China Continues To Dominate Global FINTECH Industry

[ahojunk]

PBoC push gives blockchain tech a massive fillip
2016-11-28 08:50 | China Daily | Editor: Xu Shanshan

Digital currency, global payment systems are likely to be first segments to apply new way of sharing tamper-proof information

China is investing significantly to develop blockchain technology to reshape financial services. Digital currency and global payments may be the first applications.

This technology allows parties to carry out direct transactions without using an intermediary by providing a means for people to share reliable and tamper-proof lists of information known as distributed ledgers.

The People's Bank of China said earlier this month that it would recruit personnel to develop digital currency.

"Blockchain technology can be applied to many areas, and digital currency and global payment systems may be the first applications," said Xu Mingxing, CEO of a blockchain payment company OKLink.

Xu said blockchain technology is still at the early development stage and will be mature in the next two to three years, adding that developing digital currency with the blockchain technology is not difficult, but it is very important to control risks.

OKLink is a Beijing-based global business-to-business blockchain payment platform that cooperates with about 100 financial institutions with remittance licences in more than 20 countries and regions. "Our business is growing rapidly and we expect the transaction value of our platform will reach more than $100 million in 2017," said Xu.

Yao Qian, the central bank official leading the digital currency research center, said developing digital currency can make transactions more transparent and efficient and decrease costs of printing and transportation. China will first introduce the currency in certain money markets and promote its use in a gradual and cautious way.

According to a report of the World Economic Forum in August, international payments and wire transfers, which currently involve a lot of manual steps and fees, would be replaced by blockchain.

Several blockchain alliances have been formed to develop the technology. In October, Shanghai set up a Lujiazui blockchain alliance with 13 financial institution members. Its main research areas include renminbi cross-border payments and blockchain's application in a registration-based initial public offering system.

In April, a non-commercial organization, China Ledger Alliance, was set up to focus on research and development of blockchain applications. It is led by research and development company Wanxiang Blockchain Lab.

"Before full adoption of blockchain is possible, there are factors that need to be addressed, including an uncertain regulatory environment, lack of standardization efforts and the need for a formal legal framework," said Bob Contri, Global Financial Services Industry leader, Deloitte Global.

Huang Zhen, a professor of the law school of the Central University of Finance and Economics, said it is necessary for regulators to monitor blockchain activities and carry out appropriate regulations.

The report of the World Economic Forum said blockchain will fundamentally alter the way financial institutions do business around the world, but it comes with a set of risks that must be considered. These include errors in design, malicious behaviour as a consequence of human decisions, and potential gaps in security across all inputs and outputs.

 

[beijingwalker]

China becomes global FinTech leader
06 December 2016
SINGAPORE: China has overtaken the US and UK to become the world's leading centre of FinTech, thanks in part to the innovative approach taken by the country's top e-commerce players, a new report has revealed.

DBS Bank and EY, the professional services firm, said the unprecedented levels of FinTech adoption in China is being fuelled by unmet consumer needs, ready access to capital, as well as favourable government policies and regulations.

China's lead is also being facilitated by the sheer size of the market opportunities present in the financial services sector and, with GDP of £10.9tr in 2015, the country has a vast consumer base with new spending power, yet it has been under-served by the traditional banking system.

"The speed at which China's FinTech landscape has developed is truly remarkable," said Neal Cross, Chief Innovation Officer at DBS. "It's gotten this far because China's landscape has operated in a sandbox-like environment conducive for FinTech to thrive – a strong domestic market, coupled with a constant push for innovation and experimentation driven by leading giants, unhindered by international influence."

He added that leading Chinese FinTech companies have only recently begun to take centre stage at a global level, but this will be an ongoing trend in the years ahead.

"We can expect China's FinTech ecosystem to have a wide-ranging impact on global FinTech development," he said.

James Lloyd, the FinTech leader at EY Asia-Pacific, agreed that Chinese FinTech development is mostly characterised by the scale of unmet needs in the country.

"In addition, new providers are typically not constrained by the legacy infrastructure or regulations present in more developed markets," he added.

