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  • Breaking Borders
    Breaking Borders Despite progress in payment systems, the absence of a unified, cross-border Real-Time Payments (RTP) network means that intermediaries play a crucial role in facilitating connectivity. This report examines the ongoing complexities, challenges, and initiatives in creating a seamless payment landscape across Asia.
  • Innovate to Elevate
    Innovate to Elevate In the dynamic and diverse financial landscape of the Asia-Pacific (APAC) region, banks are at a pivotal juncture, facing the twin imperatives of innovation and resilience to meet evolving consumer expectations and navigate digital disruption.
  • Catalyzing Wealth Management In The Modern Era
    Catalyzing Wealth Management In The Modern Era Hyper-personalized wealth management presents a paradigm shift from traditional models relying on static, generalized segments. Developing tailored investor personas based on psychographics, behaviours and fluid financial goals enables financial institutions to deliver rich and tailored customer experiences that resonate with next-generation priorities.

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According to the National Bureau of Statistics, China’s total retail sales of consumer goods reached 18 trillion RMB and the number of online Shopping users reached 194 million. At the same time, in 2011, China’s Online Shopping Market reached 773.6 billion RMB, with a year-on-year growth of 55.3%. The transaction value of China’s Online Shopping Market contributed 4.3% to the total retail sales of consumer goods, continuing to grow in importance to the overall retail sales market.

According to the latest China’s Payment Report from People’s Bank of China, up to 2012 Q1, the total number of bank card in circulation grew 5.2% quarterly to 3.1 billion, reaching about 2 bank cards per person. Among them, the total number of credit cards reached 290 million, an increase of 1.8% from end of 2011Q4.

According to Eguan, a China-based consulting company, the total transaction value of China’s 3rd Party Online Payment market reached 758.3 billion RMB in the first quarter of 2012.

The quarterly growth rate declined because of seasonal factors and the influence of the holiday - especially because online shopping and air travel which accounts for the largest part of the total online payment market; both declined rapidly in the first quarter.

It has been a few weeks since Tradetech China and it’s worth taking a look back at the event itself. Really in China, there are not too many capital markets focused events and WBResearch saw the opportunity and in 2010 setup Tradetech China.

In recent years, Chinese banking sector profits have skyrocketed to new levels, in part due to the Beijing imposed ceiling on the rates banks pay depositors, providing banks with a source of cheap funds, which banks then in turn lend out at much higher rates. Net profits for commercial banks grew 36 percent last year, reaching 1 trillion Renminbi. Chinese banks are enjoying year-on-year rises of more than 30 percent in their first-half net profits. In one example, the Industrial and Commercial Bank of China’s fees and commission income for the year 2011 was close to 100 billion RMB, compared to 72 billion in 2010 and 55 billion in 2009.

The Chinese mobile payment market is virtually doubling in size every year and is expected to be worth more than US$80 billion with 441 million active users by 2015, according to the latest report from Kapronasia. China has already overtaken the US as the largest smartphone market in the world; the number of mobile payment users will dwarf other markets worldwide.

Since the first QDII quota of US$500 million was allocated to the HuaAn fund in 2006, the quota allocated to security companies and fund companies has maintained steady growth. As of the end of February 2012, US$44.4 billion of investment quota was allocated to fund companies and security companies, compared to US$44.4 billion and US$40.6 billion for 2011 and 2010.

On March 28, 2012, Trunkbow, a provider of Mobile Payment services in China, announced that it has teamed up with CUP (China Union Pay, the only bankcard switch in China) for the development and deployment of a mobile online-to-offline payment system which will be launch in Q2 2012.

In recent years, since Chinese banks have been working on data consolidation at the national level, the establishment of disaster recovery systems has become one of the key considerations for banks. Today, banks must ensure the stability and security of their national data center in the event of a disaster to ensure uninterrupted business operation through disaster recovery systems.

According to IDC’s report “China Business Continuity and Disaster Recovery Market Forecast, 2008-2013, data disaster recovery service and business continuity in China is expected to become the fastest growing segment in the local IT service market during 2008-2013, with a CAGR of 52%.

A standard recovery

The importance of disaster recovery systems has pushed the Chinese government to formulate a series of industry standards. In June 2009, the China Banking Regulatory Commission issued a new guideline on IT Risk Management of Commercial Banks, which has set a higher standard for the information security and business continuity of the entire life cycle of banking IT.

In 2011, China’s regulators also urged local banks to speed up the implementation of disaster recovery systems during the 12th Five-Year Period, by proposing a disaster recovery model named “Two Places and Three Centers”, which specifies a main data center, a remote disaster recovery center, and an intra-city emergency disaster recovery center.

In response to the legislation, recently, more local banks have started building their own “Two Places and Three Centers”. Large domestic banks have been seen allocating more resources to develop the disaster recovery model and already built large disaster recovery centers. The Agricultural Bank of China initiated its Shanghai remote disaster recovery center in 2012; China Construction Bank will complete the establishment of its Beijing data center in 2013. Even though they are somewhat behind the larger banks, small and medium banks have identified “Two Places and Three Centers” as one of their key IT investment priorities in the future.

Looking forward

In 2012, we expect that local small and medium sized banks will lead the demand for disaster recovery systems, particularly for joint stock commercial banks and city commercial banks, as they seek national expansions in their next phase of growth. With increased operating risks, banks have begun to put more value on the benefits brought by disaster recovery systems, which will be key to ensure uninterrupted business operation and improve risk management capability. This trend is also likely to be seen in local insurance and securities sector, where more small and medium sized insurers, securities firms and fund companies will invest in disaster recovery systems.

Compared to self-built disaster recovery centers, outsourcing services on disaster recovery will be much more popular among these companies, as the latter can provide lower investments, shorter construction period and higher service standards; the local market for disaster recovery system is still dominated by global players represented by IBM, HP, Symantec and EMC.

What is QDII

The QDII (Qualified Domestic Institutional Investor) program was first launched in 2004 initially for insurance companies to invest their foreign exchange funds in the Chinese companies traded in overseas markets, with PingAn insurance company being the first institutional investor to receive a QDII quota of US$8.89 billion. Since then, the program has expanded and now allows institutional investors, including commercial banks, security companies, fund companies, insurance companies and trust funds to raise funds in mainland China and invest in offshore capital markets under the control of China’s foreign exchange regulator.

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