China Continues To Dominate Global FINTECH Industry

[ahojunk]

Shanghai will be the biggest financial center in the world. 10 times bigger than the second.

Don't brag without any supporting evidence.

 

[TaiShang]

Mainland turns top fintech destination
By LIN WENJIE and DUAN TING in Hong Kong | China Daily | Updated: 2017-04-07

Staff members work at a fintech incubator in Qingdao, Shandong province, March 28, 2017. [Photo/VCG]

The Chinese mainland overtook the United States as the No 1 investment destination in financial technology or fintech, according to Citi GPS, a research team under Citi Group.

According to a Citi GPS research report, in the first three quarters of 2016 the mainland accounted for over 50 percent of the world's total fintech investments.

In fact, the Chinese mainland was the only major place where fintech investments showed a major increase last year－doubling in the first nine months versus the same period in 2015, whilst investments in the US and Europe declined 38 percent and 27 percent respectively.

In a separate report by consultancy firm Accenture, global fintech business venture firms grew 10 percent last year to $23.2 billion, fueled by huge investor appetite in the Chinese mainland and Japan.

Experts attributed the skyrocketing Chinese fintech investments to a unique combination of factors including a rapid spread in digital technologies with a simultaneous rise in its mass middle classes, along with the fact that the old banking industry was poorly prepared for the new technologies.

"To push the development of fintech, you need entrepreneurs and funding," said Ronit Ghose, head of the Citi GPS research team.

The Chinese mainland has a much larger base of entrepreneurism than Hong Kong, Singapore or Europe, even though its venture capital system is yet to become well-developed, he noted.

For years, mainland banks focused only on large corporate clients, such as State-owned enterprises and property developers, with the growing digitally-enabled middle classes being underserved. Fintech has now grabbed that client base, he said.

But Ghose also pointed out that investments from the mainland fintech industry last year seemed still to be concentrated on only big companies, such as JD Finance and Lu.com, squeezing out opportunities for small and medium-sized enterprises.

"One potential risk for China's fintech market is the lack of diversity," he said. So the government should encourage diversity in the fintech sector to ensure the industry's healthy development, he added.

Banks are fighting back by arming themselves with fintech. Since November, the Bank of China (Hong Kong) has been working on the utilization of blockchain, artificial intelligence, big data analysis and vein recognition technology in its banking business.

Rocky Cheng Chung Ngam, general manager at the information technology department at the bank, said there was big competition between the banks and third－party payment companies.

He said internet companies, such as third-party payment companies, had developed a very large client base because they were more closely linked with the clients in their daily life. Some third-party payment companies have grown into financial empires, such as Tencent's online banking affiliate WeBank.

 

[Shotgunner51]

Technology
China: The World’s New Fintech Leader
April 12, 2017

​

By Alexander Jones, International Banker

The centre of financial technology (or fintech) is migrating eastwards. In November 2016, a report jointly produced by professional-services firm Ernst & Young (EY) and leading Singaporean bank DBS stated in no uncertain terms that China has now leapfrogged ahead of global technology hubs such as Silicon Valley and London to become “the undoubted centre of global fintech innovation and adoption”. Multiple fintech hubs have now emerged in China alone, most prominently in Shanghai, Hangzhou, Beijing and Shenzhen, which has led to EY and DBS concluding that the country now clearly leads the way in fintech and is “revolutionising many aspects of financial services”.

Indeed, many of the figures coming out of the fintech world appear to support the report’s assertions. According to Citigroup analysis, for example, China accounted for more than 50 percent of global fintech investments across the first nine months of 2016, as well as doubling its investment from the same period in 2015. It was also the only major global region during this period in which fintech investments increased—contractions were recorded everywhere else—implying that China is putting more daylight between itself and the rest of the world.

China also dominates the fintech “unicorn” space—those startups valued in excess of $1 billion. The country is home to eight of the world’s 27 unicorns. Although the US houses a greater number of such firms at 14, they are valued at “only” $31 billion and have raised $5.7 billion. At a valuation of nearly $100 billion, and having raised $9.4 billion, China’s eight unicorns completely dwarf their American counterparts. What’s more, the world’s four biggest fintech unicorns are all Chinese—Ant Financial (valued at $60 billion), Lufax ($18.5 billion), JD Finance ($7.0 billion) and Qufenqi ($5.9 billion).

What is behind China’s steep ascent?

According to the July 2016 report from McKinsey “Disruption and Connection: Cracking the Myths of China Internet Finance Innovation”, a handful of key reasons underpin China’s startling appetite for fintech. Firstly, the sector has been well supported by the country’s regulatory framework. Premier Li Keqiang has repeatedly made calls in favour of online finance within the annual “Report on the Work of the Government”, such as stating that he wants “to seek a healthy development road under the backing of proper regulatory coordination and supervisory mechanism”. This inclusive, tolerant regulatory environment has helped to foster a culture of innovation and entrepreneurship among China’s tech crowd, in addition to encouraging the larger existing corporations to become more innovative themselves and further explore potential applications of digital finance. Indeed, the fact that the government has officially published guiding opinions and policies for Internet finance also provides a useful degree of clarity to China’s new start-ups in relation to what they can and can’t do.

Secondly, China’s population appears to be increasingly open to using online finance, with evidence mounting that they are eager to incorporate the support provided by various fintech services into many different aspects of their lives, including online banking, payments, transfers, crowdfunding, investing and shopping. Indeed, e-commerce in China is estimated to be a RMB 16 trillion market, and is now transforming the consumption habits of a rapidly growing number of Chinese people. McKinsey has calculated that since 2011, the Internet economy in China has grown by more than 50 percent, and now constitutes a hefty 7 percent of China’s gross domestic product (GDP); in comparison, it’s only 4 to 5 percent for the US, Japan and Germany. In addition, it is estimated that approximately 40 percent of Chinese consumers are using new payment methods, dwarfing the 4 percent recorded in Singapore, while 35 percent use fintech to access insurance products, compared to just 1 to 2 percent in Southeast Asia. Smartphones and social media continue to become increasingly ingrained into Chinese consumer culture, with more than 30 percent of the population currently using digital methods (such as mobile phones and tablets) to make payments. An online investment culture has also taken off, with Internet-based wealth management and trading estimated to be drawing in around 100 million users.

A deep-seated mismatch has also emerged in recent years between the population’s strongly expanding demand for financial products and the limited solutions being provided to them by traditional financial-services institutions. As such, distinct market segments are now grossly underserved by such institutions. Banks often set their minimum threshold at RMB 50 thousand when offering wealth-management products, a level that China’s low-income households (who comprise nearly 50 percent of the total population) can ill afford. In addition, a significant one in five adults in China does not have access to formal banking services, whilst only 8.1 commercial bank branches and 55 ATMs per 100,000 people are in circulation. In the US and Canada, those figures are substantially higher, at 28.2 branches and 222 ATMs; and are at 28 branches and 81 ATMs on average in Europe. This markedly underbanked segment of China’s society, therefore, continues to opt with more enthusiasm for the inclusive financial solutions being offered by digital finance companies. China’s rural migrant workers, who work in urban areas and who number a sizeable 277 million, are just one example of a segment of China’s population who are increasingly moving towards online finance, often as a way to send their remittances back to their rural homes in an efficient and inexpensive manner.

