Global FinTech Survey China Summary 2017

The three main areas to be disrupted by FinTech in China over the next five years are consumer banking, investment & wealth management, and fund transfers & payments.  E-retailers, financial institutions and large technology companies will be the biggest sources of disruption.

FinTech business model needs to follow the basis of financial services in order to be closely related to the development of the real economy. As the economy evolves to a digital, smart and personalised business model and lifestyle, financial services needs to transform to a 3.0 model. This means they need to evolve from a product and channel-oriented model to a customer-centred one, with technologies as an important pillar.

FinTech offers opportunities to financial services in three areas:

  • Customers - Being low-cost and pervasive, FinTech enables financial institution to expand their customer base to under-served groups.
  • Products - As customer expectations shift from product-based to experience-driven, the service offerings of financial institutions are moving from unsophisticated and standardised to tailored and contextualised.
  • Channels - In the next five years, the importance of physical branches will diminish, with e-channels – especially mobile – moving centre stage.

Fintech brings challenges to the industry in three areas:

  • Competition - There is an increasing “winner takes all” tendency in the internet and technology sectors. Does this model work for financial services?
  • Regulation - The challenge for regulators is how to strike a balance between encouraging innovation and controlling financial risks.
  • Talent - Inter-disciplinary talent is the key to success in FinTech. Institutions need to figure out how to build such a talent pool.

In response to these challenges, financial institutions and FinTech companies are coming together for the common good. Financial institutions are responding in three ways:

  • Strategies & mindset - Over the next three years, Chinese financial institutions expect to strengthen innovation through internal efforts and partnerships with FinTech companies.
  • Resource allocation - Chinese financial institutions are looking at emerging technologies and are willing to allocate almost a third of annual turnover to FinTech investment.
  • Action plan - While financial institutions and FinTech companies are willing to increase partnerships, challenges need to be addressed. IT compatibility and differences in business models top the list.

The survey highlights three innovative technologies that will impact the industry profoundly. Understanding their features and building capacity around them will enable financial institutions to stand out from the competition:

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Matthew Phillips

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James Chang

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Global Technology, Media and Telecommunications Industry Leader, PwC China

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Jimmy Leung

China Financial Services Leader, PwC Hong Kong

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Yuqing Guo

China Centre of Excellence Partner , PwC China

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William Gee

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Margarita Ho

China Banking & Capital Markets Leader, PwC Hong Kong

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