commentary & opinion

The Growth of the Chinese FinTech Industry

Disruption, innovation generate $8.8B surge

NEW YORK, April 6, 2017 /PRNewswire/ — According to joint research report by DBS and EY, thanks to China’s openness to disruptive and innovative models, FinTech investments in China surged to a value of US$8.8 billion between July 2015 and June 2016.

This is equivalent to an increase of 252% since 2010. The report indicates that China’s FinTech industry is leading by huge margins in Asia Pacific with segments like payments and insurance are now beyond the tipping point.

Among the segments of the FinTech industry, non-banks lead with an impressive 35% or higher market share within the span of two years. Consumer Capital Group Inc. (OTC: CCGN), Yirendai Ltd. (NYSE: YRD), China Life Insurance Company Ltd. (NYSE: LFC), Yintech Investment Holdings Limited (NASDAQ: YIN), Noah Holdings Limited (NYSE: NOAH)

DBS chief innovation officer Neal Cross explained that it’s gotten this far because China’s landscape has operated in a sandbox-like environment conducive for FinTech to thrive – a strong domestic market, coupled with a constant push for innovation and experimentation driven by leading giants, unhindered by international influence. Much of this can be attributed to the favorable government policies and regulations.

EY APAC FinTech leader James Lloyd also commented on the subject, saying “China’s unique mix of rapid urbanization, massive and underserved market, e-commerce growth, explosion in online and mobile phone penetration, and customer adoption willingness have created a fertile ground for innovation in commerce, banking and financial services more broadly.”

Consumer Capital Group Inc. (OTCQB: CCGN) just announced earlier this morning that a subsidiary of CCGN, Yin Hang Financial Information Service (Shanghai) Co., Ltd (“CCG Yin Hang”) and Beijing Tongcheng Yilong Network Technology Co., Ltd.(“Yilongdai”) successfully signed a strategic cooperation agreement. Partnering with Yilongdai, CCG Yin Hang can provide better financial advisory service for micro, small-to-medium sized enterprises (“SMEs”) in China.

CCG Yin Hang offers financial consulting services such as loan origination criteria checkup, risk assessment and loan monitoring to SMEs and financial institutions in China. Yin Hang has developed its own big data risk assessment system to provide credit rating and risk management solutions to borrowers and financial institutions to facilitate loan origination process and reduce default risks for all parties involved in a particular lending transaction.

Risk Assessment Technology

In 2017, CCG Yin Hang upgraded and optimized its ‘Ingenuity IPCs’ risk assessment technology, developing a unique and mature risk management system. The new system not only is based on advanced technology, but also strengthened managers’ awareness of risk management. By using this new risk assessment system, the company can provide better financial and risk-management consulting services to SMEs and rebuild the small micro-financial ecology.

Yilongdai, a member of Lenovo Holdings, is the first ‘City O2O’ model online lending platform. Yilongdai aims to provide P2P loan service to farmers in rural areas and SMEs. The platform serves as an information provider, a matchmaker between lenders and borrowers and a risk controller. Yilongdai provides public with low threshold, efficient, safe and reliable financing means to meet their capital needs.

CEO and Chairman of the Board, Mr. Jack Gao stated, “Partnering with Yilongdai, CCG Yin Hang will offer SMEs alternative financing means through risk-controlled private lending to meet their capital needs and develop their business.”

Yirendai Ltd. (NYSE: YRD) provides an effective solution to address largely underserved investor and individual borrower demand in China through an online platform that automates key aspects of its operations to efficiently match borrowers with investors and execute loan transactions. Recently, the company announced that it has entered into an agreement of intent on performance bond with the Beijing branch of PICC Property and Casualty Company Limited. Under the terms of the Agreement, PICC P&C will provide Yirendai with performance bond for certain loans facilitated through the Company’s online marketplace.

China Life

China Life Insurance Company Ltd. (NYSE: LFC) is a leading provider of individual and group life insurance, annuity, and accident and health insurance in China. With its controlling stake in China Life Pension Company Ltd and significant stakes in China Life Property and Casualty Insurance Company Ltd, the Company has gradually expanded into other insurance-related areas. In 2016, the company launched ‘Xin Fu Yi Sheng’ at the Individual Agent Channel. The ‘Xin Fu Yi Sheng’ is a stand-alone insurance product, which can be bundled with two riders and the Xin Universal Account for comprehensive insurance coverage and high-quality wealth management.

Yintech Investment Holdings Limited (NASDAQ: YIN) is a leading provider of investment and trading services for individual customers in China. The company is focused on the provision of services for the trading of gold and other spot commodities. The company provides customers with comprehensive services, including account opening, investor education, market information, research, live discussion boards and real-time customer support. Yintech is actively developing new businesses including gold-based wealth management products, trading of cultural assets and trading of overseas securities, in order to provide customers with a wider range of products and services.

Founded in 2005, Noah Holdings Limited (NYSE: NOAH) is a leading wealth and asset management services provider with a focus on global services for high net worth individuals, enterprises and institutions in China. In October, 2016, the company announced that Noah, Gopher Asset Management Co., Ltd., a consolidated affiliated entity of Noah, and certain other affiliated entities of Noah had entered into an Investment and Cooperation Agreement with an affiliate of Sequoia Capital China. Under the terms of the Agreement, Sequoia will make a RMB348 million (approximately US$51.7 million) strategic investment in Noah’s asset management business by acquiring equity interests in an entity that will, through itself and/or its affiliates, hold all equity interests and asset management assets of Gopher.

 

 

 

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