Financial results from China's banks are improving recently as tight regulation is limiting the expansion of 3rd party competition, while overall bank profitability is increasing.
During the Internet Security Summit in Beijing on August 21st, Ant Financial announced the official upgrade for the security control of its digital payment platform – Alipay. The more secured process is achieved through what is called a 'Delayed Payment' (DP) function.
One morning in July, investors of Niubanjin Finance, a P2P platform with balance of 39 billion RMB at that time, tried to check their balance online, but only saw a system maintenance notification. They started feeling anxious and visited the local office in Hangzhou, only to find that the office had closed, and two policemen there to record their investment information, as proof of victims.
More and more Chinese individuals have accumulated a great amount of wealth thanks to the country’s economy boom in the past decades. As a result, the demand of wealth management is growing. With the help of new technologies, mobile wealth management (MWM) platforms are attracting more and more investors in China recently.
Fortune released the latest Global Top 500 list recently. 120 Chinese companies made the list, while US took the lead with 126 companies. Banking was the leading industry in China as China's banks come to the forefront again.
President Trump’s latest controversial policy of imposing tariffs on the EU, Canada and China has shook global trade. With around $34bn worth of tariffs on Chinese goods (with more tariffs proposed), he aims to reduce the US’s trade deficit with the hope that American consumers will buy less Chinese goods and more American goods, thus increasing net exports and GDP. However, China has retaliated with its own tariffs against the US (worth the same amount). It is clear that neither side wants to back down first so who will win this trade war?
The 20th China-EU high summit was held in Beijing this past week and attracted a lot of attention due to the current global trade tensions. As the speculation on trade war continues, the EU and China decided to stand together against Trump’s attack on the global trade system.
We have talked about the trend before, but starting to see more and more cooperation between fintech companies and banks. China Construction Bank Wenzhou Branch is now in cooperation with Alipay for a hospital payment service channel, ICBC is supporting WeChat’s QR code payment and JD finance and Citic Bank have issued over 2 million co-branded credit cards called the ‘White Card’. We're also starting to better understand the potential business models for both sides.
June 25th 2018, Ant Financial launched its E-wallet cross-border remittance service based on blockchain technology. Customers using Alipay HK can transfer money in real time to another E-wallet Gcash based in the Philippines.
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.
Ant Financial was valued at $150 billion recently, making it the biggest unicorn globally. As it completed its most recent $10 billion financing, the company has made it clear that Ant’s future is being a tech provider to the financial industry.
Cryptocurrency control in China seems to be getting stronger since the ban on September 4th, 2017. In a bid to further limit the use of crypto in China, the National Committee of Experts on Internet Financial Security Technology (IFCERT) is now monitoring 56 platforms that offer over the counter (OTC) cryptocurrency transactions.
On April 29th, the CSRC (China Security Regulatory Committee) officially released the Administrative Measures for Foreign-Invested Securities Companies.
China's banks have lost significant market share to fintech companies like Ant Finance and Tencent, especially in the mobile payment space, which the fintech companies have used as a basis to move into other market segments such as online lending. Banks have been distanced from consumers and there are concerns that people do not need banks any more. Are things really that bad?