China’s relatively high banking-sector profitability levels continue to enable them to embark on more risky “tech-ventures”, which is another crucial factor driving the country’s fintech boom. Comparing the return-on-equity figures of China’s biggest banks, which tend to average around 15 to 20 percent, with the sub-10 percent routinely experienced by US banks and the sub-5 percent that is now the norm in much of Europe, China’s higher profitability allows its banking sector to devote more resources towards developing its technological capabilities, and making riskier investments in digitisation.

Other than consumers, China’s smaller-end businesses are also responsible for a significant portion of fintech growth in the country. According to the EY and DBS report, small and medium-sized enterprises (SMEs) receive only 20 to 25 percent of the total loans disbursed by banks, in spite of the fact that they account for 60 percent of GDP and 80 percent of urban employment, and they also contribute a hefty 50 percent of China’s total fiscal and tax revenues. Given their often opaque or non-existent financial histories, moreover, SMEs also tend to receive unfavourable terms from banks, with loans sometimes being twice as expensive as that offered to larger corporations. As such, SMEs are now moving in increasing numbers into the fintech arena in order to obtain better finance solutions for their specific business needs.

The “holy trinity” of Chinese fintech

A significant chunk of China’s fintech success in recent years can be credited to Baidu, Alibaba and Tencent. Collectively referred to as BAT, the three tech giants control an intimidating share of China’s e-commerce landscape, as well as online messaging and Internet search platforms. They also control approximately half of the Chinese third-party payments market; whereas their US equivalents—Alphabet, Apple, Facebook and Amazon—control a mere 2 percent, as per recent analysis by Citigroup. Alipay from Alibaba is easily the most popular in China and covers almost 80 percent of the country’s total mobile payments; while Tencent’s flagship application has a customer base of more than 500 million people, who use the app for daily chatting, payments and wealth management.

Through numerous subsidiaries, both in China and now increasingly all over Asia, BAT’s global fintech presence only looks set to become more visible. Alibaba intends to generate more than half of its revenues from overseas, and last April it acquired a controlling holding in Southeast Asia’s e-commerce giant Lazada Group for approximately $1 billion. Alibaba also collaborated with Foxconn and SoftBank in the previous year to put $500 million into India’s leading e-commerce platform Snapdeal, as well as investing nearly $700 million into India’s largest mobile wallet, Paytm, during the same year. BAT members are also aggressively investing in some of the most exciting technologies, which are expected to play crucial roles in the financial-services offerings of tomorrow, such as blockchain and artificial intelligence.

Payments dominate China’s fintech landscape.

China’s fintech boom can be traced to explosive growth in a selection of key specific sectors. Payments/e-wallets is the dominant sector at present, with China having 380 million people shopping online via their phones, as well as nearly 200 million people using their phones as a wallet for in-store payments. Alipay (of Alibaba’s Ant Financial) and Tencent’s Tenpay are the sector’s clear market leaders, and they are capitalising on the growing trend of people in China preferring to use their mobile phones to manage their funds, instead of having to visit their bank branches.

The popularity of online banking is also exploding, with both China’s tech companies and its existing banks making a foray into this world, often in joint initiatives. Baidu provides just one such example, having partnered with CITIC Bank in order to provide online financial products, including co-branded credit cards. Alibaba, meanwhile, launched MyBank in 2015 in order to provide smaller loans to the aforementioned underbanked as well as a personal fund that promises to beat the returns offered by banks. Tencent opened China’s first major online bank at the start of 2015—WeBank can be easily accessed by the 846 million active users of Tencent’s WeChat, as well as the 877 million users on its instant-messaging software QQ.

P2P (peer-to-peer) lending also deserves a mention, with China almost exclusively leading Asia’s growth in platforms designed to deliver credit to individuals and SMEs. According to a 2016 report from Cambridge Centre for Alternative Finance (CCAF), China accounts for 99 percent of the total P2P transaction volume in the Asia-Pacific region, and is also the world’s largest P2P market, valued at $101.7 billion in 2015. It is estimated that more than 4,000 P2P lenders operate in China today compared to just 50 providers only five years ago.

Analysts expect China to continue leading fintech in 2017 and beyond. According to Citigroup, China’s rapid digitalisation, coupled with the unabated rise of its middle class, will push more people towards online finance in the face of a decline in traditional financial institutions that will continue to experience increasing competition from “entrepreneurial e-commerce and social media ecosystems”. While much of the rest of the world has focused on fostering a broadly competitive fintech environment, moreover, China’s digital culture is significantly more collaborative, which is now seemingly reaping benefits for the country. In early January, for instance, a consortium of major Chinese state-owned companies established the $1.5 billion Asia FinTech Merger and Acquisition Fund of Funds, primarily to ensure that each specific sector within China’s fintech industry is able to operate with sufficient capital. Such sectors include artificial intelligence, mobile payments and blockchain technology. Indeed, China’s blockchain market itself provides an appropriate illustration of such collaborative power, with the consortium ChinaLedger now seeking to provide an industry-wide foundation for blockchain-based startups to receive support.

It is also worth emphasising that while the rest of the world would do well to take notes on the meteoric rise of China’s fintech scene, replicating such growth and development will be close to impossible for many regions, especially the West. China is building its fintech dominance on a combination of favourable supportive factors that simply don’t exist elsewhere at present. Rapid urbanisation, an underbanked population, underserved SMEs, a supportive regulatory environment and a boom in e-commerce and mobile penetration are all combining to create ideal conditions for accelerated expansion in online finance. Many of such factors are non-existent in other countries.

Nevertheless, China’s dominance in fintech is now there for all to see. As the country continues to experience significant growth, urbanisation and digitisation over the next few years, it would not be surprising if this dominance continues to grow ever more imposing. As such, one should begin looking to the East, rather than the West, to access many of the world’s latest and most exciting technology offerings.

https://internationalbanker.com/technology/china-worlds-new-fintech-leader/

 

[TaiShang]

View attachment 390527

Technology
China: The World’s New Fintech Leader
April 12, 2017

View attachment 390528​

By Alexander Jones, International Banker

The centre of financial technology (or fintech) is migrating eastwards. In November 2016, a report jointly produced by professional-services firm Ernst & Young (EY) and leading Singaporean bank DBS stated in no uncertain terms that China has now leapfrogged ahead of global technology hubs such as Silicon Valley and London to become “the undoubted centre of global fintech innovation and adoption”. Multiple fintech hubs have now emerged in China alone, most prominently in Shanghai, Hangzhou, Beijing and Shenzhen, which has led to EY and DBS concluding that the country now clearly leads the way in fintech and is “revolutionising many aspects of financial services”.

Indeed, many of the figures coming out of the fintech world appear to support the report’s assertions. According to Citigroup analysis, for example, China accounted for more than 50 percent of global fintech investments across the first nine months of 2016, as well as doubling its investment from the same period in 2015. It was also the only major global region during this period in which fintech investments increased—contractions were recorded everywhere else—implying that China is putting more daylight between itself and the rest of the world.

