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Operator
Ladies and gentlemen, thank you for standing by and welcome to OneConnect's fourth quarter and full year 2023 earnings call. If you'd like to register an audio question, you may do so by pressing star followed by one on your telephone keypad. Please note this event is being recorded. Now I would like to hand the conference over to your speaker host today, Mr. Rick Chan, the company's head of investor relations. Please go ahead, Mr. Chan.
Chan
Thank you, operator. Hello, everyone, and welcome to our 2023 fourth quarter earnings call. Our financial and operating results are released earlier today and currently available on our RRF website. Today, you'll hear from our chairman and CEO, Mr. Shen Chongfeng, who will give opening remarks and business highlights. Afterwards, our CFO, Mr. Luo Yongtao, will offer a closer look into our financials. And then in question and answer session, Our management team will be available to you. We have our CTO, Mr. Li Jie, Head of Digital Banking, Ms. Ellen Jia, and Head of Corporate Planning and Product Management, Ms. Jie Di Shen. In today's conference, our management team will make statements in Mandarin or in English. For those in Mandarin, a context translation will be provided. In case of any discrepancy between the Mandarin version and the English version, our statement in the original language should prevail. Let me quickly cover the safe harbor statement before we start. As we are making forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially, please note that we may present both IFRS and non-IFRS financial measures. With that, I'm pleased to turn our call to our Chairman and CEO, Ms. Shen Chongfeng. Shen, please. Hello, everyone.
Shen Chongfeng
I'm Shen Chongfeng.
Shen Chongfeng
Thank you for taking the time to join our 2023 fourth quarter and annual results earnings call. Firstly, on behalf of OneConnect, I'd like to extend a warm welcome to investors, analysts, and friends from media who are with us during this call. It's a great pleasure for me to share with you the results we've achieved in the fourth quarter and the last year.
Shen Chongfeng
In 2023, the Central Financial Work Conference for the first time proposed the construction of a financial stronghold. and the importance of finance as the bloodline of the national economy. The meeting pointed out that a large number of small and medium-sized bank technology support capabilities are expected to be improved, and the high-quality development of small and medium-sized financial institutions is inevitable. At the same time, large-scale development of technology finance, green finance, general finance, pension finance, digital finance, and so on. After these five major articles were published at the Central Financial Work Conference, the relevant content was the first to be written into the government report. The financial agenda is to focus on the central deployment, continue to optimize the structure, focus on the product, and use the unique advantages of technology and business with the advanced technologies such as artificial intelligence and big data, and continue to improve the product capability around digital banks, digital insurance, and the three major business blocks of the plus platform, and continue to improve the development of financial industry and new production power.
Shen Chongfeng
In 2023, the Central Financial Work Conference proposed for the first time to build up China's financial strength, reaffirming the importance of financial sector as the lifeblood of the national economy. The conference pointed out that technology capacity in many small and medium-sized banks remains to be improved, and the high-quality development of these institutions is imperative. At the same time, vigorously developing technology innovation in finance, green finance, financial inclusion, pension finance, and digital finance, which are known as the five major articles unveiled at the Central Financial Work Conference, are also included in the government work report for the first time. With cutting edge technologies such as artificial intelligence and big data, and the unique advantages of technology plus business, OneConnect continues to improve its product capabilities in our three major business segments, namely digital banking, digital insurance, and gamma platform, so as to empower the development of new quality productive forces in the financial industry.
Shen Chongfeng
In 2023, we achieved a significant milestone in terms of net losses. The net loss from RMB 8.72 billion last year improved to RMB 3.63 billion. In 2023, we achieved significant milestones in loss reduction, with net loss attributable to shareholders improving to
Shen Chongfeng
363 million yuan from 872 million yuan in the previous year. The past year also saw proactive adjustments in product portfolio, continuous expense control, and improved operational efficiency, with the resources effectively allocated to R&D in key products. These efforts will provide a solid foundation for profitability in the medium term.
