Fintech in China Expected to See 1.97Tn Yuan in Annual Revenue by 2020, Reshape Micro-enterprise Finance

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Leading members of China’s financial sector expect fintech to completely reshape the provision of funds to small and micro-sized businesses.

Speaking at the 2018 Tianfu Financial Forum (2018天府金融论坛) held on 26 October, members of industry said that financial institutions in China were using big data, cloud computing, artificial intelligence and other technologies to improve the precision of the services they provide to small and micro-enterprises, as well as resolve the difficulties that such businesses have long experienced in obtaining financing.

Data from state media indicates that from 2013 to the present China’s fintech sector has seen average per annum growth of over 50%, with revenues expected to exceed 1.97 trillion yuan by 2020.

Hu Hao (胡浩), the vice-head of Industrial and Commercial Bank of China (ICBC) said that fintech has already become a key component of the lender’s future strategies.

“The banking sector must seize fintech development opportunities, and achieve a shift from experienced-based judgment to the use of data, in order to more accurately portray customers and identify risk.”

Yang Yu (杨毓), vice-head of China CITIC Bank, said that the use of fintech to improve financial inclusion would lie at the crux of the competitiveness of Chinese banks in future.

“Only by engaging small and micro-enterprises and financial inclusion will it be possible to to improve bank competitiveness,” said Yang. “However, the reason that achieving this is difficult at present is that in the past the banks have taken losses, and failed to find the path to a solution.

“Subsequently it has actually been Ant Financial that has shown us the way, which is fintech. This perhaps is the only road.”

Yang Yu said that China CITIC has established an innovation committee to engage in research into the development of financial inclusion, with a focus on the use of technology.

China CITIC has also recently launched the “CITIC Big Brain” (中信大脑) and established CITIC aiBank, which Yang said has used fintech to expand its customer base and reduce operating costs.

Since the start of 2018 China CITIC effective financial inclusion customers have increased by nearly 30,000 to approach 80,000 in total, while its rates on loans are lower than the industry average. The bank claims it has succeeded in reducing costs while raising quality.

Ant Financial vice-president Peng Yijie (彭翼捷) said in the keynote speech that Ant Financial is using big data and internet technology to provide “310” lending services to rural Chinese, which refers to the 3 minutes it takes to apply for a loan online, the one second it takes for funds to be provided, and “zero” staff required to process the loan.

 

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