A new report on the fintech sector from PwC China points to big data risk control as a key area of future development.
Over half of respondents to the “China Fintech Survey Report” (中国金融科技调查报告) pointed to big data risk control as being the one area where China will assume a dominant global role after taking the international lead in mobile payments.
The majority of survey respondents believe that big data analysis will be the focal point of investment by traditional financial institutions in the near future, with fintech companies endeavouring to obtain the favour of investment firms.
The difficulty of obtaining financing is set to increase, however, as Chinese regulation intensifies and competition heats up.
The survey found that respondents generally hold a “cautious” attitude towards blockchain technology, believing that application prospects remain unclear.
Respondents see great potential in cloud computing despite the belated emergence of the sector in China.
The report points out that fintech will bring new sources of systemic risk, and that traditional financial institutions, fintech companies as well as regulators will need to acquire a deep understanding of the opportunities and challenges that lie ahead.
According to the report future fintech innovations will revolve around the 3 E’s of efficiency, experience and ecosystems, and involve a symbiotic relationship between established financial institutions and new fintech players.
“The major shock that fintech will bring is to cause closed, traditional financial institutions to gradually shift towards an open industry chain ecosystem model,” said PwC China partner Zhang Lijun (张立钧) according to domestic press reports.
“Traditional financial institutions and fintech companies will become the constituent parts of a financial sector ecosphere…both sides possess intense willingness to cooperate, yet during the process of actual cooperation they still need to deal with challenges arising in the areas of management culture, regulation, commercial models and systems.”
PwC also expects regulators to rapidly step up scrutiny of the Chinese fintech sector, with compliance emerging as key factor for the competitiveness of company.
“Strict fintech regulation is both widely anticipated as well as the general trend,” said PwC China partner Wang Jianping (王建平).
“An environment of ongoing strict regulation is of benefit to standardised operation and risk reduction in the fintech sector.”
“The future leaders of the fintech sector will definitely be those enterprises that are capable of effectively satisfying regulatory requirements and changing from passive to active.
“For this reason traditional financial institutions and fintech companies should use technology to expedite compliance, and explore related response policies.”