Abstract
Almost all financial services (especially digital payments) in China are affected by new innovations and technologies. New technologies such as blockchain, artificial intelligence, machine learning, deep learning, and data analytics have immensely influenced all most all aspects of financial services such as deposits, transactions, billings, remittances, credits (B2B and P2P), underwriting, insurance, and so on. Fintech companies are enabling larger financial inclusion, changing in lifestyle and expenditure behavior, better and fast financial services, and lots more. This chapter covers the development, opportunities, and challenges of financial sectors because of new technologies in China. This chapter throws the light on opportunities that emerged because of the large population of 1.4 billion people, high penetration, and access to the latest and affordable technology, affordable cost of smartphones, and government policies and regulations. Lastly, this chapter portrays the untapped potentials of Fintech in China.
TopThe Infrastructure Of Financial Services
Before 2000s, China was operating on a cash basis until when it adopted digitization in handling financial products and services. This was after a massive manifestation of the internet, the evolution of the e-commerce, reasonable mobile data cost and availability of smartphones. As a result, the Chinese adopted the digital money transfer and payment programs and abolished cash payments. Further, it created solid platforms for e-commerce, alternative banking, banking the unbanked population (financial inclusion) and many more financial services. As of now, Chinese fintech are largely focused on the domestic payments space, mostly in retail. This is a space that many Chinese banks have ceded to the technology firms. In a very short span of time, these companies have built new ecosystem models around the smartphone and delivered this to consumers through super-apps that deliver a customer experience marked by usability, simplicity, and convenience.
Key Terms in this Chapter
RegTech: Regtech is the management of regulatory processes within the financial industry through technology. The main functions of regtech include regulatory monitoring, reporting, and compliance.
Blockchain: A blockchain, is a growing list of records, called blocks, that are linked using cryptography. Blockchain was invented to serve as the public transaction ledger of the cryptocurrency bitcoin.
PropTech: PropTech is the use of information technology (IT) to help individuals and companies research, buy, sell and manage real estate. Like the way FinTech focuses on the use of technology in finance, PropTech uses digital innovation to address the needs of the property industry.
InsurTech: Insurtech refers to the use of technology innovations designed to squeeze out savings and efficiency from the current insurance industry model. Insurtech is a combination of the words “insurance” and “technology,” inspired by the term fintech.
Neobank: A neobank is a direct bank that is 100% digital and reaches customers on mobile apps and personal computer platforms only. Neobank does not operate traditional physical branch networks.