"China's unique mix of rapid urbanisation, massive (and underserved) market, e-commerce growth, explosion in online and mobile phone penetration, and customer adoption willingness have created a fertile ground for innovation in commerce, banking and financial services more broadly."

To give some idea of the scale of the trend in China, DBS and EY revealed that 40% of Chinese consumers use new payments methods compared with just 4% in Singapore.

In addition, more than a third (35%) use FinTech to access insurance products compared with 1%-2% in many Southeast Asian markets. There are also significantly higher rates of FinTech participation in wealth management and lending.
https://www.warc.com/LatestNews/News/China_becomes_global_FinTech_leader.news?ID=37860

 

[AndrewJin]

How Modi’s Currency Ban Is Helping Chinese Fintech Investors In India

 

[onebyone]

China going cashless thanks to fintech boom

The surge of fintech services is a growing headache for traditional banks which have been left far behind

Standing in line at a Starbucks in downtown Shenzhen, I suddenly realize that no one in front of me is paying with cash. They aren’t paying by credit card either. In fact, I can’t see a single customer holding a wallet or a purse. Instead, they just hold their mobile phones over a reader and – beep! – the latte is theirs.

“Almost no one uses cash here anymore,” says cafe manager Lily Li, adding that more than 80% of all payments in the coffee shop are made via mobile phones.

But it’s not just global chains that offer “m-payment” in one of China’s most technologically advanced cities. Out on the street, two women are selling noodles from a small stall during the morning rush. Amid the steam billowing from the big boiler and the smell of hot spices, I can hear the constant beeping of phones scanning the stall’s QR code.

Street food 3.0: Noodle stand using QR-code for m-payments. Photo: Johan Nylander

While digital payments are dominated by debit or credit cards in many Western countries, China’s consumers have jumped directly from cash to mobile.

Of the country’s 710 million internet users – more than the United States and Europe combined – the utilization ratio of mobile online payments stands at 57.7%. Put in plain English, the majority of people who go online are using their smartphones to pay for goods and services, primarily through Alibaba’s Alipay or WeChat’s payment service, according to a November report by consulting firm Ernst & Young and Singaporean bank DBS.

 

[onebyone]

“I can hardly remember the last time I used my wallet,” said Mofei Chen, founder and CEO of Money Bazaar, a peer-to-peer currency exchange platform.

Mofei Chen, founder and CEO of fintech startup Money Bazaar, at a co-working space SimplyWork. Photo: Johan Nylander
He is one of many new entrepreneurs in a Chinese digital financial services industry that is undergoing explosive development. The EY/DBS report says China has leapfrogged ahead to become the undisputed center of global fintech innovation and adoption, outpacing London, New York, Silicon Valley, Singapore, Hong Kong and other global fintech hubs by a significant margin.

Read: Travel giant seeks Shenzhen fintech boost
“Few foreigners realize how fast and advanced the development actually is in new payment features and mobile financial services in China,” Chen said.

Indeed, the world’s four most valuable fintech unicorns – a startup company worth more than US$1 billion – are Chinese. The largest is Ant Financial, an arm of e-commerce giant Alibaba, and is valued at US$60 billion. Second is the peer-to-peer lender Lufax (US$18.5 billion), followed by JD Finance (US$7 billion), a joint venture between e-commerce site JD and Tencent, and then instalment payment firm Qufenqi (US$5.9 billion).

China is also the world’s largest market for Bitcoin, accounting for 42% of all transactions using the digital currency during the first six months of 2016, according to Chainalysis.

The surge of fintech services is a growing headache for traditional banks which have been left painfully behind in the competition for e-commerce and new payment methods. These new services are dominated by the internet giants – Alibaba’s Alipay, which has more than 50% market share, Tencent’s WeChat Wallet, based on its popular instant messaging service, and the Google-like Baidu.

The big tech companies are also investing heavily in smaller startups to access the next generation of financial services, including blockchain technology, as used by Bitcoin, and artificial intelligence.

Foreign competitors are limited by government restrictions, while Chinese payment apps are being rolled out abroad, mainly in other Asian markets such as Hong Kong and Japan.

