Latest Insight
- Coins.ph aims to facilitate remittances with blockchain-based services
- Is Ant Group’s exit from Paytm a strategic selloff or a signal of deeper trouble?
- Meta plans foray into stablecoins…again
- Vietnam’s bank-owned fintech apps are making a comeback
- The alarming rise of Asian scam centers
- Ripple’s bid for Circle a bold move or a strategic overreach?
- Philippines SEC launches crypto sandbox initiative
- Thailand’s fintech momentum builds the foundation for a financial hub
- UPI outages in early 2025 indicate need for tighter controls and monitoring
- Rising identity fraud targets APAC financial services
Latest Reports
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Beyond Swipe and Tap: Rewriting the Rules
The roundtable discussion at Japan FinTech Festival brought together leading experts from banking, fintech, technology and regulatory backgrounds to explore the current state and future potential of account-to-account (A2A) payments in Japan. The wide-ranging discussion surfaced several key insights and themes that will shape the trajectory of A2A in the… 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
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.
Press Release
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Kapronasia's Research Director, Josef Jelinek, Invited as Panel Speaker at Sibos 2024Sibos, organized by SWIFT and held annually, is a premier event for global financial services professionals, offering a platform for thought leadership and networking. At this year’s conference, Josef Jelinek, Director of Research, participated in a Swift Innotribe panel on "The Future of Financial Inclusion: A View from APAC."
Recently, Alipay, China’s largest third-party payment company, released its sound wave payment mobile product, which is the first time that “sound payments” have been commercialized in China. Customers can now pay for goods from the vending machines deployed by Alipay in Beijing’s subway through the sound wave payment.
According to the China Securities Journal, the quality of credit assets is again appearing as an issue for Chinese banks. The latest annual report shows that the non-performing loan (NPL) balance and non-performing loan (NPL) ratio both increased in 2012, a sharp move from the “double decreasing” in both NPL balance and NPL ratio in the previous years.
The total NPL balance in the 11 listed banks was ¥385.38 billion in 2012 with a YOY growth rate of 8.1% compared to ¥356.6 billion in 2011. China Construction Bank believes the upward trend in NPL is due to the macroeconomic fluctuations in manufacturing, wholesale and retail trade, and real estate.
The trust industry is currently the fastest growing segment in China's asset management industry so far in 2013. In Q4 2012, the total trust AUM was about US$1.195 trillion. At the end of Q1 2013, this number had reached about US$1.395 trillion representing a growth rate of about 16.7%. That growth rate is actually faster than the growth rate of bank loans / deposits, market growth of the securities market, bonds, funds and insurance industry.
According to CCW Research, a local Chinese IT market research company, China’s financial industry IT software spend in 2012 grew to 49 billion RMB and the spending will keep a steady growth in 2013. Banking segment spend is a key driver, making up about 72% of total spend. Comprehensive risk management and big data are the main IT focus areas for banks.
As securities companies continuously launch new business, CCW estimates that IT spending on new business-related solutions in the securities sub-segment will increase considerably in future.
For insurance companies, the overall IT infrastructure is still very nascent. Large players will invest more money into the development and update of core systems.
Last month, China Mobile, the biggest mobile network operator (MNO) in China, and China UnionPay (CUP) unveiled their latest mobile payment product – “Mobile Wallet”- at MWC 2013 (Mobile Word Congress, the world’s premier mobile industry event).
Kapronasia's latest report Trading China - A Look at the Issues and Opportunities in China's Capital Markets is now available in the research reports section of the Kapronasia website. The report, sponsored by Equinix, is a detailed look at the challenges and opportunities in China's capital markets. The report is free, but does require registration to download. For more information on the report, please look in the research reports section of the website above.
In a recent article, the Wall Street Journal wrote about how although mobile payments are slow to take off in China, telephone or 'fixed-line' payments are actually doing quite well and actually hugely dwarfs mobile payments. When you consider the history of the 5 major banks and their alignment with particular sectors, it's no surprise that the Agricultural Bank of China would be leveraging this kind of business model, but what is interesting is the way that the model completely avoids mobile payments. It's almost as if the bank (industry?) in China is saying 'ok, so no standards on mobile, we'll innovate with what we have.' Which is actually not tremendously different that what we're seeing in other markets where the adoption of a consistent mobile payments standard seems inconsistent at best...
