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Global FinTech Survey

China Summary 2017

68%
of financial institutions expect to
increase FinTech partnerships in the
next three to five years

85%
of respondents believe mobile apps
are the fastest growing customer
interaction channel

71%
of respondents regard increased price
war as one of the challenges of FinTech

www.pwccn.com
Table of Contents

1. A sector full of potential........................................ 4

2. Opportunities and challenges............................... 6


Customers: serving the under-served................................. 7
Products and services: experience first.............................. 8
Channels: mobile is King................................................... 9
Competition: does winner takes all work for
financial services?...........................................................10
Regulations: how to strike a balance between encouraging
innovation and controlling financial risks?......................10
Talent: how to build a pool of inter-disciplinary talent?.....12

3. Responding to changes: coming together for the


common good..................................................... 13
Strategies and mind-sets: partnering to innovate.............13
Resource allocation: focusing on key technologies............13
Action plan: multiple ways to collaborate........................16

4. Innovative technologies of the future.................. 18


Artificial intelligence.......................................................18
Robotic process automation.............................................18
Blockchain......................................................................19

5. Conclusion......................................................... 22
Executive summary

The three main areas to be disrupted by FinTech in China over the next five years are consumer banking, investment &
wealth management, and fund transfers & payments. E-retailers, financial institutions and large technology companies
will be the biggest sources of disruption.

FinTech offers opportunities to financial services in three areas:

Customers Products and services Channels

Being low-cost and pervasive, As customer expectations shift In the next five years, the importance
FinTech enables financial institution from product-based to experience- of physical branches will diminish,
to expand their customer base to driven, the service offerings of with e-channels especially mobile
under-served groups. financial institutions are moving moving centre stage.
from unsophisticated and
standardised to tailored and
contextualised.

FinTech brings challenges to the industry in three areas:

Competition Regulations Talent

There is an increasing winner The challenge for regulators is how Inter-disciplinary talent is the key to
takes all tendency in the internet to strike a balance between success in FinTech. Institutions
and technology sectors. Does this encouraging innovation and need to figure out how to build such
model work for financial services? controlling financial risks. a talent pool.

2 Global FinTech Survey China Summary


In response to these challenges, financial institutions and FinTech companies are coming
together for the common good. Financial institutions are responding in three ways:

Over the next three years, Chinese financial institutions expect to


strengthen innovation through internal efforts and partnerships with
FinTech companies.
Strategies
& mindset

Chinese financial institutions are looking at emerging technologies


and are willing to allocate almost a third of annual turnover to
FinTech investment.
Resource
allocation

While financial institutions and FinTech companies are willing to increase


partnerships, challenges need to be addressed. IT compatibility and
differences in business models top the list.
Action plan

The survey highlights three innovative technologies that will impact the industry
profoundly. Understanding their features and building capacity around them will enable
financial institutions to stand out from the competition:

Artificial
intelligence

Robotic
Blockchain process
automation

Conclusion: FinTech business model needs to follow the basis of financial services in order
to be closely related to the development of the real economy. As the economy evolves to a
digital, smart and personalised business model and lifestyle, financial services needs to
transform to a 3.0 model. This means they need to evolve from a product and channel-
oriented model to a customer-centred one, with technologies as an important pillar.

Global FinTech Survey China Summary 3


1. A sector full of potential

FinTech (or Internet Finance)1 sector in tightening measures. FinTech sector is


China has been developing rapidly and still full of opportunities.
is world leading by several measures.
The countrys digital payments account This is the second year of PwCs Global
for almost half the global volume and FinTech Survey, and the first time we
online peer-to-peer (P2P) lending present a China Summary. The survey
accounts for three quarters of the results unveil how the sector has
global total2. developed, where the opportunities
and threats lie and where the sector
Chinas FinTech sector is now at a may be heading over the next five
critical juncture. The Chinese years. According to Chinese
governments attitude towards FinTech respondents, consumer banking,
has become progressively more investment and wealth management,
complex, as risks have piled up around and fund transfers and payments are
P2P platforms and the number of the three main areas expected to be
underground fund raising and disrupted by FinTech in the next five
financing activities have grown. The years. If these industries have the same
authorities remain generally momentum that we have seen in
supportive, despite some recent mobile payments and P2P, the impact
could be substantial.

Figure 1: Areas for disruption

Which parts of the financial sector are likely to be the most disrupted by FinTech over the next 5 years in China?