Meanwhile, China’s banking system remains relatively undeveloped. One in five Chinese adults don’t have accounts, while around 80% of small and medium-sized enterprises are not adequately served by banks. The new alternative financial firms, on the other hand, offer significantly better services and customer experience, lower fees and less bureaucracy.

“I hardly use my regular bank account anymore. My salary comes in at Alipay and I make most payments with the app. They also offer better interest rates than the regular banks,” said Allen Yu, a PhD in mathematics who runs MJL, a stock picking service based on quantitative analysis. “If I borrow money, I’ll go to a peer-to-peer platform, not a bank.”

MJL’s HQ … at SimplyWork co-shared office space. Photo: Johan Nylander
The interview with Chen and Yu takes place at SimplyWork, a co-shared office in one of Shenzhen’s buzzing high-tech parks. Here, fintech startups blend with e-commerce and venture capital firms. Young entrepreneurs can be seen lying on sofas with laptops on their bellies, while others are having animated conversations in small groups; toys and skateboards are strewn across the floor, and fluffy pet dogs and cats are playing under the tables. Enthusiasm and creativity abound.

“The tech scene is booming. Finance technology has become a part of all aspects of life,” says Yu.

SimplyWork co-shared startup space in Shenzhen. Photo: Johan Nylander
Still, China’s financial technology companies face many challenges, and so do their users. The government’s tightening grip on the internet, with censorship and individual control increasing significantly in recent years, threatens innovation and the development of new ideas. Also, thanks to the array of new digital financial services, it is easier for the ruling Communist Party to conduct massive intrusive surveillance.

Hong Kong-based news agency FactWire revealed in December that five Chinese mobile payment apps – WeChat, Taobao, Taobao World, Alipay and Tmall – already record sensitive information that people store in their mobile devices, which can be used to track and monitor personal activities.

Meanwhile, hustlers are flocking to the industry. Last year, about 900 peer-to-peer lenders went belly-up in China, with some owners taking the money and running. Authorities have conducted many crackdowns and introduced tougher regulations, such as against Bitcoin platforms to stop the digital currency being used to smuggle money.

Although venture capital has flowed into the sector, Chen says that investors have become more difficult to win over. “They are more rational today. Much risk capital disappeared during last year’s stock market crash,” he says.

On top of this, the technology is not always reliable. In demonstrating the efficiency of mobile payment apps, Chen offered to buy me a cup of coffee from a vending machine. After paying with his cell phone and pressing the button for espresso it was not coffee that came out – but milk.

“Oh, that was embarrassing,” he said, but quickly finds an explanation. “See, the machine is from Germany!”

China fintech facts
• Country is home to eight of the world’s 27 current FinTech “unicorns” – technology companies that investors value at more than US$1 billion.

• There were 710 million internet users as of June (more than the US and Europe combined), bringing the online penetration rate to 51.7%, from 1.8% in 2000 and 8.5% in 2005. At this pace, China will soon catch up with North America’s 89% penetration and Europe’s 73.9%.

• China is already the world’s largest and most developed retail e-commerce market, accounting for 47% of global digital retail sales – the result of a massive domestic retail market in a closed digital economy.

• The smartphone is becoming the universal internet access device. As of 30 June 2016, 656 million people, or 92.5% of users, were going online via connected devices, driven by the development of “Smart City” and “Wireless City” public access wireless networks in major cities.

• Individuals making online payments with mobile devices hit 358 million at the end of 2015. The 64.5% increase from a year earlier came despite rising concerns about the security of mobile finance activities. The utilization ratio of mobile online payments stood at 57.7%.

• Mobile banking continued to expand exponentially, with 6.3 billion transactions totalling 29.3 trillion yuan (US$4.4 trillion) in the second quarter of 2016.

Source: The Rise of FinTech in China, by Ernst & Young and DBS

http://www.atimes.com/article/china-going-cashless-thanks-fintech-boom/

 

[nature is]

Cash is no longer King.

 

[AndrewJin]

@Götterdämmerung might disagree.

 

[Götterdämmerung]

@Götterdämmerung might disagree.

I'm not the only one. Orwell's 1984 is a cashless society. In facts, with modern technology, it will be much worse.

 

[AndrewJin]

I'm not the only one. Orwell's 1984 is a cashless society. In facts, with modern technology, it will be much worse.

