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At the end of 2017, regulations tightened around the cash loan industry in China and locked 36% as the highest APR lenders can collect on any loans. One year later, although many platforms have disappeared, others have transformed and are back at the forefront of lending in China.
The last eighteen months have been a bumpy road for initial coin offerings (ICO’s). Last year we reported that China had banned them completely citing concerns over large scale fraud and regulatory bodies across the world have begun to take a tougher stance on the practice. Yet, despite these setbacks, $5 billion dollars was raised by ICOs in 2017, with that figure being surpassed in the first three months of 2018 alone. Nonetheless, in a response to the negativity around ICO’s, Security Token offering (STO) have emerged as an alternative form of blockchain based funding. We believe that the subtle differences in both offerings may be critical in beginning a new period of reconciliation and agreement between regulators and technology companies seeking finance under the blockchain.
Double 11, the biggest e-commerce shopping festival, had another amazing result in 2018. On November 11th 2018, total online sales in China reached RMB314.2 billion (USD45.2 billion) in one single day.
In an interim report released last month Australia's Banking Royal Commission has highlighted the misconduct, greed, and even criminality involved in the Australian financial services industry. Set up in December 2017, the commission has worked through over 700,000 documents to investigate the dealings of some of Australia’s largest financial companies. The commission has heard from victims and cross-examined some of the key figures in the industry. The results are damning and are likely to spark much greater support for tougher regulation on the banks in the future. However, a battered, bruised, and riskless financial system is no good to anyone and may end up causing further disruption to the economy. It’s important that the government finds the right balance.
China's bank card market is large. Over 9 billion domestic payment cards will be in use by the end of 2018, a nearly 35% increase from the 6.7 billion in 2016. Even though the market is replete with card providers, the clearing business has been always dominated by the only one licensed clearing institution, China UnionPay (CUP), for both domestic and cross-border RMB transactions. That is, until now.
In China, financial cloud has become a key goal for financial institutions in 2016. According to ‘the 13th Five-year Plan’, by the end of 2020, banks’ online business system should all be transferred to cloud and more than 60% of their other business systems should be moved online. With this clear direction, banks are taking actions. The China Academy of Information and Communications Technology (CAICT) found that in 2017, 42% of financial institutions are applying to use cloud, whilst 47% are in the process of planning the transition to cloud as companies seek to establish agile banking infrastructure.