Joint-stock Banks Lead Founding of Fintech Subsidiaries

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A new report on fintech subsidiaries in China’s banking sector points to the leading role played by the country’s joint-stock lenders.

The report from Wacai Research (挖财研究院) said that fintech companies in China’s banking sector can be divided into two categories – the first being fintech subsidiaries directly established by banking sector financial institutions, and the second being direct or virtual banks.

Joint-stock banks have thus far played a leading role in the establishment of fintech subsidiaries, founding five out of six such companies in the sector.

“Joint stock banks are currently the main force for the establishment of fintech companies in terms of both willingness and capability,” said the report.

Industrial Bank took the lead in the founding of a banking sector fintech subsidiary, with the establishment of CIB Fintech (兴业数金融) in December 2015, in collaboration with three other companies including Global Infotech, Shenzhen Kingdom Sci-Tech and Fujian Newland Yunshang (福建新大陆云商).

In the same month Ping An Insurance launched One Connect (金融壹帐通) to focus on the five core technologies of artificial intelligence, big data, the blockchain, the cloud and financial applications, as well as provide fintech services support to other financial institutions including banks.

China Merchants Bank established fully invested subsidiary Zhaoshang Cloud (招商云) in February 2016, positioned as a cloud and tech services provider for other banks, while in December of the same year China Everbright Group founded China Everbright Technology Limited (光大科技), to serve as a platform for pursuing a new growth model of “finance + the internet,” and “the internet + finance.”

China Minsheng Bank announced the founding of Minsheng Keji (民生科技) in May 2018, to drive the establishment of Minsheng as a “fintech bank,” as well as provide fintech solutions and specialist tech products to small and medium-sized financial institutions, private companies and small and micro-enterprises.

China Construction Bank is the only big state-owned bank to have launched its own fintech subsidiary to date, establishing Jianxin Jinke (建信金科) in April 2018 as a fully invested subsidiary.

The report says that these banking sector fintech subsidiaries fall in one of three categories:

i) Spun-off IT departments that have been converted into independent fintech companies, such as Jianxin Jianke and Minsheng Keji;

ii) Fintech service providers that deliver cloud services and technical support to other financial institutions or companies, such as CIB Fintech, One Connect and Zhaoshang Cloud;

iii) Group integrated fintech companies that mainly provide services for financial operations within a given financial conglomerate, such as China Everbright Technology.

 

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