I don't read foreign novels.

 

[JSCh]

Chinese bank announces first blockchain financial service
(Xinhua) 19:07, January 10, 2017

The Postal Savings Bank of China (PSBC) announced Tuesday that it has become the first Chinese bank to use blockchain.

A PSBC asset management system using blockchain allows real-time information sharing and enhanced scrutiny among stakeholders.

Blockchain is a digital ledger system that uses sophisticated cryptographic techniques to create a permanent, unchangeable and transparent records of every transaction.

"Blockchain improves financial transaction efficiency," said Lyu Jiajin, head of PSBC.

Blockchain, the underpinning technology of digital currency, is expected to revolutionize the financial sector and is part of China's 13th Five-Year Plan for information technology.

 

[onebyone]

Half of global fintech investments are in Asia
By JOHAN NYLANDER JANUARY 23, 2017 2:23 PM (UTC+8)

Watch video of a panel discussion in Davos last week that reveals how China in particular is leaving the rest of the world behind on financial technology, with the mobile payment sector leading the way

China has quickly became the global frontrunner in financial technology and is leaving the rest of the world painfully behind.

Indeed, half of the global investment in financial technology is happening in Asia, according to the World Economic Forum. Most of these investments are in China.

In a panel discussion in Davos titled the Global Fintech Revolution, top Chinese and global financial players discussed the changing financial landscape and the possibilities and threats that lay ahead.

The Chinese fintech revolution is most evident when it comes to mobile payment, as the country is undergoing a groundbreaking shift away from cash to digital payments – a sector dominated by Alibaba’s Alipay or WeChat’s payment service.

“The new generation of financial systems will be more inclusive, focusing on the underserved or unserved, including small-to-medium-sized enterprises (SMEs). Many of them could not get access to financial services before. But today it’s different as we can bring financial services to underserved people”, said Eric Jing, Chief Executive Officer of Alibaba’s financial arm, Ant Financial Services Group, the world’s most valuable fintech unicorn at US$60 billion.

In one small county in Tibet, for example, 90% of overall electronic payments are made through mobile payments, Jing claimed.

China’s banking system remains relatively undeveloped. One in five Chinese adults don’t have accounts, while around 80% of small and medium-sized enterprises are not adequately served by banks.

Among the country’s 710 million internet users – more than the United States and Europe combined – the utilization ratio for mobile online payments stands at 57.7%. In other words, more than half of the online population are using their smartphones to pay for goods and services.

Speakers in the Davos discussion also included Henry Blodget (Chief Executive Officer and Editor-in-Chief, Business Insider Inc), Francisco González (Group Executive Chairman, Banco Bilbao Vizcaya Argentaria SA), Dan Schulman (Chief Executive Officer, PayPal Inc), David Craig (President, Financial and Risk, Thomson Reuters), and Cecilia Skingsley (Deputy Governor, Swedish Central Bank).

http://www.atimes.com/article/half-global-fintech-investments-asia/

 

[ito]

After the note ban in India, Fintech companies made billions of dollars. Now every second startup in India has something to do with Fintech

 

[TruthHurtz]

The Finns really have an interest in Asia!

 

[ahojunk]

‘Chinese Dragons’ Overtake U.S. in Financial Tech Investment
Robert Hackett. Fortune.com
Jan 24, 2017

China has unseated North America as the global investment leader in financial technology, or "fintech," according to Citigroup's (C, -0.44%) latest report on "digital disruption."

The researchers attribute the power shift to the rise of what they term "Chinese dragons," an industry term for the biggest upstarts in Asia. Think of Ant Financial, the payments spinout of Alibaba (BABA, -0.66%), as well as Lu.com, JD Finance, and Qufenqi, emerging eastern juggernauts that are generally less familiar to consumers in the west.

As the report's authors summed up 2016: "The Chinese dragons roared and some previously feted FinTech leaders wilted." (You can read more about Citi's own efforts to embrace fintech in this Fortune feature from June 2016.)

China accounted for more than half of all fintech investments globally in the first nine months of last year, the report said. Specifically in terms of venture capital, the country more than doubled its worldwide share of the investment category, rising to 46% of the global total versus just 19% the same period in 2015.

