IIF Authors

Status: Will be live at 09/08/2016 00:00

China Spotlight: Internet Finance in Focus

Thursday, September 8, 2016

Online payments open doors:Soaring e-retail sales support robust growth in online payments, with Alibaba and Tencent dominating. Fintech firms are increasingly tapping into social networks to expand in online payments. Against this backdrop, China has become the largest fintech market in the world.

E-commerce titans take on China's megabanks:Helped by a supportive regulatory environment and building off the world's largest e-retail market, major e-commerce players including Ant Financial, Wepay and Tencent are leveraging massive customer bases and investment in new financial technology to move aggressively into banking and other financial services. Many have plans for cross-border expansion.

New ways to access financial services:Along with trust funds, wealth management products and other "shadow banking" alternatives, internet finance-though still small-is changing the way businesses and consumers access financial services.

Support for consumer and small business lending, financial inclusion:Use of big data and other new fintech applications enables internet firms to provide loans to underserved customers, including SMEs and households.

P2P lending-much potential, but fraud prevention key:China's P2P lending market is the largest in the world, with total loans of an estimated $150 billion in 2015. However, much of this growth has been built on offering unsustainably high returns; long-standing problems with fraud have prompted a regulatory clampdown.

Rapid growth in internet insurance:Insurance is the one of the fastest-growing segments of Chinese internet finance-estimates suggest that online insurance premiums may surge from less than RMB100 billion in 2015 to RMB700 billion by 2018.

Heightened regulatory oversight going forward:While the authorities have been supportive of the development of internet finance, a comprehensive regulatory framework with a clear division of supervisory responsibilities is now being put in place.