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 Citigroup.
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
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.
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.