This is the third in a series of posts Cognito is preparing ahead of Sibos in Beijing. The world’s premier banking conference is coming to Mainland China for the first time, so we’re using this as a chance to explore what China can teach the rest of the world about relevant technology.
Once inside the China National Convention Center, the former Olympic fencing facility hosting this year’s Sibos Conference, you’ll enter the Convention Hall, where sponsoring institutions draw crowds with booths and exhibits.
Swift estimates there will be more than 125 companies there in October. Some are widely known: NatWest, UBS, Red Hat, Visa and ABN Amro are all sponsors. Others might be noticeable in their absence: HSBC, BNP Paribas, Societe Generale, Citibank and Standard Chartered were in Toronto but won’t be making the journey to Beijing.
But rather than focus on the absence, we suggested paying a bit more attention to names that aren’t as familiar in the West. Sibos will be a great chance to hear from and look into innovators who have built their own niche in the billion-person market. It is also a window for see how Chinese entrepreneurs navigate the challenges of strict regulatory oversight and expand their business to international expansions.
Here we briefly cover three and what this says about the overall fintech market in China.
Meet three Chinese fintech terms in the hall
Ping An Group – Renowned for its extensive work in insurtech and wealth management, Ping An integrates cutting-edge AI and blockchain technologies into its services. The Ping’An group is one of China’s largest financial services companies, with a particular focus on different types of insurance. The company has invested heavily in advanced technologies to enhance digital healthcare, insurance underwriting, and financial risk management, seeking to close the gap between traditional insurance and modern financial solutions.
JD Digits (JD Technology) – JD Digits focuses on providing AI-driven fintech solutions, particularly in smart city development, digital marketing, and financial risk management. What sets it apart is its seamless integration of AI and big data to offer more personalized financial services, emphasising improving user experience in the digital economy. (Walmart previously invested in the company but recently announced it was selling off its stake.)
Lufax – As one of China’s largest peer-to-peer lending and wealth management platforms, Lufax specializes in offering accessible investment opportunities for a broader range of consumers, particularly in underserved markets. The company’s overall lending has decreased sharply this year as the government has tried to bring down risks in the consumer lending sector.
What they can teach us
Chinese firms differ from European companies in that they primarily operate in one large market, one single regulator. While the various banking and technology regulators have sometimes moved irregularly in the past, there’s a move towards increasing communication and professionalisation. The regulatory framework established seeks to ensure that fintech innovations align with financial stability and consumer protection. Regulations often require fintechs to collaborate with licensed financial institutions, such as banks, to offer certain services.
China has an explicit Fintech Committee, created to oversee the development of fintech in China. The Fintech Committee is responsible for creating a framework that balances innovation with risk management. Industry associations in China are typically semi-governmental entities, and the Fintech Committee, backed by the PBoC’s, focuses on digital currencies (including the digital yuan or e-CNY), fintech innovations like blockchain, and financial stability. While the committee has continued to meet, there’s been comparatively little written in English the past couple years).
What the innovators above show us is that China isn’t playing catch up to the West – it’s a completely different market that’s proven itself able to create at scale for a very large market.
Although the largest of these companies are worth billions of yuan, they still have to navigate their relationships with the true behemoths of the industry. Rather than directly competing with Alipay and Tencent (behind WeChat Pay), these firms are helping expand fundamentally. Payment systems, lending services and wealth managements are areas where China is trying to develop deeper networks and more collaborators.
Janet Lin is based in Cognito’s Hong Kong office. Jon Schubin in London contributed some additional material