China also dominates the fintech “unicorn” space—those startups valued in excess of $1 billion. The country is home to eight of the world’s 27 unicorns. Although the US houses a greater number of such firms at 14, they are valued at “only” $31 billion and have raised $5.7 billion. At a valuation of nearly $100 billion, and having raised $9.4 billion, China’s eight unicorns completely dwarf their American counterparts. What’s more, the world’s four biggest fintech unicorns are all Chinese—Ant Financial (valued at $60 billion), Lufax ($18.5 billion), JD Finance ($7.0 billion) and Qufenqi ($5.9 billion).

What is behind China’s steep ascent?

According to the July 2016 report from McKinsey “Disruption and Connection: Cracking the Myths of China Internet Finance Innovation”, a handful of key reasons underpin China’s startling appetite for fintech. Firstly, the sector has been well supported by the country’s regulatory framework. Premier Li Keqiang has repeatedly made calls in favour of online finance within the annual “Report on the Work of the Government”, such as stating that he wants “to seek a healthy development road under the backing of proper regulatory coordination and supervisory mechanism”. This inclusive, tolerant regulatory environment has helped to foster a culture of innovation and entrepreneurship among China’s tech crowd, in addition to encouraging the larger existing corporations to become more innovative themselves and further explore potential applications of digital finance. Indeed, the fact that the government has officially published guiding opinions and policies for Internet finance also provides a useful degree of clarity to China’s new start-ups in relation to what they can and can’t do.

Secondly, China’s population appears to be increasingly open to using online finance, with evidence mounting that they are eager to incorporate the support provided by various fintech services into many different aspects of their lives, including online banking, payments, transfers, crowdfunding, investing and shopping. Indeed, e-commerce in China is estimated to be a RMB 16 trillion market, and is now transforming the consumption habits of a rapidly growing number of Chinese people. McKinsey has calculated that since 2011, the Internet economy in China has grown by more than 50 percent, and now constitutes a hefty 7 percent of China’s gross domestic product (GDP); in comparison, it’s only 4 to 5 percent for the US, Japan and Germany. In addition, it is estimated that approximately 40 percent of Chinese consumers are using new payment methods, dwarfing the 4 percent recorded in Singapore, while 35 percent use fintech to access insurance products, compared to just 1 to 2 percent in Southeast Asia. Smartphones and social media continue to become increasingly ingrained into Chinese consumer culture, with more than 30 percent of the population currently using digital methods (such as mobile phones and tablets) to make payments. An online investment culture has also taken off, with Internet-based wealth management and trading estimated to be drawing in around 100 million users.

A deep-seated mismatch has also emerged in recent years between the population’s strongly expanding demand for financial products and the limited solutions being provided to them by traditional financial-services institutions. As such, distinct market segments are now grossly underserved by such institutions. Banks often set their minimum threshold at RMB 50 thousand when offering wealth-management products, a level that China’s low-income households (who comprise nearly 50 percent of the total population) can ill afford. In addition, a significant one in five adults in China does not have access to formal banking services, whilst only 8.1 commercial bank branches and 55 ATMs per 100,000 people are in circulation. In the US and Canada, those figures are substantially higher, at 28.2 branches and 222 ATMs; and are at 28 branches and 81 ATMs on average in Europe. This markedly underbanked segment of China’s society, therefore, continues to opt with more enthusiasm for the inclusive financial solutions being offered by digital finance companies. China’s rural migrant workers, who work in urban areas and who number a sizeable 277 million, are just one example of a segment of China’s population who are increasingly moving towards online finance, often as a way to send their remittances back to their rural homes in an efficient and inexpensive manner.

China’s relatively high banking-sector profitability levels continue to enable them to embark on more risky “tech-ventures”, which is another crucial factor driving the country’s fintech boom. Comparing the return-on-equity figures of China’s biggest banks, which tend to average around 15 to 20 percent, with the sub-10 percent routinely experienced by US banks and the sub-5 percent that is now the norm in much of Europe, China’s higher profitability allows its banking sector to devote more resources towards developing its technological capabilities, and making riskier investments in digitisation.

Other than consumers, China’s smaller-end businesses are also responsible for a significant portion of fintech growth in the country. According to the EY and DBS report, small and medium-sized enterprises (SMEs) receive only 20 to 25 percent of the total loans disbursed by banks, in spite of the fact that they account for 60 percent of GDP and 80 percent of urban employment, and they also contribute a hefty 50 percent of China’s total fiscal and tax revenues. Given their often opaque or non-existent financial histories, moreover, SMEs also tend to receive unfavourable terms from banks, with loans sometimes being twice as expensive as that offered to larger corporations. As such, SMEs are now moving in increasing numbers into the fintech arena in order to obtain better finance solutions for their specific business needs.

The “holy trinity” of Chinese fintech

A significant chunk of China’s fintech success in recent years can be credited to Baidu, Alibaba and Tencent. Collectively referred to as BAT, the three tech giants control an intimidating share of China’s e-commerce landscape, as well as online messaging and Internet search platforms. They also control approximately half of the Chinese third-party payments market; whereas their US equivalents—Alphabet, Apple, Facebook and Amazon—control a mere 2 percent, as per recent analysis by Citigroup. Alipay from Alibaba is easily the most popular in China and covers almost 80 percent of the country’s total mobile payments; while Tencent’s flagship application has a customer base of more than 500 million people, who use the app for daily chatting, payments and wealth management.

Through numerous subsidiaries, both in China and now increasingly all over Asia, BAT’s global fintech presence only looks set to become more visible. Alibaba intends to generate more than half of its revenues from overseas, and last April it acquired a controlling holding in Southeast Asia’s e-commerce giant Lazada Group for approximately $1 billion. Alibaba also collaborated with Foxconn and SoftBank in the previous year to put $500 million into India’s leading e-commerce platform Snapdeal, as well as investing nearly $700 million into India’s largest mobile wallet, Paytm, during the same year. BAT members are also aggressively investing in some of the most exciting technologies, which are expected to play crucial roles in the financial-services offerings of tomorrow, such as blockchain and artificial intelligence.

Payments dominate China’s fintech landscape.

China’s fintech boom can be traced to explosive growth in a selection of key specific sectors. Payments/e-wallets is the dominant sector at present, with China having 380 million people shopping online via their phones, as well as nearly 200 million people using their phones as a wallet for in-store payments. Alipay (of Alibaba’s Ant Financial) and Tencent’s Tenpay are the sector’s clear market leaders, and they are capitalising on the growing trend of people in China preferring to use their mobile phones to manage their funds, instead of having to visit their bank branches.

The popularity of online banking is also exploding, with both China’s tech companies and its existing banks making a foray into this world, often in joint initiatives. Baidu provides just one such example, having partnered with CITIC Bank in order to provide online financial products, including co-branded credit cards. Alibaba, meanwhile, launched MyBank in 2015 in order to provide smaller loans to the aforementioned underbanked as well as a personal fund that promises to beat the returns offered by banks. Tencent opened China’s first major online bank at the start of 2015—WeBank can be easily accessed by the 846 million active users of Tencent’s WeChat, as well as the 877 million users on its instant-messaging software QQ.

