As China's FinTech industry, led by Tennent and Alibaba, has exploded in recent years, regulators have been watching the industry’s growth carefully, in order to manage risk and protect consumers while still encouraging growth and innovation. In May 2017, The People’s Bank of China (PBOC), the country’s central bank and main regulator, announced the creation of a FinTech committee under the PBOC’s Technology Department to research the impact of the sector on financial markets and China’s monetary policy. In addition, the committee will also act as a coordinating body for the PBOC, as well as research and promote the implementation of regulatory technology (RegTech).
There is a large financing gap in the Hong Kong market, particularly for SMEs who have become increasingly frustrated with the lack of available financing. Thus, it was not a shock when Alibaba – the Chinese e-commerce conglomerate – invested $2 million into Qupital, a Hong Kong based online platform that allows mainly SMEs raise finance against their receivables by connecting them with professional investors and family offices.
There is a big blank space on individual credit scoring in China. The national individual credit reporting system was founded in 2005 by the Credit Reference Center, a part of the People's Bank of China (PBOC). But at the end of 2015, only 870 million individuals were included in the database, and only 370 million people’ credit history was in the system, covering just 26% of the whole population. On Jan 5th 2015, the Chinese government authorized 8 companies to prepare their own personal credit scoring platforms. One of them, Sesame Credit, is owned by Ant Finance and is the largest platform, but remains unlicensed.
Yu’E Bao, the world’s largest money-market fund, may have to limit its individual investment amount at RMB500,000 (USD$72464), which is half of the amount the limit is now. The implications aren't for certain at this point, but it could mean the end of the platform's growth in the future.
As the Indian economy grows rapidly, there is an opportunity to bring ever larger number of Indians into the banking mainstream through both public and private banks.
A press announcement on April 10th 2017 showed that Tencent, a Chinese online giant, led an investment in India’s electronic commerce company Flipkart, alongside eBay and Microsoft. The total amount was $1.4 billion and Tencent contributed $700 million, eBay $500 million and Microsoft $200 million. This was the first investment for Tencent into India’s e-commerce market. But the question remains, will it be a good move for the company?
In the last year, Panda bonds (the name of mainland RMB denominated bonds from a non-domestic issuer) have become increasingly competitive and attractive for investors. What explains the increased usage of inland bonds in contrast to slightly diminishing performance of the Dim Sum (RMB denominated bond issued abroad)? How do we define the current interrelationship of the two. And what is in store for the future of the Chinese bond market?
Nothing is easy in the banking industry, and it's getting tougher in China. The Chinese central bank (PBOC) used to control banks’ lending and deposit interest rate by setting high and low limits, as the top line and bottom line in the chart. If a bank in China can always lend/borrow at the limit rates, the margin would not change much over the years. However, the story is not that simple.
Over the past year, China's Consumer Finance industry has been attracting a significant amount of attention. It may be the next hot spot for financial development in China.
The new US President Donald Trump has made clear his intention to roll back, and possibly repeal, the Dodd-Frank Act of 2010. This will have wide-reaching repercussions for Asia.
China’s consumer finance industry is booming amid the rising level of consumption among the Chinese Millennials group, a population representing nearly one-third of China’s whole population. The scale of the industry has been pushed to RMB 107.72 billion by total asset value by September last year, almost doubling the scale of RMB 51 billion in 2015.
December 6th, 2016 China Merchants Bank (CMB) held its press conference in Shen’Zhen, China, for its new AI wealth management product: MachineGene Investment, or “Mo’Jie” in Chinese. The launch represented the first time a Chinese bank released a wealth management product based on AI/Robot technology.
The recent move by the Indian Government to ban the old Rupees 500 and 1000 notes has created turbulence far beyond what was imagined and planned for. The intent was laudable, as the Indian Prime Minister Narendra Modi sought to curb growing corruption in the economy. However, the lack of preparation on part of the central bank, the Reserve Bank of India (RBI), and the commercial banks has meant that the citizens have been left in the lurch.
Recent announcements in the personal credit scoring market in China show that both global established giants and smaller, but cutting-edge companies are carving out niche markets for themselves in the country.
Since December 1st, China’s Central Bank, the People’s Bank of China (PBOC), has implemented a new Classification Management Rule for Personal Bank Accounts in China. It divides individuals’ bank accounts into three categories: 1. the main account, 2. the wallet for everyday use and 3. the 'coin purse'.
As part of our China Fintech initiative, we brought a group of Chinese executives to Singapore for the Fintech Festival and a number of company visits. The 17 fintech executives from some of China's largest P2P lenders, consumer finance groups and digital payments platforms were part of the group.
The Singapore Fintech Festival concluded on Friday November 18th, much like it started, with a bang. At the beginning of the week it was the Monetary Authority of Singapore laying out its vision for the future of fintech, while the closing party consisted of drums, music and a celebratory finish to a hectic week of innovation center visits, conferences, meetings, openings, drinks, awards ceremonies, more drinks and a general celebration of Fintech in Singapore.
KPMG and H2 Ventures, an Australian Fintech ventural capital company, have issued their report on the 2016 Top 100 Global Fintech Companies. Amongst many of the key findings in the report, it is clear that China Fintech is in the lead.
Last week, the People’s Bank of China (PBOC), China Banking Regulatory Commission (CBRC), China Securities Regulatory Commission (CSRC) and China Insurance Regulatory Commission (CIRC), who are collectively known in China as the “Yi Hang San Hui” (one central bank, three commissions), have issued four major implementation plans around Internet finance. The plans are aimed at reducing risk and further issues in the internet finance industry. Although the regulations will mean tighter controls around internet finance and fintech development in China, it should result in a more healthy environment for the industry in the future.
On October 14, HNA Usolv, a cross-border trade solutions provider under the brand of HNA Group, signed a cooperation agreement with CRIF, one of the leading European credit information companies.
On Oct 6th, the Reserve Bank of India (RBI) released the operating guidelines for Payment Banks (PBs) and Small Finance Banks (SFBs).
Although it was only a week ago, Sibos 2016 already seems like a distant memory with most of the world (with the exception of the Chinese who are still in the midst of the October holiday) back to work. Hosted in Geneva, the conference didn't disappoint. The week was packed with meetings, panels, discussions, and presentations.
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.
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.
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.'
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.