Digital Advisor Service in Guotai Junan Securities

MEMORANDUM

To:         Jing Liang, Senior Director

From:         Carlisle Yang, Researcher,

Date:         October 27, 2016

Subj:          Digital Advisor service in Guotai Junan Securities

Proposal

Implementing emerging financial technology is likely to be a new direction for Guotai Junan’s future development. One of the state-to-the-art technology is Digital Advisor, an online portfolio management service based on algorithm. As the leader of portfolio management, our portfolio managers provide suggestions and make decisions. So do our competitors. However, Guotai Junan lacks of actions in using leading financial technologies. Challenges arise when an increasing number of individual investors and larger quantity of capital occur. Now with advanced algorithms programmed by experienced financial engineers, multiple tasks such as smart data analysis, social investment, quantitative strategy and Robo-Advisor can be completed with less human resources as well as capital resources comparing with traditional mode.

This memo tends to propose a project to develop a new division of digital advisor in Guotai Junan Securities. Specifically, the proposal focuses on developing a new division and a series of new services. The purpose of the memo is to garner support from Guotai Junan leadership for recommendations and implementation strategy, and the approval to move forward in executing the plan.

Rationale

Seizing potential future market is primary reason for this plan. Despite the R&D expenditure and recruitment of new staff, Guotai Junan can still consider it as an expanding opportunity in future market. As the normalization of China’s security market, it is the tendency to implement financial technology into services. The company would benefit from investing in exclusive digital advisory system, which differentiate Guotai Junan with others. Apart from the foresight move, reduction of cost, mainly human resources expenses, is another considerable change that the plan will bring. By conducting a thorough research and a well-structured plan on the system, Guotai Junan would explore new services with higher efficiency and lower cost, accumulate technical reserve, and receive professional reputation.

Research Plan

Four stages are included into the execution of this project:  

(1) Conduct a research of industry best practices related to digital advisory, including:

• Best services provided from peer companies that have introduce digital advisor.
• Initial stage development situations of best service providers.
• Precedent practices, reports, and industry studies from third party research institutions.

(2) Interview key officers to understand Guotai Junan’s current initiatives, resolution, plans, and gaps in this area.  This will include:

• Interview with CEO, CTO as well as director of research institution, to understand the resolution about execution of the project.
• Interview with points of contacts within Guotai Junan’s financial engineering and technological department, to understand (1) how decisions are made about services and products to provide; (2) is the market demand large enough to create profit; (3) what are the obstacles to develop the system.

 (3) Analyze the results, make a list of key findings, and engage the strategic team in developing a detailed project.

(4) Present findings and suggestions, and recommend leaderships for this project.  The report will include a research strategy and execution plan.