Chinese fintech firms cosy up to banks as collaborators instead of disrupters they shift towards retail banking
- Fintech firms are increasingly positioning themselves as banks’ tech partners, rather than disrupters
- As Chinese banks increase focus on their retail business, more are seeking to grab market share through piggybacking on fintech’s online platform and technologies
Chinese companies that are engaged in financial technology, or fintech, are increasingly collaborating with banks, some of them even helping banks acquire retail customers, as the financial institutions build out their digital banking services and technology.
That is a fundamental shift from several years ago, when fintech companies enter the market with the aim of using digital technology to disrupt and disintermediate traditional banks from the financial business.
Tighter regulations such as the 2018 asset management rule governing banks’ wealth businesses have squeezed banks’ income source, pushing them to tap the retail banking business for revenue. Early movers, such as China Merchant Bank, Ping An Bank, both reported that retail loans contributed to over half of their entire loan book in 2018.
Such transformation towards retail banking has benefited fintech groups, with companies like Lexin Fintech, 360 Finance, positioning themselves as banks’ technology partners, rather than disrupters that compete against them.
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“Chinese banks are still at the Banking 1.0 stage, as most of them serve clients offline,” said DBS Group Research’s analyst Cindy Wang. “Fintech companies could help banks serve clients through their online platforms, using mobile app to expand customer base and shorten new account approval time through artificial intelligence (AI) and big data analysis.”
