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China's Fintech Future Has Already Arrived

20 June 2018, 11:25 CET

According to EY's Fintech Adoption Index 2017, China is leading the way globally in terms of the number of consumers utilising fintech services.

Fintech

More than two-thirds (69%) of Chinese consumers had used at least two fintech services during the last six months of 2017, compared with the average adoption level worldwide of 33%. According to Thomas Bull, leader of the EY FinTech Adoption Index, China is home to a large "digitally-savvy" population that is traditionally "financially underserved".

The next Chinese fintech giant to come off the conveyor belt would appear to be Ant Financial, which could soon be worth twice the amount of Uber Technologies. The Ant Financial family, which includes Ali Pay and MYbank within its portfolio, is attempting to bring its inclusive financial services to the world stage, not just China. Earlier this year, Ant Financial managed to obtain a fundraising commitment of $10 billion to underpin its growth, making the overall company worth $150 billion. China's fintech unicorns are doing their best to bridge the gap between themselves and the fintech firms within Silicon Valley. Just five years ago, China's fintech firms were worth a combined $24.4 billion. Fast forward to the present day and its firms are now worth a combined value of $271.5 billion, compared with $369.9 billion in Silicon Valley.

There's no doubt that fintech firms' agenda in China is to not only provide an industry-leading financial services solutions to locals, but to make an innovative statement to the western world too. The electronic payments industry in the Far East is arguably the most advanced on the planet today. Mobile payment network, Ali Pay already has more than 520 million users, while its Chinese competitor, Tencent, has a firm grip on China's mobile payments market, which is worth a reported $16 trillion. Between Ali Pay and Tencent, these two companies comprise over 90% of the nation's mobile payment sector.

China smartphones

It is the sheer scale of China as a country which makes the fintech opportunity in the Far East so great. China has more internet users than those across the whole of Europe, with 772 million people having access to the web, with 95% of these also accessing the internet using their smartphone or tablet. China's accelerating urbanisation and acknowledgement of technology as the future has played a huge part in the explosion of fintech in the Far East.

It must also be said that China's largely underdeveloped banking system has also played into the hands of fintech innovators. Unlike the western world, where debit and credit cards and even cheque books have been firmly entrenched in everyday life, Chinese consumers are nowhere near as wedded to traditional payment methods. Consequently, China's fintech conglomerates managed to rack up 81 trillion Chinese yuan in total transactions throughout 2017.

The fact that many of these fintech unicorns in China are already viewed as behemoth brands in the Far East yet remain virtual unknowns in the west suggests China has some way to go to bridge the cultural divide. Ali Pay already boasts more than 270 million users outside of China already and Ant Financial's horizons are certainly not restricted to China in the years to come.

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