Consumer
banking

79% Investment &


Wealth Management
51%
Fund
47% Transfers &
Payments

Investment
Banking 8%
Market Commercial Banking
Operators & 10%
36% (including SME Banking)
Exchanges
Brokerage 13%
Services 19% Fund
Operators
15% 17%
Insurance
(life and non-life) Insurance
Intermediary

1
FinTech and Internet Finance are interchangeable in the context of this report.
2
FinTech in China: The age of the appacus, by the Economist, published on 25 February 2017

4 Global FinTech Survey China Summary


Chinese respondents are among the most bullish in the world. This confidence is
based on Chinas massive and growing internet usage. The penetration rate for
financial services applications, such as mobile payment (67.5%), mobile banking
(48%) and in particular mobile stock trading / wealth management (7%)
demonstrates huge potential3.

Figure 2: Sources of disruption

Which entities are likely to be the most disruptive in the next 5 years?

China respondents Global respondents

65% E-retailers 43%

Financial infrastructure
40% 41%
companies
ICT and large
51% 50%
technology companies
Social media websites /
39% 55%
Internet platforms

48% Start-ups 75%

Traditional financial
58% 28%
institutions

The survey also reveals that Chinese financial institutions regard themselves as a
source of disruption, and are keen to adopt emerging technologies such as data
analytics, artificial intelligence (AI), mobile technologies, robotic process
automation (RPA) and Blockchain.

Traditional institutions are transforming themselves at a pace not seen before


with greater urgency than in most other markets. There is less talk of disruption
in China than elsewhere while more concrete steps being taken. The regulatory
challenges of keeping pace with these changes are significant.

3 The 39th China Statistical Report on Internet Development by China Internet Network Information
Centre (CNNIC) suggest that Chinas netizens reached 731 million by the end of 2016, with over 95%
of them are also mobile internet users.

Global FinTech Survey China Summary 5


2. Opportunities and
challenges
Survey respondents see expanding Figure 3: Opportunities arising from FinTech
products and services and a larger
customer base as the top two What are the opportunities related to the rise of FinTech?
opportunities arising from FinTech,
followed by leveraging existing data Expand products
and services Increase
and analytics. In this section we will
customer base
look at opportunities brought by
FinTech in three areas: customers,
experience and channels.
77% 60%
Leverage existing
52% data and analytics

Decrease IT 15%
infrastructure costs
Respond to
38% competition faster

Differentiate 16%

18% 25%

Improve retention Reduce cost


of customers headcount

6 Global FinTech Survey China Summary


Customers: serving the Figure 4: More financial services are moving to FinTechs
under-served
Top: What activities do you believe your consumers already conduct with FinTechs?
Chinese respondents believe that
FinTech will help to expand their Bottom: What activities do you see most at risk of moving to a FinTech company over
the next 5 years?
customer base. The survey reveals that
payments, personal loans and fund
Activities consumers already conduct with FinTechs
transfers are three main areas where
customers are adopting FinTech
Payments 63%
services in China. P2P lending
amounted to RMB 2.06 trillion in
2016, representing over 16% of total Personal loans 61%
RMB new loans and almost double the
level in 20154. Third-party online Funds transfer 60%
payment volume also grew at an
astonishing pace, with market share in Personal finance 56%
total non-cash payment transactions
almost doubling from 1.4% in 2015 to Traditional deposits /
savings accounts
54%
2.7% in 20165.

In five years time, other business


Activities that are most at risk of moving to a FinTech company over the next 5 years
sectors will also be targeted by FinTech
companies. These include personal
Personal loans 73%
finance, wealth management and
student loans.
Payments 67%
The low costs and more effective reach
of FinTech will make it possible for Personal finance 58%
financial service providers to tap
currently underserved groups. They Student loans 58%
can expand their customer base from
large corporations, urban residents
Wealth management 52%
and the wealthy, to SMEs and
consumers in rural areas.

4
 nnual Report 2016 for China Online P2P Industry, published by www.WDZJ.com:
A
http://www.wdzj.com/news/yanjiu/52614.html; RMB new loan figures come from the Peoples Bank
of China
5
PBoCs quarterly Payment System Statistics Bulletin

Global FinTech Survey China Summary 7


Products and services: Figure 5: How to keep your customers
experience first
What do you think are the most important areas to address customer retention in the
The survey shows that the most context of new FinTech competition?
important factors to retain customers
in the context of new FinTech 24/7 accessibility
competition are: 24/7 accessibility,
ease of use with intuitive product 80%
design, and faster service. This
indicates that the expectations of Ease of use, intuitive product design
Chinese customers have evolved from
$ 77%
product-based to experience-driven.
Financial institutions and FinTech
Faster service
companies are therefore shifting away
from an unsophisticated, standardised
70%
approach to a tailored and
contextualised offering enabled by
Better product design
technology.