Shen Chongfeng
Next, please go to the page four of our slides. . The company has also strengthened the precision management of the project and further minimized the cost management towards the strategic goal of Niu Kuiwei.
Shen Chongfeng
Committed to our business philosophy of value, win-win cooperation, and quality development, we achieved significant progress in three core priorities, namely product upgrade, customer expansion, as well as loss reduction and efficiency improvement. At this stage, we are accelerating export of Ping An Group technology and upgrade of self-developed products, in addition to aggregating resources on high-value products. At the same time, the company also fine-tuned our project ROI management and cost control, which will put us closer to the medium-term strategy of breaking even and becoming profitable. Next page.
Shen Chongfeng
In 2023, we achieved satisfactory progress and results in products, customers, and cost control. The company focused on product upgrade, product standardization,
Shen Chongfeng
accelerating the export of Ping An Group experience, strengthening product portfolio, and aggregating our resources on high-value and high-threshold products. 公司加強客戶拓展,擴大商機儲備,深入了解客戶需求,改善收入結構,以滿足廣大客戶的需求和期望,與客戶建立長期合作。 OneConnect also strengthened the customer engagement. The company has expanded the business pipeline, developed a deeper understanding of customer needs, improved the revenue structure, and now can better meet the needs and the expectations of our customers. And we have established long-term cooperation with them.
Shen Chongfeng
At the same time, we have refined the control of costs, increased the number of customers, and strengthened the economic and commercial management, and improved the operational efficiency.
Shen Chongfeng
At the same time, expense control, per capita revenue, product ROI management have all been improved, which translates into higher operational efficiency.
Shen Chongfeng
In 2023, non-IFRS gross profit margin exceeded 40%.
Shen Chongfeng
The number of premium plus customers of the company was over 200, and net loss attributable to shareholders was narrowed by about 510 million yuan. Next page.
Shen Chongfeng
In 2023, we got the support of many major domestic and foreign customers. We signed contracts with SBS, Hong Kong Exchange, Liqiao Renshou, Old Mutual, and many other financial institutions.
Shen Chongfeng
Last year, we secured cooperation with many large customers at both home and abroad, landing contracts with financial institutions such as SBF, Hong Kong Stock Exchange, Welllink Life, and Old Mutual. There were 75 customers with a total contract value of over 5 million yuan, and the average contract value of such customers increased by 6% year-over-year.
Shen Chongfeng
We also continue to strengthen the cooperation of existing old customers around the customer improvement strategy. In terms of old customer cross-sales and new product purchases, we have signed contracts with, for example, Huaxia Bank, Youchu Bank, Dajia Insurance, Dali Insurance, and other financial institutions. to help them continue to succeed in the digital transformation.
Shen Chongfeng
Centered on the strategy of deepening customer engagement, we continue to strengthen relationships with existing customers. In terms of cross-selling and implementing new products for existing customers, we have signed contracts with financial institutions including Huaxia Bank, Postal Savings Bank of China, Dajia Insurance, China, continent insuring, etc. They help them continue to succeed on their digital transformation journey.
Shen Chongfeng
While serving financial institutions in mainland China,
Shen Chongfeng
The company also exported successful experience abroad, actively expanding its overseas presence and remains committed to empowering a broader market with China's financial technology.
Shen Chongfeng
In 2023, the net foreign customer revenue has increased by more than 30%. The net foreign customer revenue accounts for about 6% of the third-party revenue, reaching 15.7%. Hong Kong, Southeast Asia, and South Africa are growing rapidly. The company is actively expanding its overseas market and expanding its sales network. Its products are well-received by overseas customers. For example, Financial Yuzhangtong and AutoMutual have reached a comprehensive strategic cooperation relationship. The development of the South African market has achieved outstanding results. It cooperated with Abu Dhabi and the International Central Bank to develop a small and medium-sized business financing digital platform to export digital common currency overseas.
