Fintech is exploding.

It is a global industry, striving to change the future of finance.

…And the future is now. At Kurtosys, we’ve set out to cover exactly what’s happening in the financial industry the world over, one country at a time. With so many places contributing to the advancement of our digital world, each deserves their own time in the spotlight.

And now, not only Asia’s largest economy, but also one of the world’s largest developers: China. The Middle Kingdom is tech unicorn heaven, and its massive mobile payments sector alone is simply the tip of the iceberg that is its domineering fintech ecosystem.

China-fintech-infographicIt is without any doubt that the theme of this World Series article is size. China is the third largest country in the world, with a population four times the size of the US (over 1.3 billion people – the most worldwide, unsurprisingly). It is also considered to be the oldest civilisation, with the globe’s first written language, alongside other inventions such as toilet paper (only for use by emperors back in the day though), waterwheels, tea, medicine, mathematics and astronomy, silk and ice cream, plus the biggest man made structure: the dominant Great Wall of China, which has been found to extend to over 13,000 miles, its mortar made out of sticky rice. Wow. More modern developments include the bullet train. Shanghai to Beijing in 5 hours? No bother. I know how amazing this experience is having just returned from visiting this enchanting country myself (check out a collage of personally-taken snaps below!)

An Ongoing Effort

Much of China’s financial success at the latter stage of the last century can be attributed to the economic reforms of Deng Xiaoping, focusing on a market-orientated mixed economy and the introduction of Special Economic Zones (SEZs, increasing trade links) and state-owned enterprises (SEOs). Growing at a rapid rate, China is now placed as the second largest economy by nominal GDP, with a focus on investment and export-led growth. And with technology being one of Zhou Enlai’s ‘Four Modernizations’ (enacted by Deng Xiaoping in 1978), unsurprisingly, its native e-commerce and fintech scene is similarly starting to gain momentum in the present day, looking to take the rest of the globe by storm, as we shall see.

To get things moving, it’s worth starting by highlighting that, according to the International Trade Administration, China has been given the rank of 1st in the Digital Payments sector, and 2nd place in the overall fintech markets ranking. This corroborates Statista’s figures that the transaction value in the fintech market from this year is US$1,086,493 million, with a projected growth rate of 27.4%. By 2021, this figure is expected to reach US$2,861,126 million (more than double!), and the number of potential users by this time is predicted to be around 1,016 million. The success of mobile payments services in China can be attributed to the fact that over 500 million people own a smartphone, with payments on mobile devices possibly reaching an impressive half a trillion dollars this year. Once you’ve seen first-hand the Chinese population’s mobile phone usage in everyday life (particularly for transactions), then you really understand the usefulness that mobile fintech possesses. Trust me.

In financial/techy speak, unicorns are a huge indicator of a nation’s progress in the fintech sector, and out of 27 fintech unicorns, China is home to 8. This Crazy 8 has raised funds of $9.4 billion and has a combined valuation of $96.4 billion. Going one step further, the top 4 worldwide unicorns just so happen to be Chinese companies, and are valued as such:

  • Ant Financial: $60 billion
  • Lufax: $18.5 billion
  • JD Finance: $7 billion
  • Qufenqi: $5.9 billion

Ant Financial is the fintech arm of Jack Ma’s e-commerce giant Alibaba, originating from mobile payments platform AliPay, and also accommodates the globe’s biggest money-market fund Yu’e Bao (around $125 billion AUM). AliPay will feature a lot here, as its nationwide usage makes it part of China’s living fabric; an absolute necessity for what is a largely under- or unbanked population (over 30%). One way to visualise AliPay’s power is taking into account the fact that it made three times as many transactions as payments giant PayPal in 2015 – $931 billion as opposed to $232 billion.



Thoroughly impressive, but as the third-party payment and financial product transactions are not controlled or even seen by banks, it has allowed for the internet giants in China to offer financial services to the underbanked. Given the 2,028 online marketplace lending platforms in 2015, there’s a saturated area of competition, as packed as the viewpoint of Shanghai’s Bund on a Saturday night, so these providers use their size to dominate the financial services space. The ‘big three’ tech companies, so to speak, are known as the BAT (Baidu, Alibaba and Tencent), and control 80% of China’s mobile payment market. How’s that for asserting dominance?

Financial Services: Baifa
HQ: Beijing

Financial Services: Ant Financial and MYbank (a branchless bank)
HQ: Hangzhou

Financial Services: Licaitong (a wealth management platform) and WeBank (China’s first online-only bank)
HQ: Shenzhen

On top of this, China’s very own messaging platform (and basically an all-encompassing social networking experience to rival Facebook/Twitter/Snapchat/Instagram etc.) WeChat offers WeChat Pay, which won China’s CITIC Bank the “Best Fintech Award” in 2016. As the Digital Finance Institute notes, 70 different Chinese cities offer services through WeChat, and 86 offer services through AliPay. These are the two leaders in payment services, ubiquitous amongst the population. In fact, EY has discovered that 1 in 2 people use AliPay or WeChat’s payment services on their smartphone to make general transactions.

