Shanghai Commercial Bank’s approach to innovation, as described by deputy chief executive Ryan Fung, is anchored in the economics of serving small and medium-sized enterprises. Like most banks serving SMEs, sustainable scaling requires carefully balancing efficient onboarding, high-quality servicing, and disciplined risk management. Documentation-heavy onboarding, fragmented data sources and manual verification processes increase both cycle time and cost-to-serve, creating pressure on profitability and customer experience. Fung explained that these challenges are not unique to Shanghai Commercial Bank. They reflect industry-wide limitations that cannot be solved through isolated, bank-specific digitalisation efforts alone. As a result, the bank’s innovation agenda has been shaped around participation in shared infrastructure rather than proprietary platforms. In this context, Fung positioned innovation as foundational rather than optional. Without addressing onboarding friction and servicing inefficiencies, he argued, downstream initiatives in lending, transaction services and relationship development cannot scale effectively. Fung made clear that SME capabilities and infrastructure form the base upon which broader relationships, including wealth, can develop over time. Redesigning SME onboarding to reduce cost and friction Fung described traditional SME onboarding as a process burdened by manual checks, repeated document collection and bespoke handling. He said that, in market practice, onboarding an SME account can cost around $1,000 once relationship management and operational overheads are taken into account, making it difficult to serve smaller firms profitably at scale. He explained that these costs are driven not by a single bottleneck but by cumulative inefficiencies across verification, risk assessment and internal coordination. Even relatively simple SME profiles often require disproportionate manual effort under legacy processes. From the SME’s perspective, Fung noted that prolonged onboarding timelines can quickly erode trust. Business owners expect speed and clarity, particularly when opening basic accounts or seeking working capital facilities. From the bank’s perspective, high onboarding costs constrain growth. Fung said that unless these economics are addressed, expanding SME coverage risks increasing cost without commensurate returns. As a result, he framed onboarding redesign as a prerequisite for sustainable SME banking. Improving speed, reducing duplication and lowering unit cost are, in his view, necessary before innovation can translate into meaningful scale. Using commercial data infrastructure to improve underwriting and inclusion A central theme in Fung’s remarks was the role of shared data infrastructure, particularly Commercial Data Interchange (CDI). He described CDI as a mechanism that allows banks, with customer consent, to access verified commercial data from multiple sources through a single interface. Eric Fan, senior executive vice president and head of digital transformation explained that CDI reduces reliance on manual document submission by enabling direct access to registries, accounting data and other trusted sources. This, in turn, shortens onboarding timelines and improves consistency in credit assessment. He also discussed Interbank Account Data Sharing (IADS), which allows customers to consent to sharing account data between participating banks. Fan said this capability is especially relevant in credit evaluation, where cash flow visibility can provide a more accurate view of SME performance than static documents. Fan added: “We are currently offering the most comprehensive business financial management capabilities in Hong Kong, powered by IADS. This enables SME owners to efficiently manage day-to-day operations by accessing consolidated banking transactions, balances, and analytics directly through mobile banking—providing valuable insights and greater convenience.” Importantly, Fan positioned both CDI and IADS as infrastructure rather than products. Their value, he said, lies in enabling banks to redesign workflows around reusable, consented data rather than layering new data feeds onto old processes. For SMEs, this shift has broader implications. Fan argued that reducing onboarding and underwriting friction improves access, lowers barriers to entry and supports more inclusive growth across the SME segment. Applying generative AI in controlled workflows to enhance customer experience Fan also addressed Shanghai Commercial Bank's engagement with artificial intelligence (AI), particularly through participation in the Hong Kong Monetary Authority's Generative Artificial Intelligence Sandbox. He described the initiative as a controlled testing environment that allows banks to move beyond basic use-case validation, enabling them to explore advanced AI applications while ensuring secure and reliable deployment. The sandbox also examines how AI can be used to monitor and manage risks created by other AI systems, supporting governance and resilience as adoption accelerates. He framed AI primarily as a productivity and consistency tool. Use cases discussed included document summarisation, internal knowledge retrieval and workflow support, all aimed at reducing staff time spent on repetitive or low-value tasks. These efforts ultimately deliver faster, more agile and proactive services that drive improved customer experiences. Fan explained that internal knowledge tools can improve customer experience by enabling relationship managers to summarise important market news relevant to individual customers and enhance the efficiency and quality of customer services. Governance featured prominently in his remarks. Fan emphasised that AI use cases are assessed not only for technical feasibility but also for auditability, explainability and operational impact. In this context, AI is treated as an enabler of scale rather than a substitute for judgement. Fan positioned it as another lever to reduce cost-to-serve and improve resilience in SME operations. Tokenised money, stablecoins and wholesale settlement as infrastructure A further area of discussion centred on tokenised deposits, wholesale central bank digital currency and stablecoins. Fung approached these topics as questions of infrastructure rather than as discrete digital asset strategies. He explained that tokenised assets require a reliable and regulated settlement layer to function effectively. Tokenised deposits, in his view, represent an attempt to make the “money leg” of transactions programmable while remaining within the banking system. Fung discussed these developments in relation to industry initiatives such as Project Ensemble, which explores settlement infrastructure for tokenised transactions among banks. He described participation as a learning process rather than a commitment to a specific outcome. Stablecoins and central bank money were discussed in similar terms. Fung stressed the importance of clarity around structure, governance and risk treatment before such instruments can support real economic activity. Throughout this discussion, he maintained a cautious tone, framing experimentation as necessary preparation rather than near-term transformation. Wealth is not a single engine for growth Although wealth was discussed later in the conversation, Fung did not position it as a standalone strategic pillar. Instead, he linked wealth opportunity to the same infrastructure and operating improvements driving SME innovation. He explained that improved data access, more efficient onboarding and scalable servicing create the conditions for deeper, longer-term relationships with business owners and their families. In this framing, wealth growth follows trust and engagement rather than aggressive product distribution. Fung suggested that customers are more receptive to broader financial relationships once core banking needs are met efficiently. Mortgage was mentioned but not treated as a core focus. Fung made clear that the bank’s primary innovation effort remains centred on SMEs and industry infrastructure. Wealth, therefore, is positioned as an extension of a more efficient and connected operating model rather than as an independent growth engine. Innovation as operating leverage Fung’s account of Shanghai Commercial Bank’s strategy consistently framed innovation as operating leverage rather than as digital experimentation. The emphasis remained on reducing friction, lowering cost-to-serve and improving cycle times, particularly in SME onboarding and servicing, strengthening customer experience. Shared data initiatives such as CDI and IADS were presented as foundational enablers that allow banks to redesign workflows around consented data rather than manual documentation. AI and tokenised settlement initiatives were treated with similar pragmatism. Fung described them as tools to improve efficiency and readiness, governed carefully and assessed on operational impact. Across these areas, he outlined a deliberate approach focused on feasibility, controls and economics. Innovation, in this framing, is valuable only insofar as it supports sustainable SME banking and related wealth relationships.