Shen Chongfeng
In 2023, revenue contribution from overseas customers increased by over 30% year-on-year, and the proportion of overseas revenue as a part of third-party customer revenue increased by about 6 percentage points to 15.7%. With strong growth momentum in Hong Kong, Southeast Asia, South Africa, and the Middle East, we actively explore overseas market and continue to expand our sales network. OneConnect's products are well received by overseas institutions. For example, our comprehensive strategic partnership with Old Mutual proves to be a big success in the development of the South African market. We've also jointly developed a digital platform for SME financing with the Abu Dhabi Global Market to export digital and inclusive finance abroad.
Shen Chongfeng
Since then, the business has covered more than 20 countries and regions such as Singapore, Thailand, Malaysia, Indonesia, the Netherlands, the Philippines, Vietnam, South Africa, and more than 20 countries and regions, as well as 185 foreign financial institutions. Customers include two of the top three regional banks in Southeast Asia and two of the top ten insurance companies in the world. As the foreign market gradually deepens, we have set a good foundation for achieving the second stage of financial one-stop-sale to maintain the new growth point of revenue.
Shen Chongfeng
So far, OneConnect's business has covered 20 countries and regions, including Singapore, Thailand, Malaysia, Indonesia, and the UAE, the Philippines, Vietnam, South Africa, and 185 overseas financial institutions, including a top three regional bank in Southeast Asia and two of the top ten global insurance companies. Our gradual expansion into the overseas market has undoubtedly paved the way for OneConnect to achieve its second-stage strategic goals and achieve new top-line growth points. Next page. 2023 remains a key year for Stage 2 strategy, that is, broadening customer engagement. During this stage, we are committed to unite the core and empower the wings, where we focus on financial institutions while expanding ecosystem and overseas. Next page.
Shen Chongfeng
In the digital banking sector, in 2023, our family trust and trust system will successfully realize the family trust and trust establishment, investment configuration, account management,
Shen Chongfeng
In the digital banking segment, our family trust system realized the full closed-loop services for family trust establishment, investment allocation, and account management in 2023, expanding the family wealth inheritance scenario for high net worth customers of private banks.
Shen Chongfeng
We have built a unified technology base and successfully upgraded to a smart credit management system. This system not only achieves comprehensive digital management of credit business, but also provides favorable support for credit decision-making through smart analysis. Currently, the system has successfully laid many comprehensive cases in the field of non-credit and banking, and has won the wide praise of customers.
Shen Chongfeng
We have built a unified technology base and successfully upgraded our intelligent credit management system. This system not only realizes the comprehensive digital management of credit business, but also provides strong support for credit decision-making through smart analysis. The system has been successfully implemented in a number of non-banking and banking scenarios so far, and has been highly recommended by our users. At the same time, One Connect also continues to promote the adoption of self-controlled technology. The company's self-developed portfolio management system has successfully accommodated home-developed technology in 18 projects, providing sound technical support for the sustainable development of the company's business.
Shen Chongfeng
Next page. In digital insurance segment, we have upgraded our claims core system over the past year.
Shen Chongfeng
With advanced technology, we provide customers with more intuitive and convenient remote survey services, which creates significant improvements in user experience during claims processing. 全新的线上理赔工作台不仅提高了后端理赔人员的工作效率,而且有效地降低了查看人力和运营成本。 Our new online claims panel not only improves the efficiency of back-end claims adjusters, but also effectively reduces survey manpower and operating costs.
