Chinese Firms Adopting FinTech with More Urgency than Rest of the World

Chinese Firms Adopting FinTech with More Urgency than Rest of the World

Though most of the technology news out of the financial sector seems to come from the United States and Europe, another location — with a much larger population — has the largest fintech market in the world.

A recent report from big four auditor and professional services firm PwC highlighted the scale of China’s fintech industry, revealing that traditional consumer banking, payments, and investment/wealth management are all being upended by the digital revolution.

Financial companies in China are investing big money into fintech — and with good reason. While the annual return on investment (ROI) for fintech stands at just 14% in Europe, that figure is nearly three times as high, at 38%, in China, according to PwC.

“Chinese respondents are among the most bullish in the world,” stated PwC’s Global FinTech Survey China Summary 2017. “This confidence is based on China’s massive and growing internet usage. The penetration rate for financial services applications, such as mobile payment (67.5%), mobile banking (48%) and in particular mobile stock trading / wealth management (7%) demonstrates huge potential.”

With such potential, it’s no wonder that the survey shows that more than two-thirds (68%) of financial institutions in China are planning to ramp up their fintech partnerships in the next three to five years. Another 85% believe that mobile apps are currently the fastest-growing channel for customers, while personal loans are the transaction type that the most people see migrating to fintech in the next half-decade.

As with anything, advancing fintech in China will not come without challenges. Nearly three-fourths (71%) of respondents believe a price war for fintech will be one of the biggest hurdles. Regulation also remains a problem to overcome along with finding enough talent and out-dueling the competition in all aspects of fintech.

“The regulatory challenges of keeping pace with these changes are significant … Some Chinese respondents feel that regulations have been a barrier to innovation,” according to PwC.

But ultimately, these are viewed as challenges that will be overcome, not factors that will hold back the industry. The PwC study shows that, in a nation with so many people, the benefits of better serving the client are tremendous. So rather than worrying about adapting to disruption, almost everybody is racing to be the driver of change and attract a customer base that is currently underserved.

“Traditional institutions are transforming themselves at a pace not seen before with greater urgency than in most other markets,” stated the report. “There is less talk of disruption in China than elsewhere while more concrete steps being taken.”

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