As highlighted by Deloitte, China’s (main) two fintech hubs are…


With a Global Financial Centre (GFC) ranking of 22 and a Global Innovation Index score of 25, this SEZ has rightly been dubbed the “Silicon Valley of China”. High praise indeed, and it acts as the base for commercial banks Ping-An Bank and China Merchants Bank.


An international financial hub on China’s East Coast, ranked the 16th best GFC, and also with a Global Innovation Index score of 25. Home to Lufax and a large amount of significant investors such as Sequoia Capital and the Bank of China.

Yet, China’s a pretty big place (you get that, right?), and other cities act as prominent tech hubs. Beijing (the “Northern Capital”), for example, is the headquarters for such tech multinationals as Microsoft, IBM and Cisco, as well as native companies and the aforementioned Baidu. Similarly, other cities flying the flag for innovation are situated in China’s West: Chongqing and Chengdu, both of which have wonderfully spicy regional hotpots (which you should try) and Suzhou, an up-and-coming canal-centric city close to Shanghai.

Food and holiday recommendations aside, large number of investments have of course been a major factor for Chinese fintech growth. Between July of 2015 and June 2016, they reached a whopping US$8.8 billion. This happened to be the largest share of global investment, topping North America and Europe in 2016’s first seven months, and a 252% increase since 2010. Yet, EY also explains that there has been a slow rate of economic growth of late, and the mobile payments boom has deprived banks of income, providing challenging times for financial services. Also, “low income” customers (<RMB100,000 a year) struggle to meet the investment threshold for traditional wealth management products offered by banks (a minimum of RMB500,000) and there are 8.1 commercial bank branches and 55 ATMs per 100,000 people, meaning the need for digital finance is of utmost importance to the populace. Already, internet-based wealth management and trading platforms have around 100 million users.


China’s Changes

Then again, the country’s banks, financial services companies, tech giants, investors and the government are all starting to pull their weight to amend this situation and place China at the top of the financial tree. Given the country’s 7.6 million financial services employees (including 10,000 fintech specialists) and the fact that it houses 11 of the top 50 world banks by asset size, it has a firm foundation.

  • In 2013, Shanghai was declared a free-trade zone. The Shanghai government has launched an “Entrepreneurship in Pujiang Action Plan” in a bid to attract fintech companies to the internationally-minded city.
  • There is a plan to make government services accessible on mobile by 2020, which would prove to be successful given the fact that 92.5% of China’s wealth of smartphone users are also actively online.
  • Also planned for a 2020 roll-out is a Nationwide Social Credit System. This would involve assigning a credit score to all Chinese citizens and businesses based on their financial and social behaviour. The government has granted licenses to eight private enterprises to develop the credit scoring systems.
  • The National Internet Finance Association (NIFA) is run by China’s central banks, with 400 members from both traditional finance and internet finance companies to regulate Chinese fintechs and control risk.
  • The NIFA has also launched the Internet Financial Industry Information Sharing Platform to accelerate the entry of credit scoring into the internet finance sector.
  • An emerging industry innovation investment fund for digitalisation has been set up, amounting to RMB40 billion (US$ 6.5 billion)
  • In fact, the government operates over 750 funds to assist startups. In 2015, it raised US$231 billion and also pledged a further US$6.5 billion in government grants, tax breaks and subsidised technology parks to startups.
  • The Treasurer has also noted that a $1.5 billion fund-of-funds has opened in China to stimulate investment in the Asia-Pacific fintech scene, run by a consortium of 11 fintech firms, private equity lenders and state-owned enterprises.
  • This is on top of Beijing’s Zhongguancun fund-of-funds, launched in July 2016, and valued at $4.5 billion.
  • The “Internet Plus” plan aims to integrate mobile cloud computing, big data and the Internet of Everything to develop the sectors of e-commerce and mobile banking. It is a ¥40 billion fund.
  • The People’s Bank of China is developing its own digital currency based on (our new friend) blockchain technology. This is being undertaken to lower operating costs, increase efficiency, and to control illicit transactions and negative interest rates (as cited by PBOC governor Zhou Xiaochuan).
  • The Beijing-based China International Payment System (CIPS) will enable cross-border trade settlement, investment and transactions in Yuan (¥). Fintech firms transacting in the currency can have reduced cost and processing times.