Shen Chongfeng
Our innovative deployment model combines process localization and core eyes SaaS to provide more flexible and efficient support for our LiPay core system. At the same time, our long-term work platform
Shen Chongfeng
Our innovative deployment model combining in-house process and SAS core engine provides more flexible and efficient support for our claims core system. At the same time, our remote operation platform has added a new core module for claims settlement, making settlement operation more convenient and efficient. Next page. In Gamma Platform, we fully apply AI capabilities in all business links to further empower customers in risk management and sales, improving both their risk management efficiency and service and sales conversion rates. For example, our AI interview robot has over 20 AI vision and dialogue risk control capabilities and empowers customers to easily improve risk control efficiency with a vivid digital human interaction experience. At the same time, we have also launched an AI wealth management robot with over 30 card content templates, supports preset scripts, and provides personalized recommendations of wealth management products, helping account managers greatly improve conversion rates.
Shen Chongfeng
Next page. In 2023, the company's services in the Hong Kong market are gradually deepening, assisting the digitalization of Hong Kong. In terms of government supervision, the company provides a new IPO settlement platform for technical support in Hong Kong. has been officially launched. After the platform is online, the time between the new stock price and the stock price start trading is roughly divided into two operating days. The development of the Hong Kong capital market will lead to a major milestone event. In terms of financial institutions, the company is deeply aware of the actual needs of Hong Kong bank insurance customers. Using the EKYC to establish a market reputation and serve more than 10 financial institutions. At the same time, we will provide financial support, manage the opening, and seal system services, etc. In 2023, the company has gradually extended its services in Hong Kong, helping to accelerate Hong Kong's digital construction.
Shen Chongfeng
In terms of supporting regulators, the launch of Fini, the company's new IPO clearing platform for Hong Kong Stock Exchange, has significantly shortened the time between pricing and trading of new shares from T plus 5 to T plus 2, marking another major milestone in the development of Hong Kong's capital market. As for serving financial institutions, OneConnect has developed in-depth understanding of demands in banking and insurance customers from Hong Kong. While providing eKYC to over 10 financial institutions to establish our market reputation, we have also implemented solutions such as asset and liability management, management accounting, and risk management service system services in a number of financial institutions in Hong Kong. The company's credit reference services agency also cross-sells with other business lines, now providing end-to-end solution of CRA report plus EKYC certification plus account opening plus loan system for two note-issuing banks in Hong Kong. Next page.
Shen Chongfeng
In 2023, we will continue to upgrade our products and upgrade our products' competitiveness. to provide customers with a higher-value product service experience, and to build an external benchmarking project. The company's risk reduction team provides e-POWER system products for Hong Kong's risk reduction people and provides e-POWER system products for Hong Kong's risk reduction people and speeds up the process of hiring agents. The Southeast Asian team upgrades the professionalization of AI intelligent assistants to assist external customer information decision-making, and at the same time, to innovate the AI intelligent translation model in the domestic market, and to greatly improve the usability and friendliness of multi-language customers in different countries and regions.
Shen Chongfeng
We have continued to upgrade our products and enhance our competitiveness overseas in 2023, striving to provide customers with higher value product and service experience and creating overseas flagship projects. OneConnect's life insurance team provided EPOS insurance system for welding life insurance to reshape their policy insurance process. Our Southeast Asian team upgraded the professional configuration of AI assistance to help overseas customers make informed decisions and innovated the embedded AI intelligent translation module to greatly improve the adaptability and accessibility for multilingual customers in different countries and regions.
Shen Chongfeng
Next page. In 2023, we have worked tirelessly to gain the recognition and honor of many three-party institutions and comprehensive media, such as the China Financial Technology Enterprise Excellence Award, the ITC Global Financial Technology Bond 100 Award, the 20 Banker Financial Technology Innovation Excellence Organization, the Tai Lianshe Support Award, and the ITC先锋奖.
Shen Chongfeng
In 2023, our hard work has also won a number of recognitions and honors from third-party institutions and renowned media outlets. For example, the company has won KPMG's China FinTech Enterprise Excellence Award and being included in IDC FinTech Global Top 100 for many years in a row. Named as the 2023 Chinese Banker Top FinTech Innovation Institution, and won the 2023 Thailand Press ESG Pioneer Award.