P2P (peer-to-peer) lending also deserves a mention, with China almost exclusively leading Asia’s growth in platforms designed to deliver credit to individuals and SMEs. According to a 2016 report from Cambridge Centre for Alternative Finance (CCAF), China accounts for 99 percent of the total P2P transaction volume in the Asia-Pacific region, and is also the world’s largest P2P market, valued at $101.7 billion in 2015. It is estimated that more than 4,000 P2P lenders operate in China today compared to just 50 providers only five years ago.

Analysts expect China to continue leading fintech in 2017 and beyond. According to Citigroup, China’s rapid digitalisation, coupled with the unabated rise of its middle class, will push more people towards online finance in the face of a decline in traditional financial institutions that will continue to experience increasing competition from “entrepreneurial e-commerce and social media ecosystems”. While much of the rest of the world has focused on fostering a broadly competitive fintech environment, moreover, China’s digital culture is significantly more collaborative, which is now seemingly reaping benefits for the country. In early January, for instance, a consortium of major Chinese state-owned companies established the $1.5 billion Asia FinTech Merger and Acquisition Fund of Funds, primarily to ensure that each specific sector within China’s fintech industry is able to operate with sufficient capital. Such sectors include artificial intelligence, mobile payments and blockchain technology. Indeed, China’s blockchain market itself provides an appropriate illustration of such collaborative power, with the consortium ChinaLedger now seeking to provide an industry-wide foundation for blockchain-based startups to receive support.

It is also worth emphasising that while the rest of the world would do well to take notes on the meteoric rise of China’s fintech scene, replicating such growth and development will be close to impossible for many regions, especially the West. China is building its fintech dominance on a combination of favourable supportive factors that simply don’t exist elsewhere at present. Rapid urbanisation, an underbanked population, underserved SMEs, a supportive regulatory environment and a boom in e-commerce and mobile penetration are all combining to create ideal conditions for accelerated expansion in online finance. Many of such factors are non-existent in other countries.

Nevertheless, China’s dominance in fintech is now there for all to see. As the country continues to experience significant growth, urbanisation and digitisation over the next few years, it would not be surprising if this dominance continues to grow ever more imposing. As such, one should begin looking to the East, rather than the West, to access many of the world’s latest and most exciting technology offerings.

https://internationalbanker.com/technology/china-worlds-new-fintech-leader/

Nice analysis. So, the factors that encouraged Fintech in China are:

*Government's proactive policies
*People's open attitude to the new technology
*SMEs interest in this frontier industry

 

[Bussard Ramjet]

Nice analysis. So, the factors that encouraged Fintech in China are:

*Government's proactive policies
*People's open attitude to the new technology
*SMEs interest in this frontier industry

Non-effect of incumbent technologies

 

[Shotgunner51]

Inside the JBI: China's Massive New Blockchain Research Effort
Pete Rizzo (@pete_rizzo_) | Published on April 25, 2017 at 13:15 BST

The government of the Chinese province of Jiangsu is backing a new research effort aimed at offering unbiased information to businesses coming up to speed on blockchain.

Launched in September 2016, the Jiangsu Huaxin Blockchain Research Institute (JBI) is now going public via CoinDesk as the first state-owned enterprise to focus solely on blockchain tech. Already, the group, backed by parent firm Beijing Huaxin Electronics Enterprise Group, claims to have roughly 100 employees at its office in Nanjing working to develop its product.

According to executive director of operations Michael Yeung, the group in many ways can be read as a reaction to the growing hype in the blockchain industry, as well as the increasing desire global governments have shown for becoming active on R&D.

At CoinDesk's offices in New York, Yeung and five of his colleagues discussed how international businesses in the sector are aggressively targeting the Chinese market, and how this has created a new appetite for informational services domestically.

Yeung stressed that unlike established consortium groups, JBI intends not to be "beholden" to corporates, and that its government affiliation makes it able to focus on overall ecosystem health.

He told CoinDesk:

"The hype for blockchain in China is massive. There's different ICOs [initial coin offerings] with pretty girls running around and DJs. But we're also serious about blockchain and the future. They're willing to try blockchain."​

With this backdrop, the JBI will seek to offer services working on academic research, education, political engagement and product development centered on blockchain tech.

Senior members of the group include research directors Kraken Yu, formerly of consultancy Chainsmiths; Paul Jones, a former consultant at consultancy CryptoIQ; and Phillip Fox, a former treasury accountant at New Zealand's ASB Bank.

The group's launch further comes amid an active time for blockchain in China. In addition to new policies levied on bitcoin exchanges, the country has seen the launch of new blockchain efforts by its domestic insurance and lending industry, as well as major technology firms like e-commerce giant Alibaba.

Leapfrog opportunities

To start, JBI is looking to differentiate itself from approaches taken by established startups and consortium efforts.

Though similar in aim, Yeung said that JBI is styling itself as a facilitator, seeking to be more "comprehensive" than groups like R3. Of course, this mandate will still require partnerships and network.

(JBI is a member of Enterprise Ethereum Alliance and Hyperledger, and it has working partnerships with Bitfury, Bloq, Blockstream, ConsenSys, Rootstock and more).

The difference, though, will be in how these relationships develop.

"You might be a company involved in supply chain and there might be aways for blockchain to help you. We'll see if one of the tools in our partnership portfolio, if it makes sense to connect that with your needs," Fox explained.​

He noted that this means working with academics and universities on research projects that could inform its matchmaking. Already, the JBI intends to form a consortium of universities that would study applications of the technology.

Further, Fox explained that the JBI wants to work across financial and non-financial use cases, evaluating and working with both private and permissioned blockchains.

Still, he said the overriding goal is to position China as a leader on blockchain technology:

"It also offers them a leapfrog for cutting-edge technology, so it's clever if they implement it in banking – the west will try to catch up."​

Overlooked opportunities

Elsewhere, JBI seeks to look into blockchain use cases they argue are being underdeveloped.

"There's lots of different things that blockchain can provide benefits for, and they're not as easy to look at as finance," he said, adding:​

"How much profit is there for educators if education is better because of blockchain?"​

Right now, the group is still investigating early business partnerships, but Yu framed this also as a way it plans to differentiate.

"We're not interested in the 10% back-office improvement that will let people get paid. That is not very interesting. We want to serve the 99% and give a 90% revenue," Fox continued.​

Another unique feature of JBI's model is that it will seek to train and accredit blockchain professionals to provide market transparency.

"We have ongoing lessons three days a week," Yeung said. "Two-to-three hours of lecture on blockchain, and they have to pass an examination every three months."​

Those individuals, Yeung suggested, would then be able to sell partner technologies or otherwise be involved in various JBI activities.

Work ahead

For now, though, the group is pushing ahead with work on research and a few experimental projects.

Already, JBI is working with Zhongke Media, a state-owned media and advertising entity, on a project that showcases more creative uses for blockchain in the Internet of Things industry.

The project envisions how a company's TVs and ad displays could be upgraded with air filters, the shares of which could then be bought and sold digitally on an open market. The design could serve as a way to both cut down on pollution and help token holders on the blockchain gain steady access to revenue.

"The TV behind you would have an air filtration unit," Yeung explained. "So, it does two functions, it shows you an advertisement and clears the air space. Investors who invest in that have revenue collected by the machines."​

For all these futuristic use cases, the group noted it has tough work ahead.

