-leading financial services ecosystem in order to create more value for customers and shareholders. Our new five-year strategy will help usher in the next wave of digital financial development and build an industry-leading financial services ecosystem. We are fully confident in the company’s development trajectory and believe that, with the accelerated implementation of our strategic five-year plan, OneConnect will capitalize on existing and new momentum during this transitional phase to add value and cultivate deeper loyalty with our customers,” said Mr. Ye.
Adhering to a long-term vision to build new momentum
By 2024, the digital transformation market for China’s financial service institutions is expected to exceed RMB 400 billion (approx. US$ 62 billion), while the market for Southeast Asia is projected to reach RMB 180 billion (approx. US$ 27.9 billion). In response to growing demand, OneConnect has engineered its “One Body and Two Wings” five-year plan to capture market potential by minimizing low-production business and optimizing its structure.
The “one body” in OneConnect’s strategic development plan refers to the digital transformation of financial services as the key driver to empower financial institutions to improve efficiency and services while reducing cost and risk. Meanwhile, the “two wings” refer to the establishment of government policy, as well as a corporate user ecosystem and the expansion of overseas markets. Empowered by technology, OneConnect seeks to help the financial services industry truly achieve digital transformation.
Its latest five-year plan comes following its highly successful first phase between 2015 and 2020, during which the company laid a strong foundation in terms of customers, products and operations. This stage was focused on growing individual products to meet the business needs of financial institutions, in order to gain widespread coverage, adapt to different scenarios and needs, reduce onboarding time, and rapidly capture market share.
This year, OneConnect is tapping into extensive insights on the digital needs of financial institutions, as well as its long-term partnerships over the past five years, to upgrade and integrate more than 50 individual products into four products with “horizontal integration and full coverage across verticals.” These four products include digital retail finance, digital corporate finance, digital insurance, and its Gamma Platform.
Four stages to create a leading financial services ecosystem
By leveraging Ping An Group’s three decades of extensive experience in the financial industry, OneConnect is able to accurately grasp the needs of financial institutions to provide end-to-end services for banking, insurance, investment, and other sectors. As a result, the company has reached a number of milestones over the past half-decade, including the establishment of a widespread and solid foundation of financial institutions and government-regulated customers, the creation of a diversified range of innovative products and solutions, and achievement of continued business performance. OneConnect has also consistently improved its position in the market and currently ranks fourth for revenue among listed financial software service providers.
As the company looks forward to its second stage of growth in 2021 and beyond, it has divided its strategic development plan into four stages: capturing the market, cultivating a deep and lasting relationship with customers, expanding its ecosystem, and establishing global leadership in the financial services industry. During this stage, OneConnect will seek to accelerate conversion and focus on customer loyalty, gross product profit and third-party revenue, in order to rapidly and effectively improve its products, services, and operations.
OneConnect has already grown its customer base significantly during the first phase of its development. At the end of 2020, the company had 594 high-quality customers and 160 premium Plus customers, which represents a growth rate of 64% and 63% respectively over the past three years.
At the product level, the company has continued to diversify and innovate its product portfolio across five types of businesses, including implementation, risk control, operational support, cloud platforms, and operations and maintenance. The proportion of revenue generated from business development has increased 13% from the 39% achieved in 2018. Furthermore, revenue generated from new products, such as its Gamma Voice Platform, has been responsible for a third of the total revenue.
On the operational side, overall performance trends show that OneConnect is improving its position compared to domestic competitors. From 2018 to 2020, the company recorded a 53% compound annual growth rate from its operating income and a 58% compound annual growth rate from third-party revenue, whilst reducing its net loss rate from -85% to -37%. At the same time, OneConnect has optimized the ratio of its sales and management expenses from 31% and 37% in 2018 to 16% and 22% in the first half of 2021. Revenue and gross profit have maintained double-digit year-on-year growth for multiple consecutive quarters.
OneConnect has also continued to invest in the transformation of the technology-enabled financial services industry with continued investment in R&D. Its ratio of R&D expenses has remained at 30% over the past three years, which has enabled the continued enhancement and advancement of its products and services. As of the end of June 2021, OneConnect had accumulated 5,075 global patent applications, including 1,199 overseas patent applications and 3,876 domestic patent applications.
Looking ahead, OneConnect will continue to advance its “technology and business” model with a focus on product upgrades, cultivating relationships with its customer base and building its ecosystem. Underpinned by the philosophy that “Technology Create Value through Expertise”, OneConnect is well-placed to become an integral player in the development of the nation’s digital economy.