Shen Chongfeng
Yi Zhangtong will continue to innovate in the technology and financial industry, focus on serving high-quality customers and product improvement, and meet the core demands of financial institutions for the improvement of the productivity of all kinds of businesses. He will continue to develop products with smart voice robots, all-round agents, and other new production-level products, and provide strong support for financial institutions to increase efficiency, service, cost reduction, and risk reduction. Thank you.
Shen Chongfeng
Since the beginning of 2024, we have seen a new round of scientific and technological revolution and industry transformation continue to deepen. New quality productive forces with artificial intelligence at the core is accelerating to lead the high quality development of industries. We firmly believe that the financial industry has the best use cases for artificial intelligence plus and will be a strategic focus for new quality productive forces. OneConnect will continue to empower the upgrade and transformation of the financial industry with technological innovation, focus on serving premium-plus customers and product improvement, and satisfy the core demands of financial institutions for various business productivity improvements. We also aim to develop products featuring new quality productive forces such as AI voice assistant and omni-channel agent solution, so as to improve efficiency and service, reduce cost and risk for financial institutions. Thank you.
Shen Chongfeng
Next, Mr. Luo will introduce the company's 23-year, full-year, and four-year specific financial performance.
Shen Chongfeng
Next, I'll hand it over to Mr. Luo to give you a detailed introduction of OneConnect Financials in Q4 and Q4 year 2023. Okay.
Luo
Thank you, Shenzhou. Good evening, everyone. I'm pleased to present our financial results for the year of 2023. We have accomplished a solid financial performance marked by significant progress in reducing losses. This achievement aligns with our strategic objectives of attaining mid-term profitability. While it is true that we encountered a decline in revenue over the past few months, it's during challenging periods like this that we have the opportunity to exhibit our resilience and capacity to adapt. We are steadfast in the commitment to exploring new opportunities evaluating our existing processes and implementing necessary adjustments to position ourselves for renewal growth in the future. Now, let's turn to our financial results. In 2023, we delivered revenue of 3.67 billion RMB, decreased by 17.8% compared to the last year. primarily due to a decline in transaction-based and supported revenue. Revenue generated from third-party customers decreased by 11.5% to $1.31 billion. We are glad to see gross margin of 2023 was 36.8% and improved by 0.2 percentage points on a year-over-year basis. gross margin was 40.3%, improved by 0.2 percentage points as well. We are thrilled to see net loss attributable to shareholders was 363 million as compared to 872 million for the prior year. Net margin attributable to shareholders improved by 9.7 percentage points. to negative 9.9% compared to negative 19.5% for the prior year. Now let's turn to our revenue mix by customer. In 2023, our third-party revenue was $1.31 billion, contributing 35.6% of total revenue. Third-party revenue growth remains a key focus of our second-stage strategy. We will continue to seek opportunities that align with our growth objectives, fueling further expansion of our third-party revenue streams. Revenue from LUFAX decreased 41.4 percent to $269 million and contributed 7.3 percent of our total revenue. The revenue decline from LUFAX was mainly due to LUFAX business operation optimization, resulting in lower demands for business origination and risk management services. Revenue from PN Group decreased 17.2% to $2.09 billion and contributed 57% of the total revenue. Revenue decline from PN Group was primarily due to a decline in transaction volume, such as operation support and risk management products. The services provided to PN Group are core technology solutions, which have been deeply embedded into PN Group's daily operations. Looking ahead, we will continue to fully support PN Group's business reform and look for new cooperations. Moving on to revenue mixed by business type. Implementation revenue decreased by 3.2% on a year-over-year basis to $835 million, mainly due to the lower revenue contribution from new customers, as financial institutions recovering from the pandemic still takes time. Revenue from business origination services decreased by 65.6% year-over-year to 132 million, primarily due to declined transaction volumes and our proactive actions of phasing out low-value products in the digital banking segment. Revenue from risk management services decreased by 22.8% year-over-year to 320 million, mainly due to reduced transaction volume in banking loan solutions because of lower than expected banking activities. Revenue from operation support services decreased by 24.5% on a year-over-year basis to $861 million, which was primarily caused by reduced demand from auto insurance customers and banking customers. Revenue from cloud services platform decreased by 5.3% on a year-over-year basis to $1.25 billion. Revenue for post-implementation support and other services decreased by 47% year-over-year to $127 million. The decline was primarily due to lower demand for auto ecosystem services. Revenue from POB, virtual banking business in Hong Kong, increased by 37% to 146 million as compared to last year. As you can see, we have been diligent in identifying and improving and performing areas of our