Leading Chinese banks are lagging far behind international lenders when it comes to fintech investment levels.
A recent report on global digital banking from McKinsey and Company found that leading international banks are investing as much as 17 – 20% of their pre-tax profits into digital banking and fintech transition and innovation.
US banking giant JPMorgan Chase made tech investments of USD$10.8 billion in 2018, equivalent to around 10% of total operating revenues, or approximately 40% of net profits.
In sharp contrast leading Chinese lenders such as Bank of China, China Merchants Bank and China Everbright Bank are investing only one to two percentage points of their net profits into fintech research and development, according to a report from Xin Jinrong (馨金融).
Bank of China recently announced that it would ensure that annual investment into fintech would not be less than 1% of group operating revenues for the preceding year.
China Everbright invested just 1% of net profits into fintech in 2017 and preceding years, a figure which it has since adjusted upwards to 2% for 2018.
China Merchants Bank has attracted much attention for its fintech adoption efforts, yet in 2017 its investments in a specialist fintech innovation fund amounted to just 1% of pre-tax profits (approx. 790 million yuan) for the preceding year, while in 2018 this figure has since been lifted to 1% of operating revenues (2.21 billion yuan).