Given the state of China's vibrant and experimental cryptocurrency market, JBI's team noted a big part of its mandate is to provide due diligence for wider public benefit and to mitigate consumer risk.

While the task could be daunting, Yu said the group is taking its aspirations seriously, noting the characters used in the company's Chinese name: 江苏华信区块链研究院.

Yu explained:

"The first character means 'whole'. The second is 'trust.'"​

http://www.coindesk.com/chinas-government-backing-massive-blockchain-research-effort/

 

[TaiShang]

WeChat to make payment service available in US
CGTN, May 8, 2017

WeChat is already one of China's most popular mobile payment methods. Now the social media app, owned by Internet giant Tencent, is teaming up with Silicon mobile payment startup Citcon to take its services to the US market.

WeChat Pay advertisements hang from the ceiling at a supermarket in East China's Hangzhou city. [Photo/China Daily]

Through WeChat accounts, users will be able to pay for whatever they need in Chinese currency renminbi without cash, just as they do in China.

For four consecutive years, China has been the world number one outbound tourism country, accounting for over 13 percent of the total tourism revenue globally. The United States has been one of the most popular destinations for Chinese travelers.

"Last year, over 100 million Chinese people traveled outside of China. Once they see this place can accept WeChat Pay, they can use their mobile phones. They certainly receive much warmer welcomes‍ from foreign countries," according to Chuck Huang, CEO of Citcon.

Mobile payment is the new frontier of commerce, and China is leading this trend. By providing an easy-to-use mobile payment and cross-border marketing solution, WeChat is empowering global merchants to connect with millions of Chinese consumers.

Currently, WeChat Pay is available in 15 countries and regions, for payments in 12 foreign currencies.

Tencent has now joined Apple and Google-parent Alphabet in the ranks of the world's biggest firms by market capitalization, with a value of more than 302 billion US dollars. Shares in the tech company hit a record high on Tuesday.

It's the only firm outside the US among the world's top 10 most valuable companies.‍

 

[Shotgunner51]

Insurtech in China: Revolutionizing the Insurance Industry
November 7, 2016 Cliff Sheng Partner and Head of Financial Services, Greater China at Oliver Wyman

China’s capital markets aren’t yet mature enough to support financial innovation; meanwhile, existing state-owned financial institutions are not reforming quickly enough. This gap in supply has provided opportunities for Chinese fintech players—who are being supported by rapidly growing online ecosystems and a tech-savvy population—in diverse fields ranging from investing to payments.

A Growing Insurance Market

While insurance penetration in China is currently low (3.6 percent in 2015) compared to developed markets such as the UK (10 percent) and the U.S. (7.3 percent), strong government support, coupled with a growing middle class, is making insurance products more accessible. In 2015, for example, total insurance gross written premiums (GWP) in China increased by 20 percent in 2015 to 2.4 trillion yuan ($355 billion).

In fact, the Chinese insurance market has doubled in size over the past six years. Based on China Insurance Regulatory Commission’s (CIRC) five-year plan and various other sources, the insurance market is forecasted to grow at 13 percent (compounded annually) up to 2020 to 4.5 trillion yuan.

The rapidly growing insurance market—albeit from a low base—in China is also opening up plenty of opportunities for insurtech (defined as insurance further enhanced through technology in a customer-centric way).

Insurtech Makes Gains

Insurtech is revolutionizing the insurance industry by bringing disruptive products and services to a market that is fast adopting, and increasingly moving toward, an online ecosystem. The market is also seeing a surge in the number of people who are aware of and are starting to understand the benefits of insurance.

The CIRC is supporting these gains by fostering a favorable regulatory environment for insurtech. As a result, the insurtech market is experiencing rapid growth and is expected to rise from 250 yuan in 2015 to more than 1.1 trillion yuan in 2020.

There are broadly three insurtech segments in China (Graphic 1), which are projected to grow at different rates:

Online distribution of traditional insurance products (e.g., online auto insurance sales). According to Oliver Wyman estimates, GWP for this segment will grow from about 207 billion yuan in 2015 to about 747 billion yuan in 2020. And within this segment, non-life insurance products will grow at a faster pace than life products.

Technology enabled upgrades of existing insurance products (e.g., new health insurance policies or prices based on wearable devices, telematics). GWP for this segment is expected to grow from about 28 billion yuan in 2015 to about 197 billion yuan in 2020. Auto insurance will be the highest contributor to this growth, followed by health insurance products.

Ecosystem-oriented innovation of new insurance products (e.g., shipping return insurance, flight delay insurance). Estimates show that GWP in this segment will grow from 12 billion yuan to 202 billion yuan between 2015 and 2020. The key contributors to this growth being the e-commerce and travel ecosystems because of their large market size and the growing desire among consumers to protect themselves against risks related to these ecosystems.

Graphic 1:

Risks and Uncertainties Facing the Insurtech Industry

Notwithstanding the tremendous scope and opportunity for certain simple products—such as travel insurance and shipping return insurance—in the Chinese insurtech market, several products such auto insurance and universal life insurance face uncertainties owing to the following four factors:

Macro economy. A fall in Chinese GDP growth to 5 percent or lower would have an adverse impact on per capita disposable income, which in turn could negatively affect the demand for non-essentials such as automobiles, wearable devices and connected home devices. As a result, GWP in these sectors would fall.

Regulation. In general, the CIRC has been supportive of innovation, but there are times when it has been too conservative. For instance, the regulator may put a limit on guaranteed return of universal life insurance distributed online. Online universal life was recently stopped by the regulator (which is considered a temporary measure to curb increasing risk). In another case, we observed that the slow adoption of telematics is caused by the tariff set by the regulator even after the recent pricing reform for auto insurance. In another case of regulatory back-and-forth, smog travel insurance, which compensates travelers during bad weather caused by smog, has been stopped by the regulator.

Technology. Future development of technologies such as big data, cloud computing, block chain and artificial intelligence are critical to insurtech. Therefore, technological failures of particular platforms can pose risks for companies, particularly when they are looking to ramp-up operations.

Competition. Traditional insurers and disruptors currently dominate the industry. Traditional insurers may set up joint ventures with tech companies to compete with disruptors, or they might set up subsidiaries to attack this market. New players could also emerge, increasing competition. For example, auto or 3C (computer, communication and consumer electronics) manufacturers could set up insurance companies to insure their own products. Similarly, peer-to-peer insurers may rise to cover online communities and large ecosystems might also self-insure.

Despite these uncertainties and possible risks, there is potential for the insurtech industry in China, with the forecasts clearly suggesting a growing opportunity set for businesses in this space. The question is whether it will meet or exceed expectations.

http://www.brinknews.com/asia/insuretech-in-china-revolutionizing-the-insurance-industry/

 

[TaiShang]

Alibaba's next online stop: the whole world
By HE WEI in Shanghai | China Daily | Updated: 2017-05-11

A Russian consumer shows her passport to identify herself at a goods collection center of AliExpress in Moscow. Alibaba is expanding overseas aggressively using AliExpress, in the process taking on global rivals such as Amazon and eBay. XINHUA


With growth slowing in China, the internet behemoth unleashes AliExpress for global e-commerce dominance, applying lessons from Tmall

For Carine Danblier, 51, a Belgian housewife based in Brussels, shopping on Chinese online marketplace AliExpress has proved to be nothing short of a treasure hunt.