business and focused on enhancing revenue structure. We will remain committed to integrating our product mix and adopting a stable and sustainable stock-based charging model. Let's turn to revenue mix by product sectors. Gamma platform sector, the focus of product innovation in recent years, contributed the biggest chunk of our revenue, declined 4.8% in 2023 to 1.92 billion and accounted for 52.4% of total revenue. The decline was mainly caused by reduced transaction volume of our open platform products. Digital banking sector, which accounted for 25.7% of total revenue, reduced by 35.3% on a year-over-year basis. to 942 million. That was mainly caused by reduction in transaction volume of our business origination and risk management services, which are related to our initiatives to phase out lower value products and the impacts from the lower than expected banking activities. Digital insurance sector which accounted for 17.9% of total revenue, decreased by 25.5% to $657 million in 2023, primarily due to reduced demand in auto ecosystem services. In each sector, we faced out products with low margins, products with low technological value added features, as well as those with limited potential for the growth in the future. In addition, virtual banking sector, as I just mentioned before, accounting for 4% of total revenue. Premium Plus customers. In 2023, the number of Premium Plus customers decreased to 208, as compared with 221 for the same period last year. primarily due to fewer customers in digital banking sector. We believe as we continue to advance our initiatives, we expect our customer base further expand and more premium plus customers will use our products and services. Now let's take a look at the gross margin. We are glad to see our gross margin Our gross profit reached 1.35 billion in 2023. Gross margin improved by 0.2 percentage points to 36.8%. On non-FRS basis, gross margin reached 40.3% as we continued our product integration and standardization. In the whole year of 2023, the continued efforts in product integration and delivery efficiency together with execution on quality growth helped improve our gross profit margin. We will stick to that strategy and continue the endeavor of achieving higher margins. Moving on to expenses and net loss attributable to shareholders. You can see that we are well on track to our mid-term break-even target. First of all, our research and development expenses came down 32.6 percent to $955 million from $1.42 billion in the same period of last year. As percentage of revenue, it decreased to 26 percent. In 2023, our continued investment in technological innovation and organizational capability remains unchanged. As our products were upgraded and integrated, we further improved our product delivery efficiency. Looking ahead, we will keep investing in research and development at a more measurable and suitable pace to enhance our product competitiveness in the market. Our sales and marketing expenses decreased 33% to $275 million compared with $411 million in 2022. The improvement in sales and marketing expenses mainly benefited from our continued efficiency-improving efforts and decrease in marketing and advertising activities. Our general and administrative expenses decreased 39% to $505 million from $825 million in the prior year. As percentage of revenue, it decreased to 13.8% from 18.5%. the decline in general and administrative expenses was primarily due to stringent cost control measures and a reduced labor cost. It was mentioning again that under a challenging business environment, our net loss attributable to shareholders improved substantially to negative 363 million from negative 872 million last year. And the corresponding net margin to shareholders improved 9.6 percentage points to negative 9.9%. This achievement reflects our commitment to enhancing our financial health and it demonstrates the effectiveness of our actions on our journey towards profitability. The next page demonstrates the trend of our net margin improvements to shareholders in the past few years. From this page, you can see a clear trajectory of our path to profitability over the years. Our results over the whole year continue to reflect that the effects of our disciplined execution of cost control accompanied by improved operational efficiency marking another milestone in the path to breakeven. We will continue our product integration efforts and strive to improve operating efficiency and business margin. Looking ahead, we acknowledge the prevailing uncertainties about the pace of full economic recovery. Despite these challenges, our primary focus remains on bolstering third-party revenue streams. Our commitment to improving gross profit margins, emphasizing cost control measures, and enhancing operational efficiencies remains unwavering as we strive towards sustainable profitability. Our dedication to achieving our long-term objectives and creating enduring value for shareholders remains resolute. The ongoing efforts to optimize operational efficiency and leverage our resources will persist as integral components of our strategic roadmap. With a proactive mindset and unwavering resolve, we are well positioned to surmount the current obstacles and emerge stronger in the forthcoming quarters. Next page, we list key financial metrics of 2023. We summarized FRS and non-FRS gross margin results for your reference. Lastly, and once again, I would extend my sincere appreciation to our employees, shareholders, and partners for their invaluable support and trust in our vision. Together, we will navigate through challenges, capitalize on opportunities, and drive sustainable growth and success. Thank you. Back to you, Ray.