Powered by emerging technologies, 64%


FinTech companies have managed to
take a leap forward in financial Superior customer service (friendly help chats, etc.)
services. Mobile payment and fund
transfer solutions are so convenient 55%
that cash and debit cards are becoming
less necessary for daily transactions. Cost (cheaper, lower rates)
Credit cards are also being challenged
48%
as some e-retailers are issuing e-IOUs
to finance customers purchases. Design of interface/platform

While leading e-retailers in China have


39%
been exploring consumer banking,
incumbent financial institutions still Rewards
dominate. They possess most of the
capital, people, know-how and most 23%
importantly public trust. The
question is whether they can transform
themselves to match the new players.

8 Global FinTech Survey China Summary


Channels: mobile is King Figure 6: Client interaction channels are shifting
The very first and so far the biggest
Top: What percentage of your clients do you interact with through the following
disruption that FinTech has had in channels?
Chinas financial services is in
Bottom: From which channels do you expect the largest growth in usage over the
channels. While branch networks still
next 5 years?
dominate, the survey finds they will
diminish over the next five years, with
Current client interation channels
e-channels, especially mobile
applications, moving centre stage. Branches 56%
What happened with mobile payments
will spread to other types of financial
Mobile app 54%
services. Institutions need to be
prepared.
Website 50%

Call centre 41%

Social media 35%

Client interaction channels in five years

Mobile app 85%

Website 74%

Social media 55%

Branches 37%

Call centre 30%

Global FinTech Survey China Summary 9


While offering substantial Figure 7: The rise of FinTech brings threats in China
opportunities, FinTech also brings new
challenges. We summarise these What are the threats related to the rise of FinTech?
below:

Competition: does winner-


takes-all fit for financial
services?
China respondents Global respondents
Chinese respondents see market
competition as the main threat arising 61% Increase of customer churn 45%
from FinTech. Globally, increased
price and loss of market share are the 33% Increase of IT investments 33%
biggest concerns, followed by
information security and privacy. But 71% Increased price 63%
Chinese respondents regard increased
price competition, loss of market 42%
Information security /
48%
share and increased customer churn privacy
as the top three threats. This may be a 24% Legal / Compliance risk 39%
result of the fierce competition seen in
other tech-driven, emerging online- 70% Loss of market share 57%
to-offline (O2O) sectors in China.

Financial institutions in China also feel


the threat of revenue loss. Yet they are
more sanguine than global Figure 8: Regulatory barriers to FinTech
respondents: 10% believe they will
In which areas do you see regulatory barriers to innovation in FinTech?
experience no revenue loss at all.

While competition is intensifying, New business model (crowdfunding, peer-to-peer lending)


technological disruption has also
changed the landscape of many 50%
industries, with a winner takes all
Data storage, privacy and protection
mind-set taking hold. This is the case
in certain areas of financial services,
36%
such as payments. It remains to be seen
whether this model will work for AML/KYC
financial services as a whole.
35%
Regulations: how to strike a
balance between encouraging Digital identity authentication
innovation and controlling
financial risks? 31%
The successful development of FinTech
in China has helped to improve the Use of new technology
efficiency of the overall financial
system. Yet there have been side 22%
effects. For example, unregulated P2P
lending allowed some service E-money / Cryptocurrency
providers to use innovation as a cover
21%
for underground fund-raising
activities. A growing number of Customer communication
investor protests became a source of
social unrest and prompted the 16% 16%
authorities to step in.

