Explosive
Growth of FinTech
Opportunities to Scale
Current and Future
Landscape
The Rise of
FinTech in China
Redefning Financial Services
A COLLABORATIVE REPORT BY DBS AND EY
NOVEMBER 2016
THE RISE OF FINTECH IN CHINA
02
Produced by:
Asian Insights Offce
DBS Group Research
Co-Author:
Sachin Mittal
Senior Vice President
Global Head for Technology,
Media & Telecommunications
Group Research
DBS Bank
With contributions by:
Neal Cross
Managing Director
Chief Innovation Offcer
DBS Innovation Group
DBS Bank
Rob Findlay
Senior Vice President
Experience Design
DBS Bank;
Founder, Next Money
Chien Yen Goh
Senior Vice President
Asian Insights Offce
Group Research
DBS Bank
Daniel Foo
Analyst
Group Research
DBS Bank
Co-Author:
James Lloyd
Asia-Pacifc FinTech Leader
EY
With contributions by:
Jan Bellens
Global Emerging Markets and
Asia-Pacifc Banking & Capital Markets Leader
EY
David W Wu
Executive Director
Financial Service Risk
Transformation and Innovation
EY
Li-May Chew, CFA
Associate Director and BCM Analyst
Asia-Pacifc Banking and Capital Markets
EY
Marc Entwistle
Senior Manager
Asia-Pacifc Fintech
EY
THE RISE OF FINTECH IN CHINA
03
Foreword
Executive Summary
Introduction
Key Drivers of FinTech in China
Unmet Financial Needs
Ubiquitous Connectivity
E-commerce with Chinese Characteristics
Internet Giants Driving Innovation
FinTech Ready
Key Trends in FinTech
From Competition to Collaboration
Increasing Regulatory Focus
Opening Up
More Formalised Funding
Value Chain Participation
Beyond Payments: FinTech Forays
Insurance
Wealth management (WM)
Blockchain
Digitising Credit Scoring
Chinese FinTech Going Global
Casting a Wide Net
Challenges with Internationalising
How to Enter China
04
06
0923
31
37
The Rise of
FinTech in China
Redefning Financial Services
While London, New York and Silicon Valley, compete to position themselves as the
world’s ‘FinTech hub’, China has leapfrogged ahead to become the undoubted centre of
global FinTech innovation and adoption – thanks to developments across multiple hubs,
such as Shanghai, Hangzhou, Beijing, and Shenzhen. The speed, sophistication, and scale
of development of China’s FinTech ecosystem have been at a level unmatched in more
established markets. As banks and fnancial services institutions in the West look at ways
to incrementally innovate, China’s technology leaders are revolutionising many aspects of
fnancial services.
China’s FinTech revolution is a consequence of multiple factors – not least the scale of
unmet needs being addressed by dominant technology leaders, combined with regulatory
facilitation and easy access to capital. Underserved by China’s incumbent banking system,
consumers and small-to-medium-sized enterprises (SMEs) are increasingly turning to
alternative providers for access to payments, credit, investments, insurance, and even other
non-fnancial service offerings.
The willingness of Chinese consumers to adopt FinTech services is just as striking. Forty
percent of consumers in China are using new payment methods compared to 4% in
Singapore. Thirty-fve percent are using FinTech to access insurance products compared to
1-2% in many Southeast Asian markets. There are also signifcantly higher rates of FinTech
participation in wealth management and lending.
Underpinning China’s FinTech dominance are leading domestic technology companies
setting out to own entire customer journeys and consumption ecosystems across both
fnancial and non-fnancial activities. ‘Platform effects’ enable them to capture data and use
it to offer ever more services with signifcantly better and more comprehensive customer
experiences than traditional fnancial services players. The relationship with Chinese
corporates and start-ups is also often very collaborative, helping to fuel the rapid innovation
and expansion.
If FinTech in the West has reached the tipping point of infection, China has moved beyond
the point of disruption.
The
Rise of FinTech in China
lifts the lid on China’s unique, dynamic and rapidly evolving
FinTech ecosystem. It examines the drivers behind the explosive growth of Chinese FinTech.
It looks at the FinTech ecosystem, the unique characteristics and development profles of
China’s FinTech giants, and assesses the implications both in Asia and internationally.
THE RISE OF FINTECH IN CHINA
04
Foreword
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