Daniel Slotta
Research expert covering Greater China
Fintech in China - statistics & facts
China in 2024 is an almost cashless society- almost all monetary transactions are conducted via mobile payments. Along with the rise of e-commerce, Alibaba and Tencent built a massive fintech ecosystem, leveraging the QR code to facilitate offline payments. Since then, the fintech sector has evolved into a massive industry encompassing a wide variety of financial services, but its development was not without challenges.
Tencent and Alibaba, the do-it-all duopoly
The two most prominent actors in the Chinese fintech industry are WeChat Pay and Alipay. As offspring of the e-commerce giant Alibaba and the messaging application WeChat, the payment function originally was an addition to the core business model. However, mobile payments proved to be so popular that they became their stand-alone product, integrating other financial services, such as wealth management and insurance, and even providing access to government services. In the shadow of the trailblazers Alipay and WeChat Pay, many smaller companies emerged, which helped build the fintech industry of today.Regulation vs. the wild west entrepreneurship
The history of Chinese fintech was characterized by rapid growth and government crackdowns. With enormous growth potential, many companies prioritized growth and gaining market shares, often disregarding consumer protection and existing regulations. Other companies outright scammed users. The most glaring example was the P2P lending industry, where providers competed for funds by offering higher and higher interest rates that they could not afford. To ensure the longevity of the fintech industry and protect consumers, the government had to step in and put regulations in place.A new fintech era
The wild west in the fintech industry is over. Under a stricter regulatory environment, the industry has matured and shifted focus from fast growth in new segments to a more sustainable and solution-oriented development. This includes leveraging cutting-edge technologies to address customer needs and a greater participation of established institutions in the traditional finance sector. Moreover, with the consumer segment covered by Tencent and Alibaba, companies shift to the B2B business and focus on providing more niche services.