10 Global FinTech Survey China Summary


While some believe this marks a
Table 1: Financial regulatory bodies and their responsible areas of FinTech business
regulatory U-turn, we believe the
authorities are consistent in their
support for financial innovation. Regulatory body Responsible areas Regulations
Recent tightening moves are
PBoC Third-party fund payments Measures for the
necessary calibration to send a strong and transfer administration of payment
message to the market that no business of non-financial
deviation of innovation is tolerated. institutions
Measures for the
That said, some Chinese respondents administration of non-bank
feel that regulations have been a online payment business
barrier to innovation. The main
CSRC Crowdfunding; Measures for the
barriers they cite are on new business administration of private
online fund products;
model, data storage, privacy and crowdfunding
protection, and initiatives such as Measures for the
anti-money laundering (AML) and supervision and
Know-Your-Customer (KYC). It is also administration of Money
the case for partnership between Market Funds
financial institutions and FinTech CBRC P2P online lending; Interim measures for the
companies, as they both regard online trust products; administration of the Online
regulatory uncertainty as a top three online consumer finance;
Lending Information
barriers (see Figure 16). Intermediary Institutions
Guidelines for the custody
Regulations are double-edged of online lending funds
swords, as they can either be catalyst
CIRC Internet insurance Interim measures for the
to ensure a healthy market supervision of Internet
environment and encourage good insurance
behaviours, or barrier to constrain
industry development. It is clear that
FinTech regulations need to keep up
with the market development. The
key is to balance risk and innovation.

Chinese regulators recognised the


importance of well-balanced
regulation. Apart from some
tightening measures, the China
Banking Regulatory Commission
(CBRC) has issued regulations on
making fund custody mandatory and
specifying the overall regulatory
framework of the P2P business. Other
regulators, such as the China
Securities Regulatory Commission
(CSRC), the China Insurance
Regulatory Commission (CIRC) and
the Peoples Bank of China (PBoC),
are also drafting regulations on the
FinTech businesses they supervise.

Global FinTech Survey China Summary 11


Talent: how to build a pool of Figure 9: Hiring and retaining the right people to innovate
inter-disciplinary talent?
Do you have trouble in hiring and retaining people with the right skillset to innovate?
When it comes to talent, the survey
results present a mixed picture.
Chinese financial institutions are more
upbeat than their global peers about
hiring. A smaller proportion of
respondents find it very difficult to hire China respondents Global respondents
and retain people with the right skillset
to innovate, and a higher proportion 12% Very difficult 28%
report no difficulty at all.
Moderately
59% 52%
difficult
Yet when assessing their ability to
innovate, Chinese institutions are far 16% Not difficult at all 12%
less confident (measured by the
14% Do not know 8%
proportion of the respondents rating
the ability as good or very good)
than the global peers in all areas.

To succeed in FinTech competition,


Figure 10: Self-assessment on ability to innovate
financial institutions will need an
inter-disciplinary talent pool that How would you rate your companys ability to innovate? (measured by the proportion
combines financial expertise, digital of the respondents who rate the ability as good or very good)
skills, business acumen and
management capabilities. Apply design thinking

34%
36%

Apply Lean Startup Methodology to product development

29%
34%

Co-create with start-ups


24%
28%

Commercialise
38%
$ 43%

Develop minimum viable products (MPVs)


30%
41%

Generate ideas

29%
61%

Implement

41%
45%

Testing get fast feedback to adapt the product or fail fast

22%
31%

Chinese respondents

Global respondents

12 Global FinTech Survey China Summary


3. Responding to changes:
coming together for the
common good

The speed of technological advances means that failing to keep up with the
market will lead to revenue and customer loss, or even being driven out of the
industry. The survey also highlights the growing importance of partnership in
the FinTech era.

Strategies and mindsets: partnering to innovate


How to innovate strategies and mindsets? Chinese financial institutions
mostly expect to strengthen innovation through internal efforts and
through partnerships with FinTech companies.

Figure 11: Sources of innovation

What changes do you expect to see in your sources of innovation over the next 3-5 years?)

75% 68% 46%


19% 31% 44%
6% 1% 10%
Decrease
$
$ Stay the same

Increase

Internal efforts FinTech partnerships FinTech acquisitions

FinTech acquisition is the third option cited. An equal number of respondents


expect no change in their acquisition efforts, suggesting financial institutions are
taking a prudent approach to acquisition.

Global FinTech Survey China Summary 13


Resource allocation: focusing on key technologies
Chinese financial institutions are committed to investing in emerging
technologies. According to the survey, they are willing to allocate almost a
third of annual turnover to FinTech investments - more than double the level
of their global peers. Despite this enthusiasm, financial institutions will need
a more thorough approach to evaluate innovative technology. Monitoring new
technologies globally will be necessary to understand the potential for
disruption.