Every week, she snaps up cooking accessories, shoes and electronic gadgets directly from China via AliExpress, a subsidiary of Alibaba Group Holding. A few taps on her device keypad, followed by a few days in wait－that's all it takes for the tamper-proof parcels to materialize at her doorstep.

So impressed was Danblier with AliExpress that she created a Facebook page just to share images of the goodies as well as information on online deals. Two years on, the page has 100,000 followers.

Alibaba has also become famous in Europe for its Singles Day shopping extravaganza on Nov 11, which created a buzz on online social media. The shopping fest has made Alibaba the world's top e-commerce marketplace by transaction value. It reported a gross merchandise volume of $485 billion in fiscal year 2016. This is higher than $482 billion in revenues netted by Walmart Inc in the same period.

Alibaba is expanding overseas aggressively using AliExpress, in the process taking on global rivals such as Amazon and eBay.

Founded in 2010, AliExpress is the equivalent of Alibaba's business-to-customer site Tmall, but targets only overseas customers. It has attracted more than 100 million international buyers as of April, said Dai Shan, president of Alibaba's business-to-business unit.

Following a decade of explosive growth, China's online retail market is expected to slow down to a 15 percent compounded annual growth rate, consultancy Mintel has projected. This means internet behemoths like Alibaba need to foray abroad for new sources of income.

AliExpress is gaining traction among users such as Danblier by reshaping their shopping behavior and building a personal rapport, said Zuniga Perez Pell, an employee at AliExpress' Spanish operations.

"Wedding is perhaps the most important occasion for women. In the past, Spanish women never bought wedding dresses online. But now, taking a look at AliExpress before buying is becoming a ritual," he said.

Agreed John Arregui, a regular Spanish shopper on Ali-Express. His personal favorite is footwear. "I really like the clear assortment of all types of shoes, and I'd say China-made footwear is of superb quality."

Alfonso Noriega Gomez, economic and commercial counselor of the Consulate General of Spain in Shanghai, believes e-commerce is an essential engine to promote trade and economic relations and a major conduit for products made around the world.

"Through Tmall and Tmall Global, Chinese consumers are able to enjoy products from Spain. We hope AliExpress can bring alive the virtual Silk Road by connecting Chinese merchandise with countries including Spain," he said at an AliExpress conference in Hangzhou earlier this month.

Customers from more than 220 countries and regions have placed orders via the platform, according to the company. The top three countries ranked by total spending are Russia, the United States and Spain.

Apart from Spain, AliExpress also found early success in Russia, by offering Chinese products including clothing and car parts at a lower price. It also advertised its services and teamed up with local payment providers. The platform has been Russia's biggest shopping site since 2014, according to researcher TNS.

A wide array of goods, partnerships with several key Russian payment providers, and a strong social media presence have helped make AliExpress the top player, said Shen Difan, general manager in Russia.

"AliExpress is planning to tie up with more local vendors, ship from local warehouses, and provide local after-sales service, including a no-excuse return policy in 72 hours," Shen said.

Relatively super-quick delivery has become the real gamechanger. In Russia, parcels normally take weeks, or even up to two months, to reach buyers. Backed by big data technology, AliExpress has managed to shorten the delivery period to just four days.

This is part of an even bigger goal of global delivery within 72 hours in three to five years, using algorithm-based realtime analysis by Cainiao Network Technology Co Ltd, Alibaba's smart logistics network.

Alibaba will be wading into a number of markets where no single player has yet to dominate. Challenges abound.

Many developing nations still lack the infrastructure crucial to widespread adoption of e-commerce.

According to Wan Lin, Cainiao's president, the logistics network has teamed up with various postal services to ensure faster customs clearance, including a partnership with US Postal Service, Brazilian Post and Australian Post. It has picked up a stake in Singapore Post.

It will manage logistics globally and provide users with global traceability of their parcel shipment movement.

AliExpress aims to build a "cyber Silk Road" and serve up to 1 billion people from overseas, Shen said. "The Belt and Road Initiative, which aims to strengthen infrastructure, economic and trade ties in the Eurasian and Africa region, will lend AliExpress new momentum to grow its customer base tenfold in less than seven years."

That creates a win-win scenario for both global shoppers and export-driven Chinese manufacturers, who are transitioning from being original equipment manufacturers to providers of higher-end branded products.

Napearl, a Chinese curtain maker, is riding the consumption boom overseas. Via AliExpress, the company receives regular orders from US customers for tailor-made curtains used in villas. Its monthly revenue could top $500,000, said Wang Yuting, its operations director.

Also reaping the gains is earphone maker Bluedio. According to Li Jiacheng, its marketing head, sales on Singles Day last year surged 120 percent compared to the previous fest.

"We've devoted a 30-people taskforce to research and development of critical technologies, and are on course to bagging a handful of patents. We're building our own brand, and AliExpress is a good starting point," Li said.

To date, AliExpress has groomed and fostered over 1,000 smaller merchants whose monthly sales in cross-border deals have surpassed $500,000 each.

"While globalization offers many benefits to multinational corporations, the Belt and Road Initiative aims to unlock the potential of SMEs (small and medium enterprises) by enhancing connectivity, and e-commerce is a critical channel to reach that goal," said Zhao Lei, a professor at the Institute for International Strategic Studies, which is part of the Central Party School of the Communist Party of China.

 

[TaiShang]

AlipayHK app to be launched in Hong Kong
By He Wei in Shanghai | chinadaily.com.cn | Updated: 2017-05-24

Alipay, China's largest mobile payment tool, is launching its first app to handle non-renminbi transactions in Hong Kong, its parent Ant Financial Services Group said on Wednesday.

AlipayHK, a version of its flagship app dedicated to local-currency payments, will be accepted at over 2,000 brick-and-mortar stores in the city.

From May 25, shoppers can pay via the service in HK dollars in stores such as Watsons, Chow Tai Fook, Sa Sa and Bonjour Cosmetics, as well as theme park Ocean Park.

"Introducing local-currency mobile payments to Hong Kong is an important step forward in Ant Financial's mission to bring our services to more users in more markets," said Douglas Feagin, Ant Financial's president of Global Business.

"We are looking forward to rolling out a wide variety of payment-related services for local users in Hong Kong."

Currently, over 8,000 stores in Hong Kong accept the Chinese mainland version of the e-wallet. Ultimately, all these stores also will accept AlipayHK, the company said.

Users also can buy coupons from OpenRice, a popular local online and mobile dining guide, using the AlipayHK app. Mobile phone bill payments and insurance products soon will be available via the AlipayHK app.

WeChat Pay, another major mobile payment tool, is also available in Hong Kong but has yet to roll out a customized local version.

@grey boy 2 , @Chinese-Dragon , @bbccdd1470

 

[Shotgunner51]

China: Central Bank Establishes New Fintech Committee
19th May 2017

THE People’s Bank of China has established a new fintech committee to study the impact of financial technology on monetary policy, financial markets, payment and clearing mechanisms.

The bank announced the plans on Monday, saying fintech has “injected new vitality” to the industry, but also “brought new challenges” for financial security and the banking sector.