On top of this, 20% of China’s finserv workforce is made up of ‘returnees’ that have gained experience in the financial and tech sectors abroad, and the Chinese government is hoping to ease regulatory issues for foreign startups wanting to set up in China. There is a need to obtain a ‘foreign-invested enterprise establishment’ approval from the PRC’s Ministry of Commerce (MOFCOM), an application process which can last between 1 and 3 months, with additional approval needed from three finserv regulators: the People’s Bank of China (PBOC), the China Banking Regulatory Commission (CBRC) and the China Insurance Regulatory Commission (CIRC). Elsewhere, the Administration for Industry and Commerce (AIC) operates to deal with approval letters and certificates and additional registration relating to various government departments. However, the government has streamlined administration approval for foreign investment since October 2016, whereby plans are submitted to local regulators for swift approval.

A month later than this date, the UK’s Financial Conduct Authority (FCA) and the PBOC have established a joint initiative to provide domestic investors with new opportunities, opening their market to foreign capital, as reported by Crowd Valley. The so-called London-Shanghai Stock Connect aims to transfer information and regulatory issues for traditional banks, asset managers and fintech companies. Considering China and the UK are ranked 2nd and 3rd respectively worldwide in the alternative finance industry ($74.16 per capita and $72.41 per capita), this seems a smart move between two similarly forward-thinking financial world centres.

I wouldn’t consider myself much of a photographer, but here are some personal shots of sights around China.

To cap off our adventure across the Middle Kingdom, here are China’s major investors and fintech startups (featuring in the KPMG Fintech 100 2016).


Legend Capital
CDH Investments
Guotai Jun’an Securities


#1 – Ant Financial – The world‘s leading third-party online payment platform, dedicated to create open ecosystem of financial services for SMEs and individual consumers. It covers digital payments, wealth management, private banking and cloud computing services and has developed its own complete online wallet and partnered with some of China’s leading banks. It was founded in 2004 by Lucy Peng (exec-Chair and CEO) with its HQ in Hangzhou.

#2 – Qudian – A student micro loan site and investment management platform to broaden the amount of financing available to non-credit card holders in China. It partners with companies in finserv, e-commerce, digital services and other sectors. Founded in 2014 by Luo Min (CEO) and based in Beijing.

#3 – Lufax – An online lending and wealth management platform owned by Ping-An Group. It provides risk management services, trading information and consulting services for enterprises and finserv institutions and investors. It is based in Shanghai and was founded in 2011 by Ji Kuaisheng (Chairman/CEO), Gregory Gibb (Chairman), Li Renjie (Chairman) and Huang Wenxiong (Deputy General Manager).

#4 – ZhongAn – Internet-based insurance which uses mobile internet, cloud computing and big data services to help users search insurance products with a focus on travel, accident and health. Founded in 2013, with its HQ in Shanghai, by Chen Jin (CEO), Xu Wei (COO) and Jiang Xing (CTO).

#10 – JD Finance – A smorgasbord of financial services for consumers, startups, SMEs and businesses including supply chain finance, consumer finance, crowdfunding, wealth management, payments, insurance and security. JD Finance attempts to manage risk and lower the general costs of financial services. It also owns these platforms: JingBaobei (a microloan platform), Baitiao (a crowdfunding platform) and Jintiao and Xiaobai (wealth management services). It was founded by Richard Liu in 2013.

#34 – Rong360 – A customised financing and loan platform allowing users to search for financial services (loans, credit cards, wealth management services). It gathers data to provide recommendations for individuals and SMEs. It is based in Beijing and was founded in 2011 by Ye Danqing (CEO), Luija Yan (VP, Operations and Banking Relation) and Liucao Feng (VP, Product Technology).

#39 – Pintec – Pintec uses big data to provide financial services solutions to consumers and SMEs. Its brands include Dumiao (AI to provide loans to consumers), Xuanji (an online advisory tool for asset managers), Hongdian Fund (a fund sales platform) and 76hui (which obtains licenses from regulatory authorities to check credit references). It was founded in 2013 by Dong Jun (CEO) and Wei Wei.

Large country, large article. Clearly, The Red Dragon is riding on its successes from Baidu, Alibaba and Tencent and their already established financial services products, all tools used widely by the Chinese population. Given changes to regulation and more market trading opportunities with the West, this world-leader is certainly poised to propel itself even further above the global fintech pack. 干杯!

If you have any thoughts about fintech in China, let us know in the comments below, or you can tweet us.

Check back soon for more instalments of The Fintech World Series!

Elliot Burr

Elliot Burr

Content Marketing Editor at Kurtosys
Fervently chatting about the future of funds and fintech.
Elliot Burr