Chinese Bankers Foresee Rise in Fintech Subsidiaries

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Members of China’s banking sector expect domestic lenders to continue to launch their own fintech subsidiaries in order to shore up their competitive capability.

A raft of Chinese banks have established their own fintech subsidiaries since Industrial Bank first kicked off the trend in 2015.

These banks include China Construction Bank, Ping An Bank, China Everbright Bank and China Merchants Bank.

Member of the banking sector in China say that the establishment of independent fintech subsidiaries by Chinese lenders is an inevitable trend, and foresee the emergence of a greater number of such entities in future.

This will lead to the creation of fintech companies that are more closely aligned to the established financial sector than those launched by internet giants such as Alibaba or Tencent.

While online giants may hold the high ground when it comes to technological expertise, fintech subsidiaries launched by conventional lenders have a better understanding of the services needs of banking sector customers as well as greater practical expertise.

Yin Hong, vice-head of the ICBC Financial Research Institute, said to Securities Daily that at present and in future commercial banks will face the challenges brought by the rapid growth of fintech, and that lenders will need to orient themselves towards the “four becomings,” that will see them “shift models, becoming more comprehensive, become more international, and digitise.”

According to Yin the core goal of Chinese banks in future will be to use fintech to identify long-tail customers, promising small and medium enterprises, and the risk levels of customers in comparatively high risk emerging industries and sectors, in order to raise their risk management capabilities, as well as provide higher quality products and services.

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