In a statement, the bank said: “The People’s Bank of China will organize an in-depth study on the impact of financial and technological development on monetary policy, financial market, financial stability as well as payment settlement, and do the strategic planning and policy guidance for China’s financial and technological development.”

The new body is also expected to strengthen implementation of regulatory technology, possibly in regards to the application of big data, artificial intelligence, cloud computing and other technologies that will likely come under enhanced scrutiny in future years.

The bank has said it wants to work with and alongside businesses, academia and researchers to “push forward the healthy, orderly development of fintech” in China.

Recently, The People’s Bank of China has been proactively engaging with the fintech industry.

It is backing a venture capital firm called Silk Ventures that plans to invest up to US$500 million in US and European technology startups that have a focus on fintech, artificial intelligence and medical technologies.

Last week, a decree was introduced that mentioned new regulations will be initiated in next month, following the suspected violations committed by leading bitcoin exchanges OKCoin, Huobi and BTCChina.

http://techwireasia.com/2017/05/chi...ommittee-take-challenges/#7sKUCLJ1zllxvo0a.99

 

[JSCh]

Monday, June 05, 2017, 12:33
KPMG: China now a fintech force
By Bingcun

A Hong Kong shop clerk tests the Alipay app. Alipay launched its Hong Kong version on May 24. (Photo/Xinhua)

If KPMG is set to launch a compilation of top 50 financial technology or fintech companies in China, it indicates the new business segment has truly arrived and is poised for rapid growth, said Zhou Jun, vice-chairman of its China unit.

The global audit, tax and advisory services major accords high regard to the fintech segment, which refers to online payment systems and other financial services offered digitally. KPMG will persuade Chinese companies to upgrade their systems so as to integrate fintech into their operations, he said.

"China is indeed taking the lead in global fintech," said Wang Lipeng, a partner at KPMG. "Fintech is bringing profound changes to the Chinese economy and industrial reforms."

He attributed China's lead in fintech to two key aspects: the fast-growing internet-related businesses; and the government's encouragement for innovation and entrepreneurship.

"Fintech benefits a lot from a culture of innovation and experts driving the development of internet-based businesses," Wang said.

According to a report by DBS Bank and EY, 40 percent of online consumers use electronic payment tools. China's investment on fintech last year was $8.8 billion, much higher than the previous year's level.

China is now home to four fintech unicorns - starups whose valuations have grown to $1 billion and above.

Ant Financial, from the Alibaba stable helmed by Jack Ma, leads the pack. It is followed by Luafx, a peer-to-peer lending platform powered by Ping An Insurance; Qufenqi, an online retailer that allows monthly installments; and JD Finance, a financial subsidiary of JD.com Inc, one of China's biggest online marketplaces.

Their rapid growth has lured traditional banks to fintech services. According to China Merchants Bank, it has earmarked 790 million yuan ($114 million) to encourage innovation in fintech projects.

In March, the bank agreed to grant 1 percent of its annual profit to fintech-related project innovation.

The bank also plans to intensify its efforts to adopt mobile technology, cloud computing, big data and blockchain technologies in its operations.

Industry observers, however, said fintech services should be adopted in a conscious way, not as a fad. Sringent risk management in enterprises holds the key, they said.

Chen Shengqiang, CEO of JD Finance, said in a recent message to the China Banking Regulatory Commssion that risk management is the very foundation of the fintech business.

 

[JSCh]

Nobel laureate heads Chinese institute on economics, AI application eyed
Source: Xinhua| 2017-06-11 21:32:54|Editor: Mengjie



BEIJING, June 11 (Xinhua) -- Nobel laureate in economics Thomas J. Sargent has been tapped to head a Chinese university institute to conduct teaching and research on economics including the use of artificial intelligence and big data in financial analysis.

The Sargent Institute of Quantitative Economics and Finance was set up at the Peking University HSBC Business School (PHBS) in the southern Chinese economic hub of Shenzhen, said PHBS Dean Hai Wen.

He said with the institute the school will start offering a Ph.D. program in quantitative economics and a Master's program in finance specialized in financial technology.

Sargent, an American economist, was awarded the 2011 Nobel Prize in Economics for his empirical research on cause and effect in the macroeconomy. He teaches at New York University.

Hai said Sargent will be personally involved in the new Ph.D. program, teaching the course of advanced macroeconomics. The institute will also host a number of summer and winter projects to encourage wide participation of students in the financial research and academic debates.

Hai said the Sargent institute, among other researches, will study the use of artificial intelligence and big data in quantitative investing, asset pricing, and other financial analysis.

It will partner Shenzhen-based financial institutes and firms to provide them with tools to make better investment strategies.

 

[JSCh]

Meet the Chinese Finance Giant That’s Secretly an AI Company
The smartphone payments business Ant Financial is using computer vision, natural language processing, and mountains of data to reimagine banking, insurance, and more.

• by Will Knight
• June 16, 2017

If you get into a car accident in China, you can simply pull out your smartphone, take a photo, and file an insurance claim with an AI system.

That system, from Ant Financial, will automatically decide how serious the ding was and process the claim accordingly with an insurer. It shows how the company—which already operates a hugely successful smartphone payments business in China—aims to upend many areas of personal finance using machine learning and AI.

The e-commerce giant Alibaba created Ant in 2014 to operate Alipay, a ubiquitous mobile payments service in China. If you have visited the country in recent years, then you have probably seen people paying for meals, taxi rides, and a whole lot more by scanning a code with the Alipay app. The system is far more popular than the wireless payments systems offered in the U.S. by Apple, Google, and others. The company boasts more than 450 million active users compared to about 12 million for Apple Pay.

Ant’s progress will be significant to the future of the financial industry beyond China, including in the U.S., where the company is expanding its interests. The company’s approach goes around existing institutions to target individuals and small businesses who lack access to conventional financial services. Ant acquired the U.S. money-transfer service MoneyGram in April of this year for $880 million. The company could well apply the technologies it is developing to its overseas subsidiaries. A spokesperson for the company says it hasn’t brought Alipay to the U.S. because existing financial systems provide less of an opportunity.

Yuan (Alan) Qi, a vice president and chief data scientist at Ant, says the company’s AI research is shaping its growth. “AI is being used in almost every corner of Ant’s business,” he says. “We use it to optimize the business, and to generate new products.”

The accident-processing system is a good example of how advances in AI can flip an existing system on its head, Qi says. It has become possible to automate this kind of image processing in recent years using a machine-learning technology known as deep learning. By feeding thousands of example images into a very large neural network, it is possible to train it to recognize things that even a human may struggle to spot (see “10 Breakthrough Technologies 2013: Deep Learning”).

“We use computer vision for a job that is boring but also difficult,” Qi says. “I looked at the images myself, and I found it pretty difficult to tell the damage level.”

Qi speaks a mile a minute, which seems appropriate given how quickly his company seems to be moving. Dressed in a smart shirt and dress pants on a sweltering afternoon in Beijing this May, shortly after giving a speech at a major AI conference, Qi explained that the company considers itself not a “fintech” business but a “techfin” one, due to the importance of technology.