Figure 12: Resource allocation to FinTech

What percentage of your annual turnover do you allocate to FinTech matters (investments into FinTech, IT
projects, dedicated resources)?

32%
Chinese respondents
15%
Global respondents

A high proportion of resource allocation comes with higher expected returns.


Chinese respondents expectations from return on investment for FinTech-
related projects are almost twice as high as the global level. While it is good
to hope for the best, Chinese financial institutions need to manage their
expectations.

Figure 13: Expected annual return on investment for FinTech

What is your expected annual Return on Investment on your projects related to FinTech?

38%

20%
25% Global
23% 22%
18%
16%
14%

China Asia North Latin Africa Oceania Europe


America America

14 Global FinTech Survey China Summary


Data analytics, artificial intelligence and mobile technology top the list of
investment priorities.

Figure 14: Key technologies to invest

What are the most relevant technologies for your business you plan to invest in the next 12 months?

83% 50% 45%

Data analytics Artificial intelligence Mobile

43% 24% 22%

Robotics process Distributed ledger technologies Cyber-security


automation (e.g. Blockchain)

16% 10% 6%

Public cloud Biometrics and


Internet of things (IoT)
infrastructure identity management

Financial institutions are currently concentrating on updating legacy systems


to support data analytics and mobile technology. Many financial institutions
are struggling to consolidate and manage data and to offer digital customer
experiences. FinTechs, meanwhile, are not only enhancing client service but
also reducing costs, increasing security and making processes more agile.

Global FinTech Survey China Summary 15


Action plan: multiple ways to Figure 15: Financial institutions interaction with FinTech companies
collaborate
How are you currently dealing with FinTech companies?
The importance of collaboration in
the FinTech era is growing. Chinese
Buy services from FinTech companies
financial institutions have been
buying the services of FinTech
48%
companies to improve operations
and services. The survey results
Engage in partnerships with FinTech companies
indicate that they are willing to
increase FinTech partnerships over $
40%
the next three to five years.

There are multiple forms of Monitor FinTech in order to respond competitively


cooperation. Apart from engaging
in partnerships, financial 37%
institutions can provide services to
FinTech companies, set up venture Offer services to FinTech companies
capital funds to fuel FinTech
21%
growth, or establish start-up
programmes to incubate FinTech
companies. The key is to cooperate Launch own FinTech subsidiaries
in a way that suits both parties.
10%

Do not deal with FinTech

10%

Rebrand purchased FinTech services (white labelling)

10%

Set up venture funds to fund FinTech companies

7%

Establish start-up programmes to incubate FinTech companies

5%

Acquire FinTech companies

$ 3%

16 Global FinTech Survey China Summary


There are several challenges that
Figure 16: Challenges in working with one another, financial institutions vs. FinTech
both financial institutions and companies
FinTech companies need to address.
IT security and regulatory When working with traditional financial companies (FinTech companies), what
challenges do you face?
uncertainty are two concerns
shared by both parties.

On top of that, Chinese financial Financial institutions FinTech companies


institutions find IT compatibility to be
another big challenge when working 36% Differences in business models 52%
with FinTech companies. The latter
Differences in knowledge
identify differences in business models 19%
/ skills 24%
as a source of challenges. Goodwill Differences in management
30% 33%
will not guarantee the success of a & culture
partnership. Both financial institutions Differences in operational
15% 14%
processes
and FinTech companies need to work
hard in order to cooperate smoothly. 64% IT compatibility 38%

