Tightening regulations make fintechs easy takeover targets for banks stepping up digitalisation drive

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China’s fintech businesses has grown by leaps and bounds since 2011 buoyed by the leadership’s efforts to expand financing services to small companies and individuals. Photo: Alamy Stock Photo

Published: 11:19am, 15 Aug 2018Updated: 10:43pm, 15 Aug 2018

Embattled financial technology businesses in China, which have come under tightened regulatory scrutiny, are becoming acquisition targets by mainland banks accelerating their digitalisation drive, according to global management consultancy McKinsey.

Joe Ngai, managing partner for Greater China at McKinsey, said that tremendous changes are taking place in the mainland’s fintech sector amid the clean-up campaign by regulators to ward off financial risks.

“The fintech businesses originally envisioned mounting a challenge on established banks, but the new trend is that more partnerships and acquisitions will be seen as the lenders bank on the latest technologies to bolster their development.”

Nearly all mainland banks have embraced digital technologies to attract clients, cut staff costs and boost security and convenience. Photo: Alamy Stock Photo

China’s fintech businesses has grown by leaps and bounds since 2011 buoyed by the leadership’s efforts to expand financing services to small companies and individuals.

Peer-to-peer (P2P) lending platforms, third-party mobile payment service providers and online insurers rapidly penetrated into people’s daily lives in the absence of efficient supervision of their operations.