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.
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’.
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.