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Huang Zhuo: Why Fintech Registers Rapid Growth

Sep 30-2022   



Compared to their overseas counterparts, China’s world-leading fintech platforms boast larger scales, wider-ranging aggregation, and more disruption to traditional finance, wrote Prof. Huang Zhuo in a commentary, adding that this has enabled China’s fintech firms to offer more support to the real economy.

 

The commentary is part of a series exclusively on the platform economy and goes hand in hand with a research project by nearly 20 NSD professors on the innovation and governance of the platform economy, of which the findings have been published as a book. Prof. Huang is NSD Assistant Dean and Associate Professor, Deputy Director of PKU Institute of Digital Finance, and Associate Dean of PKU School of Computing and Digital Economy.

 

China’s fintech platforms have traversed three phases: third-party payment, digital inclusive finance, and fintech platforms and fintech ecosystems, and have been consistently instrumental in galvanizing the real economy, said Prof. Huang. Originally devised to solve the payment conundrum of the e-commerce industry in the early 2000, third-party payment has since developed on a tear and its current form, mobile payment, has covered 86% of all Chinese netizens, the highest rate in the world. Subsequently, on the strength of data accumulation and digital technology, the platforms have evolved from mobile payment to inclusive finance, fueled by the supply gap of traditional finance. And more recently, the platforms have continuously expanded their businesses and applications of digital technology; as a result, some have become top platforms with comprehensive coverage of finance, consumption, healthcare, and technology, and have gradually built digital fintech ecosystems by involving consumers, businesses, financial institutions, and third-party service providers.

 

Thanks to the country’s colossal market size and advanced digital technology, China’s fintech platforms have claimed world-leading position in terms of market competitiveness, as evidenced by its over 1/3 share of the world’s 11 leading fintech firms compiled by H2 Venture and KPMG. The fact is also corroborated by the large number of patents acquired by China’s fintech companies. In comparison to their global counterparts, the Chinese ones have stood out in terms of market capitalization, user number, and business scale. In fact, a global unicorn ranking for 2022 put Ant Group and WeBank at No.1 and No.3 respectively. Prof. Huang also noted that China’s fintech platforms have aggregated a vast range of life and financial services, which in turn drives the digital transformation of traditional firms. While addressing many of the pain points in traditional financial services, the fintech players have also disrupted the whole financial system and filled in market blanks.

 

Prof. Huang attributed such a rapid rise to the insufficient supply of traditional financial services, the fast development of the digital economy and internet platforms, as well as the relatively lax supervisory environment in the industry’s infancy period.

 

Huang Zhuo: Why Fintech Registers Rapid Growth

Sep 30-2022   



Compared to their overseas counterparts, China’s world-leading fintech platforms boast larger scales, wider-ranging aggregation, and more disruption to traditional finance, wrote Prof. Huang Zhuo in a commentary, adding that this has enabled China’s fintech firms to offer more support to the real economy.

 

The commentary is part of a series exclusively on the platform economy and goes hand in hand with a research project by nearly 20 NSD professors on the innovation and governance of the platform economy, of which the findings have been published as a book. Prof. Huang is NSD Assistant Dean and Associate Professor, Deputy Director of PKU Institute of Digital Finance, and Associate Dean of PKU School of Computing and Digital Economy.

 

China’s fintech platforms have traversed three phases: third-party payment, digital inclusive finance, and fintech platforms and fintech ecosystems, and have been consistently instrumental in galvanizing the real economy, said Prof. Huang. Originally devised to solve the payment conundrum of the e-commerce industry in the early 2000, third-party payment has since developed on a tear and its current form, mobile payment, has covered 86% of all Chinese netizens, the highest rate in the world. Subsequently, on the strength of data accumulation and digital technology, the platforms have evolved from mobile payment to inclusive finance, fueled by the supply gap of traditional finance. And more recently, the platforms have continuously expanded their businesses and applications of digital technology; as a result, some have become top platforms with comprehensive coverage of finance, consumption, healthcare, and technology, and have gradually built digital fintech ecosystems by involving consumers, businesses, financial institutions, and third-party service providers.

 

Thanks to the country’s colossal market size and advanced digital technology, China’s fintech platforms have claimed world-leading position in terms of market competitiveness, as evidenced by its over 1/3 share of the world’s 11 leading fintech firms compiled by H2 Venture and KPMG. The fact is also corroborated by the large number of patents acquired by China’s fintech companies. In comparison to their global counterparts, the Chinese ones have stood out in terms of market capitalization, user number, and business scale. In fact, a global unicorn ranking for 2022 put Ant Group and WeBank at No.1 and No.3 respectively. Prof. Huang also noted that China’s fintech platforms have aggregated a vast range of life and financial services, which in turn drives the digital transformation of traditional firms. While addressing many of the pain points in traditional financial services, the fintech players have also disrupted the whole financial system and filled in market blanks.

 

Prof. Huang attributed such a rapid rise to the insufficient supply of traditional financial services, the fast development of the digital economy and internet platforms, as well as the relatively lax supervisory environment in the industry’s infancy period.