The U.S., meanwhile, sunk to 41% of the global total from 56% during the same period in 2015, putting it behind China.

Screenshot of Citi report
A number of factors have placed China at the forefront of financial innovation in recent months.

First, mishaps at fintech upstarts in the Unites States have cooled investor enthusiasm in the private markets there. Once-soaring firms such as Zenefits, Lending Club, OnDeck, and others, have run afoul of regulation, struggled to meet expectations, or both.

In China, the biggest fintech accelerants involve the concurrent explosion of Internet connectivity through mobile devices and the rise of a middle class. This revolution has created an opening for new businesses, filling a void left by incumbent financial firms, which are more accustomed to working with state-owned entities than ordinary consumers.

It also helps that China has "light regulatory touch, at least initially," per the report.

While the U.S. still boasts more fintech "unicorns," startups valued at $1 billion or more, the concentration of wealth is greater in China. The dragons are lately raising more funding per round and achieving larger private valuations than their western kin.

For instance, Lu.com, JD Finance, and Qufenqi raised rounds of $1.2 billion, $1.0 billion, and $0.45 billion respectively last year, making them the global fundraising leaders in fintech.

Furthermore, no unicorns even come close to touching Ant Financial's private valuation of $60 billion. (San Francisco-based Stripe is the U.S.' highest valued fintech unicorn, leaping to a private valuation of $9 billion from $5 billion only after a November raise, which fell outside the purview of the report's nine month period.)

Another difference? Whereas fintech upstarts in the U.S. and elsewhere have been picking off niche areas of to specialize in (e.g. lending, insurance, and wealth management), the Chinese giants are taking a broader approach to build "one-stop financial shops."

.

 

[ahojunk]

China takes fintech sector by storm
2017-02-03 08:20 chinadaily.com.cn Editor: Feng Shuang

Chinese shoppers can now enjoy a real-time VAT refund service via their mobile phones at three airports: Milan Malpensa, Munich and Helsinki, saving them weeks of waiting time if receiving refund by card.

The announcement, made on Thursday by Chinese fintech firm Ant Financials' payment arm Alipay, is the latest milestone in Chinese fintech companies' overseas expansion. Last month Alipay collaborated with Finnish mobile payment provider ePassi to begin taking mobile payments for shopping and services on Finnair's flights, marking the first ever mobile payment service in air.

"In the fintech and mobile internet sectors, China is a global leader thanks to business, innovation, market size and population density", said Alexander Yin, chief financial officer of TCG, parent company of the Finnish mobile payment provider ePassi.

The fintech sector grew rapidly in the wake of the 2008 financial crisis as the downturn cast traditional banking models into doubt.

China's strong start-up culture, significant venture capital availability and need for alternative financing have all contributed towards its fintech boom.

A 2016 report by KPMG - a professional service company and one of the Big Four auditors - and the Australian investment firm H2 Ventures notes that five of the world's top 10 fintech firms are Chinese. Ant financial topped the list. Another report by EY noted China has eight of the world's 27 fintech unicorns - start-ups worth more than $1 billion - and last year received more than 2 billion pounds of investment.

The UK has signed an agreement with China to help cross-border fintech investment in November 2016. The Irish Minister for Financial Services Eoghan Murphy also recently led a delegation of fintech firms to visit China in search of opportunities along the Belt and Road countries.

Other notable Chinese fintech firms expanding into the UK include big-data firms Wind Financial Information and BBD, both of which established London operations last year.

BBD, known for its innovative data analysis algorithms, is now developing indexes specific to the UK and European markets, with one index assessing credibility and risk profile of UK crowd funding platforms and companies, expected to be launched in the second half of 2017.

Wind Financial Information, dubbed the "Chinese Bloomberg terminal", is eyeing opportunities to sell its data on Chinese and Asian asset classes including equities, bonds, funds and commodities to European investors.

Thomas Zhang, General Manager of Europe at Wind Financial Information, said: "We are seeing more interest in China's markets from global institutional investors. If China's A-share is admitted into the MSCI index one day, there will be a further boost to the global demand for China-related financial data."