On September 28th, the Postal Savings Bank of China (PSBC) (1658.HK) finally made its IPO debut in Hong Kong after a lot of speculation.
Meituan-Dianping, the result of the merger of the group buying titans Meituan and Dianping, completed the acquisition of payment company QiandaiPay on the September 27th. The deal is significant in a few ways and demonstrates the current state of affairs in China’s payments industry.
Sibos is in full-swing here in Geneva with a record number of delegates and exhibitors on Day One already. Kapronasia is delighted to be part of Sibos 2016 and will be participating in three sessions of the next couple of days. Please join us at one of our sessions to hear our insights on the latest Asia Financial Industry trends and how we can help your business succeed in Asia.
Here are the highlights:
On Tuesday September 27th at 11am Zennon Kapron will be moderating the Payments Market Infrastructure Roundtable. The session is a closed door event with regulators and central banks across the region to discuss the latest trends and challenges in payment infrastructure in Asia.
On Thursday the 29th of September from 12:45-13:45 in the Innotribe space, Zennon Kapron will be guest speaking on Fintech Hubs and more specifically the developments around China Fintech.
Later that same afternoon on Thursday the 29th from 14:00-15:00 in Conference Room 3 (CR3), Zennon will join an expert panel to speak on the topic of Emerging Markets: Mobile money and financial inclusion.
The Bank of Harbin was granted a license to set up its consumer finance company, Hayin, on September 19th. The bank owns 59% shares of Hayin’s equity with paid-in capital RMB295 million ($44 million). It is another consumer finance license which is issued by the China Banking Regulatory Commission (CBRC) to a company that has a banking background.
On September 4th, Urjit Patel officially became the new central bank chief in India. He succeeded Raghuram Rajan, who was famous for largely stabilising the economy during his three year term. Under Patel's leadership, the Reserve Bank of India (RBI) is expected to continue the current policy regime.
The recent introduction of offline mobile banking apps in India underlines the determination by both government and private banks to push financial inclusion in India and is a strong signal that India is ready to embrace fintech and innovation to solve complex problems within its banking network.
China's internet finance, or fintech, sector has had a busy couple of years as the industry has developed to be a critical part of the financial industry as a whole. Yet, the developments have been somewhat imbalanced. While areas like digital payments and asset management grew and matured, others like credit scoring fell behind. On September 9th, China's National Internet Finance Association (NIFA) finally launched their digital Credit Information Sharing platform, which really brings credit scoring into the fintech fold in China.
Over the past year, China's National Development and Reform Commission had been defining and refining the new payment card merchant fees. These came into effect on September 6th. The requirements have a range of implications, and are impacting the industry already.
Leaders of the world's largest economies gathered at the G20 summit in Hangzhou, China this past week. For the first time, 'Green Finance' was written into the agenda among other topics. Clearly, there is more that we could do as a global society to manage climate and environment change, a fact recognised by many of the attendees. The effort also showed China’s determination to move towards a low carbon and more sustainable development track.
Xiaomi, the well-known Chinese technology focused electronics company, has announced the launch of its payment services “MI Pay”, which is in cooperation with China Union Pay, the biggest Bankcard Association in China. The official launch date is September 1st. After Apply pay, Samsung Pay, Xiaomi is yet another mobile company joining the competition with Alipay in the third-party payment industry in China.
Indian messaging app Hike raised $175 million in funding from global investors this month. This round of funding valued the messaging app at $1.4 billion, cementing Hike's entry into India's coveted "tech unicorn" club. Even so, it was one of Hike's new shareholders that lifted more eyebrows. Tencent, the owner of WeChat and China's most popular messaging app, were among the investors throwing their bets behind Hike. Kapronasia takes a look at possible advantages of this new relationship.
The recent announcement that Canadian merchants will now accept UnionPay’s mobile QuickPass payment, along with Ingenico partnering with Alipay to provide mobile payments in Europe, highlight that huge strides are being made by both UnionPay and Alipay to infiltrate Western markets and that these efforts are being supported by the Western payments industry.
Beijing has approved a new trading link between Shenzhen’s and Hong Kong’s stock markets to be opened by the end of the year. With the start of the Shenzhen-Hong Kong link, 880 companies will be added to the already available 567 through the Shanghai link that opened in 2014.
On Aug 12th 2016, the People’s Bank of China (PBOC) issued license extensions to the first group of companies in China to ever receive a third party payment license five years ago. It was a long wait for the 27 firms. Their licenses, including those of industry giants Alipay and China UnionPay, had expired 78 days ago.
Ant Finance, the most valuable Fintech startup in China, announced their plan to launch another payment app based on Virtual Reality (VR) technology. It will allow customers to make payments when they are using VR.
Inclusive finance is one of the most focused on issues for the Chinese government this year. In January, authorities issued a five-year plan for the development of inclusive finance in the country, and since then, the term has appeared multiple times in government reports and is still gaining traction.
One of the significant implications of the Brexit EU referendum is that over 40 years of political and commercial contracts and relationships will need to be reviewed. Once Article 50 of the 2007 Lisbon Treaty, which specifies the procedure for the exit from the EU, has been implemented, the UK will then have two years to negotiate its withdrawal as well as its participation in all of the existing UK-EU arrangements. Although the new Prime Minister, Theresa May, has stated will only happen next year, the UK will need to re-establish its current trading interests and create new ones. One of the most critical partnerships to be re-negotiated will be the one that it has with China.