Chan
Thank you, Mr. Law. Operator, we are open for questions.
Operator
Thank you. As a reminder, if you'd like to register an audio question, please press star 1 on your telephone keypad. If you change your mind, please press star 2. And please ensure you're unmuted when speaking. We have a question from Lydia Lin of Morgan Stanley. Lydia, the line is yours.
Lydia
Hello, I'm Lydia from Morgan Stanley. I have two questions. The first one is that the reduction in losses in 2023 is very large. How do we look at the future reduction in losses in 2024? What specific measures can be taken to ensure So the first question is, we have seen very impressive progress of cutting costs in 2023. how do we see the further space that the company can tackle in 2024, and what kinds of specific measures does the company have? And the second question is, I would like to have the management help us to summarize the generative AI application in the company's product profile, and what is the impact from this technology? Thank you.
Chan
Thanks, Lydia. The first question was taken by Mr. Luo, and the second one was taken by our CTO, Li Jie.
Luo
Thank you for the first question. In 2023, we will see a significant decline in the cost of labor and the efficiency of the delivery. Thank you for your question. So in 2023, through headcount optimization, improvements in delivery efficiency and reduction in expenses from R&D, sales and marketing,
Shen Chongfeng
We have greatly reduced our costs and improved metrics such as our gross profit margin. And all this can be seen from our financial metrics.
Luo
In 2024, we will continue to implement a strict cost management measure. In terms of costs and expenses, we will strictly control them.
Shen Chongfeng
For next year, we will continue with our cost control and efficiency improvement measures, and reduce costs in R&D, S&M, as well as G&A.
Luo
On the other hand, in 2024, in terms of resource use, Additionally, for the investment of our resources,
Shen Chongfeng
Next year, on the one hand, we will continue to improve resource allocation efficiency and fine tune our ROI management. On the other hand, we will aggregate our resources on quality products, continue to develop and upgrade products according to our development demands, and ensure our competitiveness in the market.
Luo
Cost control ultimately comes down to the sustainable development of our business. Therefore, we will use our resources more efficiently
Shen Chongfeng
That means we may invest them in more promising business lines, for instance, our overseas business. Thank you.
Shen
I would like to answer the second question, which is related to the potential impact of OC in the product applications related to artificial intelligence. We can see that this year's government work report first wrote artificial intelligence in the report. This not only marks the rise in the position of AI technology in the development of the country, but also indicates that our lives are about to face deeper changes. AI is a broader concept. It is an AI-based, driven technology that needs to be deeply integrated with finance, medicine, education, and other fields in order to promote the transformation and upgrade of the traditional industry.