Ant already operates a range of other financial services besides Alipay. For instance, it provides small loans to those without a bank account. It assesses a person’s creditworthiness based on his or her spending history and other data including activity on social media (see “Alipay Leads a Financial Revolution in China”).

Ant’s creditworthiness system also provides a high-tech way to obtain various services, such as hotel bookings, without a deposit. Qi says that Ant uses advanced machine-learning algorithms and custom programmable chips to crunch huge quantities of user data in a few seconds, to determine whether to grant a customer a loan, for instance.

A recent hire offers some measure of Ant’s intent to apply artificial intelligence to finance. This May the company announced that Michael Jordan, a professor at the University of Berkeley and a major figure in the field of machine learning and statistics, would become chair of the company’s scientific board.

Qi is no slouch, either. He got his PhD from MIT and became a professor in the computer science department at Purdue before joining Alibaba in 2014. Once there, he developed Alibaba’s first voice-recognition system for automating customer calls.

“We built a system, based on deep learning, to carry on conversations; to provide answers to your questions,” Qi says. This chatbot system also taps into a knowledge base of information created by Ant, and is an example of how researchers are increasingly combining cutting-edge machine-learning techniques with conventional representations of knowledge. “Human language is still very hard for a machine to understand,” Qi says.

In March this year, the chatbot system surpassed human performance in terms of customer satisfaction, says Qi. “There are many, many chatbot companies in Silicon Valley. We are the only one that can say, confidently, they do better than human beings,” he says.

Ant’s success to date has certainly been impressive. Credit Suisse estimates that it manages 58 percent of mobile payments in China. A key competitor has emerged in recent years with WeixinPay, from the mobile chat giant Tencent, now accounting for almost 40 percent of the market. Ant remains enormously valuable, though. Earlier this year, a Hong Kong investment group valued the company at $75 billion. The company was expected make an initial public offering this year, but that now looks more likely to happen in 2018.

Ant is also increasingly looking to expand its interests overseas. The company has invested almost $1 billion in Paytm, an Indian payments company. It has also invested in Ascend, a Thai online payments business, and M-Daq, a Singaporean financial business. Ant apparently also sees investments and acquisitions as a way to bolster its technological prowess. Last year the company acquired EyeVerify, a U.S. company that makes eye recognition software.


Meet the Chinese Finance Giant That’s Secretly an AI Company - MIT Technology Review

 

[Shotgunner51]

Meet the Chinese Finance Giant That’s Secretly an AI Company
The smartphone payments business Ant Financial is using computer vision, natural language processing, and mountains of data to reimagine banking, insurance, and more.

• by Will Knight
• June 16, 2017

If you get into a car accident in China in the near future, you'll be able to pull out your smartphone, take a photo, and file an insurance claim with an AI system.

That system, from Ant Financial, will automatically decide how serious the ding was and process the claim accordingly with an insurer. It shows how the company—which already operates a hugely successful smartphone payments business in China—aims to upend many areas of personal finance using machine learning and AI.

The e-commerce giant Alibaba created Ant in 2014 to operate Alipay, a ubiquitous mobile payments service in China. If you have visited the country in recent years, then you have probably seen people paying for meals, taxi rides, and a whole lot more by scanning a code with the Alipay app. The system is far more popular than the wireless payments systems offered in the U.S. by Apple, Google, and others. The company boasts more than 450 million active users compared to about 12 million for Apple Pay.

Ant’s progress will be significant to the future of the financial industry beyond China, including in the U.S., where the company is expanding its interests. The company’s approach goes around existing institutions to target individuals and small businesses who lack access to conventional financial services. Ant said in April of this year that it is buying the U.S. money-transfer service MoneyGram for $880 million. The deal is subject to regulatory approval and should close in the second half of this year. The company could well apply the technologies it is developing to its overseas subsidiaries. A spokesperson for the company says it hasn’t brought Alipay to the U.S. because existing financial systems provide less of an opportunity.

Yuan (Alan) Qi, a vice president and chief data scientist at Ant, says the company’s AI research is shaping its growth. “AI is being used in almost every corner of Ant’s business,” he says. “We use it to optimize the business, and to generate new products.”

The accident-processing system is a good example of how advances in AI can flip an existing system on its head, Qi says. It has become possible to automate this kind of image processing in recent years using a machine-learning technology known as deep learning. By feeding thousands of example images into a very large neural network, it is possible to train it to recognize things that even a human may struggle to spot (see “10 Breakthrough Technologies 2013: Deep Learning”).

“We use computer vision for a job that is boring but also difficult,” Qi says. “I looked at the images myself, and I found it pretty difficult to tell the damage level.”​

Qi speaks a mile a minute, which seems appropriate given how quickly his company seems to be moving. Dressed in a smart shirt and dress pants on a sweltering afternoon in Beijing this May, shortly after giving a speech at a major AI conference, Qi explained that the company considers itself not a “fintech” business but a “techfin” one, due to the importance of technology.

Ant already operates a range of other financial services besides Alipay. For instance, it provides small loans to those without a bank account. It assesses a person’s creditworthiness based on his or her spending history and other data including friends' credit scores (see “Alipay Leads a Financial Revolution in China”).

Ant’s creditworthiness system also provides a high-tech way to obtain various services, such as hotel bookings, without a deposit. Qi says that Ant uses advanced machine-learning algorithms and custom programmable chips to crunch huge quantities of user data in a few seconds, to determine whether to grant a customer a loan, for instance.

A recent hire offers some measure of Ant’s intent to apply artificial intelligence to finance. This May the company announced that Michael Jordan, a professor at the University of Berkeley and a major figure in the field of machine learning and statistics, would become chair of the company’s scientific board.

Qi is no slouch, either. He got his PhD from MIT and became a professor in the computer science department at Purdue before joining Alibaba in 2014. Once there, he developed Alibaba’s first voice-recognition system for automating customer calls.

“We built a system, based on deep learning, to carry on conversations; to provide answers to your questions,” Qi says.

This chatbot system also taps into a knowledge base of information created by Ant, and is an example of how researchers are increasingly combining cutting-edge machine-learning techniques with conventional representations of knowledge. “Human language is still very hard for a machine to understand,” Qi says.​

In March this year, the chatbot system surpassed human performance in terms of customer satisfaction, says Qi. “There are many, many chatbot companies in Silicon Valley. We are the only one that can say, confidently, they do better than human beings,” he says.

Ant’s success to date has certainly been impressive. Credit Suisse estimates that it manages 58 percent of mobile payments in China. A key competitor has emerged in recent years with WeixinPay, from the mobile chat giant Tencent, now accounting for almost 40 percent of the market. Ant remains enormously valuable, though. Earlier this year, a Hong Kong investment group valued the company at $75 billion. The company was expected make an initial public offering this year, but that now looks more likely to happen in 2018.

Ant is also increasingly looking to expand its interests overseas. The company has invested almost $1 billion in Paytm, an Indian payments company. It has also invested in Ascend, a Thai online payments business, and M-Daq, a Singaporean financial business. Ant apparently also sees investments and acquisitions as a way to bolster its technological prowess. Last year the company acquired EyeVerify, a U.S. company that makes eye recognition software.


https://www.technologyreview.com/s/...obile-payments-is-rethinking-finance-with-ai/