Technology brings more imagination to financial service – from China Fintech to Techfin

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China's tech giants are increasingly focused on positioning themselves as technology providers rather than financial services providers. A recent 3-second blockchain remittance from Hong Kong to the Philippines, was supported by Alipay HK and Philippine's GCash, cleared by Standard Chartered. Caifu Hao, a wealth management platform launched by Ant Financial, opened their AI-functioned investment tools to fund companies. Tencent recently signed contracts with a few banks to provide a financial cloud structure for acquiring and managing growing clients.

All of these cases are examples of tech companies providing the technology infrastructure, but steering clear of providing the actual underlying financing. But, they have also not stopped acquiring more financial licenses. Baidu, Alibaba, Tencent and JD (BATJ) as the biggest technology companies in China, started business from search engine, e-commerce and social apps. Further to their original business, these companies expanded their business into finance, which has become one of their most important focuses. To explore more possibilities in the space, these companies tried to acquire as many licenses as possible to allow them to experiment. So far Alibaba and Tencent have hold most licenses. Baidu is slow in the process. JD is new compared with BAT but took quick actions in completing their finance service types.

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With more licenses, the BATJ have shown their competitive power. As the companies' influence has grown, a few of them have moved in an unexpected direction: from Fintech to Techfin. This transfer intention showed up earlier in 2017. Ant Financial declared that, in the long term, they will only provide technology to support financial institutions. So did JD Finance, saying that they would like to share the value their technology creates for financial institutions, rather than developing their own financial services. ‘License is for defense but not offense’, said CEO Chen Qiangsheng. Baidu also made it clear that their final goal is to provide technology for financial institutions with licenses only for testing their fintech capability.

Their actions speak louder. Ant Financial’s wealth management platform, Caifu Hao, meaning ‘wealth’ in Chinese, has been adopted by 27 China-based asset management companies. Available via Ant Fortune, Caifu Hao is provided as a fully integrated platform enhancing the customer service Ant financial has to offer. Their main wealth management product Yuebao, which have 6 money funds, just broke RMB 1.8 trillion reserve by the end of June 2018.

Moving to Techfin

It is reasonable for those technology companies step back a bit and focus on providing technologies. Pressure from more strict regulations and competitive movement from banks, to a certain extent, has forced these companies to reconsider their position in the industry. The PBOC positions 3rd party payment as ‘small and frequent payment vendor’. What is more, managing such big financial product brings pressure to Ant Financial too. If the technology companies continue with the original financial service, they will have to deal with outside regulation pressure, banks’ emerging competition and further product optimization.

On the other side, tanking advantages of technology power, Caifuhao, as an example, has shown good results. Confidence has soared since its launch as investments made by returning customers has grown threefold. As opposed to having a minimum threshold, one needs to even contemplate about getting into the investment industry, this service offers a real opportunity for those with less capital. Catering for those whom would perhaps fall under that category, Caifu Hao has revolutionised the industry of investment.

Zu Guoming, president of Ant Fortune quoted ‘In our research, we discovered that China’s post 80s, and especially its post 90s generation, increasingly want more personalised and segmented financial products’. This is where Caifu Hao is hoping to make its stand by providing an unprecedented platform like none other in China to emphasise the importance of human interaction and really cater for every individual’s financial objectives regardless of one’s wealth.

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