Shen Chongfeng
I'll answer your question about OneConnect's applications of AI and its impact. This year, the government's work report included AI Plus for the first time, which not only shows increasing importance of AI in China's development, but also bodes more significant changes in our everyday life. Artificial Intelligence Plus is the broader concept which refers to artificial intelligence as the basic and driving technical force and the deep integration of manufacturing, finance, medical care, education, transportation, agriculture, and other fields so as to promote the transformation and upgrading of traditional industries. 其中金融業必將是人工智能家落地的。
Shen
the best scenario for the development of new productivity. Since the beginning of the OCA, OCA has been committed to innovation in technology, to upgrade the financial industry, to focus on serving high-quality customers and products, and to meet the core demands of financial institutions for the improvement of the productivity of all kinds of businesses. There are smart voice robots, all-powerful agents, and other products that serve new productivity, financial institutions,
Shen Chongfeng
The financial industry has the best use cases for Artificial Intelligence Plus and will be a strategic focus for new force productivity. OneConnect has been committed to empower financial industry upgrade and transformation, focused on serving our Premium Plus customers and product improvement. as well as to satisfy the core demands of financial institutions for various business productivity improvements. We provide products featuring new force productivity, such as AI customer service and omni-channel agent solution, so as to improve efficiency and service, reduce costs and risks for financial institutions.
Shen
OC has a backbone in the field of artificial intelligence. OneConnect has long developed strong capacity in artificial intelligence.
Shen Chongfeng
We have won the championships of well-known competitions at home and abroad, such as the third and fifth Chinese machine reading comprehension evaluation, the free text extraction track of the international semantic assessment competition. At a time when larger models see further breakthroughs, our AI team is also actively deploying the exploration and R&D of related technologies. Thank you.
Operator
Our next question comes from Yixuan Li of Guo Cai Unit. Yixuan, please go ahead.
Yixuan Li
I am Li Yixuan from China. I would like to ask the company's leaders two questions. The first question is related to the question I just asked. I would like to ask, if the company does not achieve the goal of making a large-scale financial model, how can it better play a role in the production of AI? How can we make the production of AI We are focusing on The first question will be taken by our CTO and the second one will be taken by Mr. Shen.
Shen
Firstly, I'll address your question about utilizing generative AI. One kind of AI
Shen Chongfeng
to apply AI capacities in all links of the financial industry business. So we offer fine-tuned financial scenario experience, AI experience to our customers.
Shen
Our AI AI products cover more than 20 scenarios such as customer service, marketing, and control. For example, our AI face-to-face robots have more than 20 AI visual and dialogue control capabilities. Our AI customer service solution covers customer service
Shen Chongfeng
sales and marketing as well as scenarios such as interviewing. For instance, our AI interview robot offers over 20 dialogue and image risk capacities. Through vivid human-digital interactions, we help our customers to improve risk management efficiency. Another example would be our wealth management tax robot, which offers over 30 content templates and supports preset scripts. So all these solutions will help our customers to improve their conversion rate.
Shen Chongfeng
The adjustments made by both Ping An Group and Ping An Bank are measures to cope with changing market trends.
Shen Chongfeng
Our relationship and cooperation with both Ping An Group and its associate companies remains unchanged.
Shen Chongfeng
Ping An Group is still our most important internal customer and also our most important tech partner.
Shen Chongfeng
我们与平安集团及其子公司的合作是深度绑定和持续的,目前双方合作良好。 Our in-depth cooperation with the group and its associated company aligns our interests together and is sustainable, but all sides are happy with our cooperation and relationship. 这次集团的内部改革呢, Internal adjustments actually bring us new business opportunities as we will be involved in many important projects. Thank you.
Operator
We have no further questions on the line, so I'll hand back to Rick for closing remarks.
Chan
Thank you. Thank you, everyone, for joining the call today. If you have any questions, feel free to contact our RRQ and appreciate your interest in following us and look forward to speaking with you again.
Operator
This concludes today's call. Thank you for joining. You may now disconnect your lines.
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