In its August 2016 report on the use of Unstructured Supplementary Service Data (USSD) for mobile financial services, the Telecom Regulatory Authority of India (TRAI) conceded that their attempts to replicate the success of USSD mobile financial services in other nations, such as Kenya’s M-Pesa, and provide banking solutions for the underbanked, had failed.
In July, China released the second draft of its Cyber Security Law, just a year after the release of the first draft. On one hand, many of the key terms listed will have to be better defined before it is possible to draw definite conclusions about the implications of the Law. On the other, it is already clear that the Law makes it harder for foreign technology companies to conduct business in China, and this will likely be the case for financial institutions too. Specifically, the second draft does that by expanding and blurring the scope of the regulation, giving authorities broader access to information systems and raising data localization requirements.
Last week, the government injected Rs 22,915 Crores or approximately $ 3.14 billion in 13 public sector banks in India. Of this one third of the allocation went to the State Bank of India. The capital infusion is expected to help banking institutions clean up their books, increase lending activity and also raise additional funds. However, not everyone is celebrating the move.
Over the past few months Alibaba's 'Finance Cloud' has gained significant traction with an estimated 40+ banks subscribing to some, if not all, of the services available on the financial platform. Far from just a cloud platform, Ali Finance Cloud is the closest we have seen to 'Bank in the Cloud.'
Kapronasia was co-organizing the PitchIt part of the LendIt 2016 event in China and we had a chance to talk to a number of exciting fintech start-ups. Two of the pitching start-ups are targeting Chinese retail investors but they do this in a very different ways, which, in fact, tells us a lot about the mindset of retail investors in China; the start-up which understands the market better wins.
According to a report filed by a leading business daily in India, the Securities and Exchange Board of India (SEBI) has abandoned proposed regulations for the Indian crowd-funding industry. This is clearly a big boost for the fintech industry and in particular the P2P lending industry in India.
Blockchain technology has become one of the hottest topics in China Fintech. So when Ant Finance, the most valuable tech unicorn company in the world, announced they were working on a blockchain-based solution for the charity space, it captured lots of attention - but what is behind the move?
Assessing SME (Small and Medium Enterprise) credit has always been a difficult problem for banks and other financial institutions because lack of credit rating and reporting platforms. Last week, Sesame Credit announced the launch of their own credit checking and rating system for SMEs. They named it “Ling’Zhi” - which means “smart sesame” in Chinese. This new system may be the start of solving the SME credit issue and open up new funding channels to SMEs themselves.
At Lendit’s China conference in Shanghai this week, Kapronasia learned that Chinese digital payments giant Alipay is close to rolling out its new facial recognition software to the public. The lender – whose payments system holds about 48 percent of China’s online payments market share last year – has already made the feature available for employees, and plans to open it up to the public in the next few months, according to a source from Ant Financial. To pay with a selfie, Alipay users use a camera installed on the online payments platform to take a picture of themselves and the platform uses biometric methods to verify their identity. Ant Financial, which runs Alipay, is an affiliate of Hangzhou-based Alibaba Group Holdings.
The Reserve Bank of India (RBI) has formed an inter-regulatory working group to address the regulatory issues relating to fintech and digital banking in the country. This is a welcome step in the right direction, in line with recommendations by Kapronasia in its recent report titled: ‘Fintech Regulation in Asia’.
China is pushing its card industry towards tokenization as it seeks to make digital payments more secure on the Mainland. Banks and payment service providers (PSP) are required to use tokenization to process transaction data by the end of this year, according to Chinese business publication National Business Daily, citing a notice from China’s central bank.
Fintech companies in China are raising investor eyebrows this year, with such firms breaking global fund raising records. Even as the amount of venture capital flowing into China has slowed from its peak in 2015, data compiled by KPMG Enterprise and CB Insights show investors are still bullish on the fintech industry. The money invested into China’s fintech sector reached a record high of $2.4 billion in the first quarter of the year, the consultancy said. This amount was boosted by deals into two of China’s so-called tech unicorns: Chinese P2P lender Lu.com and JD Finance.
Fintech in China started as 'internet finance' or 互联网金融. As the first real China fintech giants tended to come from internet finance platforms, like P2P lenders or financial distribution platforms, the name seemed to make sense, so the term 'fintech' was rarely used. However, today, we're seeing an interesting phenomenon in China as more firms are transforming their businesses to be more 'fintech focused', but what does that actually mean? Is fintech different than internet finance? And more importantly, why now?
Automated advisory platforms, or Robo-advisors, have shaken up the finance industry in many parts of the U.S. and Europe. China's wealth management industry is now the next in line to receive such a boost.
Securities market regulator the Securities and Exchange Board of India (SEBI) has taken credit rating agencies to task after a spate of fiascos wherein a rating agency downgraded a certain paper from BBB+ to BB+ and finally D all within a span of month. In another case the credit rating agency suspended ratings on a certain stock citing non-availability of sufficient information. Interestingly, in both the cases the companies have been called out for debt servicing issues in the wake of the NPA process at major Indian banks.
The Department of Post (DoP) is all set to launch its payments bank by September this year after receiving the in-principle approval from the RBI to launch the same in August last year. With over 154,000 post offices of which 130,000 are operating in rural pockets of the country the new bank is expected to be a sure winner on account of the distribution strength. No wonder that some of the world's top 50 banks including Barclays of England, Deutsche Bank of Germany, Citi Bank of USA and the World Bank wanted to link themselves with the postal department for a piece of the action.