Chinese bankers’ concerns about falling behind on fintech investment are at a three-year high, as they consider their existing information technology system to be “a major drag” on business. Results from the Chinese Bankers’ Survey 2018, jointly conducted by consultancy PwC and the China Banking Association, found that about 38 per cent of the bankers viewed the current IT systems at their banks could “barely satisfy” ongoing business operations and see it weighing on their operations. This has risen from 30.4 per cent in 2016 and 34.1 per cent in 2017. The findings come as newly minted internet banks like MYbank, backed by Ant Financial, and Tencent Holdings-backed WeBank, could potentially challenge the dominance of incumbent bricks-and-mortar institutions with their parents’ fintech supremacy. Ant Financial is the fintech affiliate of Alibaba Group Holding, which owns the Post . Richard Zhu, north China financial services leader at PwC China, said that the bankers’ growing frustration reflects their heightened awareness on how fintech investment is increasingly impacting banks’ competitiveness. “We see this as positive, because their increasing concern over fintech investment also means that they want to see their banks accelerate investments on integrating technology with traditional banking operations,” said Zhu. Li Jian, director of research department of the China Banking Association, said this explains banks’ growing investment on fintech research and development – on average 2-3 per cent of their operational income every year. HSBC takes on Chinese e-payment giants with PayMe business app “Since 2015, we have also seen a trend among banks to set up their own dedicated fintech units, with a mandate to develop fintech specifically to support internal risk management, and help banks price their loans,” said Li. Currently, six banks – China Construction Bank, China Minsheng Bank, China Merchants Bank, China Everbright Bank, Industrial Bank Co and Ping An Bank – have set up fintech units. Their moves come as non-bank internet giants, such as Ant Financial and JD.com in recent years have been increasingly encroaching on traditional banks’ core businesses – extending loans to consumers and small medium enterprises. These internet groups often extend their edge in artificial intelligence and vast amounts of clients’ data they have been collecting on their e-commerce platforms to service these borrowers, who had previously been underserved by banks. But Zhu said he does not foresee internet banks necessarily posing a significant threat to banks. If Chinese banks speed up their fintech investment, and make use of technologies to improve their internal risk management, asset liability management, they were unlikely to lose out to their virtual banking competitors, Zhu added. The survey, which collected 2,380 responses from 127 banks, also found that Chinese bankers overall remain optimistic on the outlook of the Chinese economy. China ‘exaggerated’ GDP data by 2 percentage points, new study says Some 39.7 per cent of bankers surveyed believe China’s gross domestic product growth to stay in the range of 6-6.5 per cent in the next three years; another 39.4 per cent even believe GDP will grow at 6.5-7 per cent. In the annual government work report that Premier Li Keqiang delivered at the National People’s Congress on Tuesday, the government set a GDP target for 2019 at 6-6.5 per cent, down from the “about 6.5 per cent” in 2018.