One of China’s leading finance publications has just released a far-reaching report on the state of the country’s fintech sector.
The “2018 China Fintech Development Map” (2018中国金融科技发展地图) released by 21st Century Business Herald seeks to provide a comprehensive portrait of the Chinese fintech space, examining 120 of the country’s leading fintech companies and conducting interviews with a slew of leading bankers and executives.
According to the report Beijing, Shanghai, Shenzhen and Hangzhou have emerged as China’s leading hubs for the fintech sector.
Beijing is host to 37 of the country’s top fintech firms, with a significant number of internet giants, big data and risk control service companies.
Shanghai comes in second place with 33 fintech firms, with a focus on the banking sector and online wealth management companies.
In third place with 23 leading fintech companies is Shenzhen, while Hangzhou is host to 11, including P2P lending platforms and wealth management platforms.
The report points to Guangzhou, Nanjing and Chongqing as hosting rapidly emerging fintech companies.
According to the report a total of 484 fintech companies in China sought equity financing in 2017, for a year-on-year decline of 247 companies, raising a total of 35 billion yuan, for a YoY fall of 38.2 billion yuan.
With regard to offshore listing, in 2017 four of China’s top fintech companies were listed on the New York Stock Exchange, two on NASDAQ, and one in Hong Kong.
The report highlights six major trends for China’s fintech sector going ahead:
i) Trend towards mobile devices.
“Major multi-national financial institutions, as well as smaller municipal commercial banks and rural banks in China’s second and third-tier cities have all made mobile strategies part of their key strategic goals for the next three to five years.
“Mobile phones have become the number one channel – China has 800 million smartphone users, who on average look at their mobil advices 150 times each day.
“China’s per capital mobile payments rate is 70 times that of the US, with the era fast approaching when the mobile phone is a bank and an insurance company.”
ii) Banks focus more on retail services, data set to become growth driver.
“Data will become a strong growth driver…more and more banks are realising that a future driver of profit growth is retail services.”
iii) Further integration between banks and fintech companies
“Strict regulation clearly demarcates [finance and technology], while also creating the conditions for further co-operation and integration between the two.”
iv) Artificial intelligence will lead to “multi dimensional upgrade” of finance.
“AI will bring about a revolution in customer experience…facial recognition payments, voice recognition and machine interactions will make the customer experience more secure and convenient than ever before.”
The report expects AI to become a key driver of risk control, as well as new technologies such as deep learning to serve as a driver for innovation in banking services.
v) A rising percentage of non-core systems will shift to the cloud.
Chinese regulators have required that the banking sector “fully transfer key information systems for internet usage to cloud platforms, as well as transfer no less than 60% of other systems during the 13th Five Year Period.”
vi) The blockchain will become the standard technological benchmark for cooperation in the financial sphere.
“In future the blockchain will become the infrastructure for establishing trust links in the financial sector…in a multi-instituional and multi-organisational as well as cross-institutional and cross-organisational environment, blockchains can create a string of reliability.”