The Hedge Fund Association, in conjunction with Bloomberg, hosted the HFA - Bloomberg Shanghai Hedge Fund Panel Discussion: International Hedge Funds and Direct Investment in China, in Shanghai on January 5th, 2013. During the event, three experts shared their insight into the challenges and opportunities in China’s hedge fund industry in 2013. I had the opportunity to attend on behalf of Kapronasia and summarized some of my conclusions from the event here:
The 2nd Annual eTail Conference was held from 27th to 28th November, 2012 in Shanghai. Kapronasia was invited to attend the event to speak on a few payment related topics along with other industry experts. The conference's topics included e-commerce trends and strategies, cross border shopping challenges, and IT implementation on e-payment.
Margin trading is an important part of financial markets, especially for derivatives although the use of margin trading is still somewhat controversial in certain markets. In China, margin trading is relatively new and the phenomenon and behaviors observed in the markets from the use of margin trading are quite different from those of western markets. In order to better understand the markets, its worth taking some time to analyze the differences and provide suggestions to utilize the opportunities from the development of Chinese margin trading market development.
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In the past we haven’t spent too much time looking at the development of China’s financial futures market, but if you were to ask any China capital markets observer what some of the most important reforms of the past few years included, the introduction of the financial futures market would be one of them.
The CSRC’s latest figures show that 57 funds obtained QFII (Qualified Foreign Institutional Investor) licenses in the first 10 months of 2012, far more than any previous year since the program’s inception in 2003. This is a positive signal that foreign investors are more keen to invest in China. Moreover, on Nov. 14th, 2012, Chinese regulators decided to expand the quota by 200 billion yuan to specifically attract RQFII investments; it is predicted that the quota will soon be used up and likely regulators will continue to increase the quota amount.
China Mobile, the biggest mobile network operator in China, continues to grow its mobile payment business which was first launched in 2010. At the end of September 2012, China Mobile had 60 million registered mobile payment users with a total transaction value of reached 25 billion RMB, 2.5 times as much as in 2011.
In 2012, other key players in China’s mobile payment market also expanded their business. At the end of October 2012, the number of China Telecom’s mobile payment users exceeded 8 million; China UnionPay also announced that so far it has 4 million mobile payment users, compared with 2 million in 2011. The data from Alipay (China’s biggest third-party payment company) showed that as of the end of May 2012, Alipay had 10 million users conducting payment through their mobile phone and the number was increasing by about 90,000 every day.
We expect that China’s mobile payment business will grow faster in the future, with the number of mobile users surging to 400 million in 2015.
Kapronasia is pleased to announce the next webinar in our ongoing series covering China's Financial Services Industry. The November 21st webinar will be looking at the current status and future development of China's Credit Card industry. More information on the webinar and information on how to register can be found here.
The webinar is free and open to all.
So we’ve just come out of the October holiday here in China and are headed in the final frantic few months before Chinese New Year. The difference this year is the early November once in a decade leadership transition where nearly every Chinese leader and politician will be replaced and/or shifted around in China’s Communist Party. It was never in doubt that the transition would happen towards the end of this year, but it was only in the last few weeks that it became clear it would happen in early November.
This is an important transition for the government and only the second peaceful transition of power in recent China’s recent history. The transition is even more important because of the critical social and economic challenges that the country is facing right now. A slow/stagnant world economy and increased but still limited domestic consumption is limiting China’s economy as a whole which is exacerbating the internal challenges it is facing – one of the most critical being the increasing delta between the haves and have nots. If you have been reading international media recently, we’re starting to see more and more of this discrepancy being uncovered and it does nothing to help the government in the eyes of the people.
More specifically to the financial industry however, the transition means increased change. We’ve seen this already this year especially in the capital markets as the new chief regulators have done quite a bit to open the capital markets this year with increased rumours that regulation on the RFQLP programme should be announced shortly, adding yet another channel for off-shore RMB to come back into China’s mainland markets.
The shift in policy is also indicative of China’s increased awareness of money leaving China. With reports of both wealthy individuals and corporations legally and illegally sending money abroad, the issue which used to be too much hot money coming in, is now too much hot money going out. To a certain extent, this is a bit of a blessing in disguise for China as it will allow regulators to further open the market without risking the hot money inflows – which was viewed as a challenge in the past.
With the party congress set for November of this year, we’re unlikely to see too much more change until after Chinese New Year (Feb 2013). What we should be able to quickly determine though is how open the new leaders are to change and modernization of all industries, not just the financial services industry. As we’ve discussed on our blog before, this will largely depend on how quickly the new leaders can consolidate their power to be able to effect change and in which direction they decide to go.
Regardless, 2013 will be a new watershed for China’s financial services industry. Stay tuned early next year for our 2013 top financial technology trends report to see how we see things changing.