69% IT security 57%

61% Regulatory uncertainty 76%

6% Required financial investments 5%

Global FinTech Survey China Summary 17


4. Innovative technologies
of the future
Technological breakthroughs are Our research suggests that each sector
impacting the financial services sector applies AI differently. For example,
in several ways. Based on the survey insurance leaders use AI in claims
results and our conversations with processing to streamline processes and
clients, we highlight three key fight fraud. Banks use chatbots to
technologies that will have a great improve customer experience. In asset
impact on the future of financial and wealth management, AI adoption
services. Understanding these has been widely focused on robo-
technologies and building capabilities advisors7.
around them will help financial
institutions to stand out from the Robotic process automation
competition. (RPA)
Robotic process automation is the
Artificial intelligence (AI) application of small software routines
Artificial intelligence is defined as the which mimic the actions of users,
development and adoption of computer typically as they interact with a
systems to perform tasks that normally companys systems. RPA enables rapid
require human intelligence, such as digitisation of a clients business,
visual perception, speech recognition, delivering significant and sustainable
gesture control, machine learning and value in short timeframes while
natural language processing. reducing overall risks.
Currently, the adoption of AI in the
financial industry is increasing in areas RPA is useful in improving customer
where a vast array of data processing is experience, lowering costs and
required to make decisions. AI also bringing strong governance,
enables personalised financial compliance and auditability. RPA can
products and services, such as reduce manual processes by 70% and
e-wallets (monitor and learn users shorten the process cycle by 90%. It
habits and needs), insurance can also significantly cut down error
underwriting (automate the rates to less than 0.05%8. Applications
underwriting process and utilise more of RPA in financial services are mostly
detailed information to make better seen in labour-intensive, repetitive
decisions), and customised investment activities that need significant amounts
research (analyse massive volumes of of data, such as loan and credit
information, provide customised processing, compliance-related
financial advice, calculations and processes and automated queues. We
forecasts). expect that uses of RPA will expand
from core operations into
administrative functions such as
human resources (record keeping) and
financial reporting.

7
Top financial services issues of 2017, produced by PwC Financial Services Institute, published in
December 2016: http://www.pwc.com/us/en/financial-services/research-institute/top-issues.html
8
Robotic Process Automation Keynote, PwC, published in March 2016

18 Global FinTech Survey China Summary


Blockchain with respect to post-trade clearing and
Blockchain enables the identification settlement, custody and securities
and tracking of transactions digitally, servicing. A shared, synchronised
and the sharing of this information Blockchain would eliminate the need
across a distributed network of to reconcile various independent
computers. The distributed ledger ledgers and would improve process
technology offered by Blockchain workflows, as well as leveraging smart
provides a transparent and secure contract technology to eliminate some
means for tracking the ownership and manual processes.
transfer of assets. Blockchains applications may extend
According to the survey, Chinese to reinsurance. PwC research shows
respondents believe post-trade that Blockchain has the potential for
settlement, digital identity more efficient data processing and
management and payment, and funds reductions in claims leakage and
transfer infrastructure are the most fraud in the reinsurance industry. It
promising areas for Blockchain. This is could cut expenses by 20%, thus
consistent with our observations. We delivering an industry-wide saving of
believe it can be applied through the US$5-10 billion9.
life cycle of securities and commodities

Figure 17: Application of Blockchain

What business use cases do you most likely see Blockchain technology useful for?

Payment Funds transfer


infrastructure infrastructure

Digital identity 43% 42%


management Securitisation
19%
Regulatory
44% 17% compliance
and audit

17% Trade finance

Syndication
10%
in lending
Post trade
settlement 62% 6% Insurance

9
 ource: Blockchain: The $5 billion opportunity for reinsurers, Long Finance research report,
S
PwC, published on September 2016: http://www.pwc.com/gx/en/industries/financial-services/
publications/ blockchain-the-5-billion-opportunity-for-reinsurers.html

Global FinTech Survey China Summary 19


Blockchain first came to peoples With central banks continuing to
attention as the technology behind explore digital currency, Blockchain
Bitcoin. The PBoC has been exploring will remain a key technology.
digital currency since 2014 and has
made concrete progress. According to Over the past year, Blockchain and its
the PBoCs assessment, digital applications in financial services has
currency has many benefits, including: been one of the most discussed topics
reducing the costs associated with the in China. Despite its high profile, the
issuing and circulation of bank notes; survey suggests that Chinese
improving the efficiency and respondents knowledge of Blockchain
transparency of economic is lagging behind their global peers,
transactions; preventing financial with only a very small portion of
crimes, such as money laundering and respondents having a working
tax evasion; strengthening the central knowledge (refers to those who are
banks control of money supply and extremely familiar and very
circulation; and promoting financial familiar with it) of it, as opposed to
inclusion11. The Hong Kong Monetary 24% of global respondents. The
Authority (HKMA) has also just proportion of Chinese respondents
revealed its plan to conduct a proof of who are not familiar at all is also
concept together with local note- higher than the global respondents.
issuing banks and industry groups12.

Figure 18: Knowledge of Blockchain

Please describe the extent to which you are familiar with Blockchain technology?

China respondents Global respondents

2% Extremely familiar 4%

4% Very familiar 20%

24% Moderately familiar 36%

40% Slightly familiar 23%

30% Not familiar at all 17%

11
PBoCs statement on its digital currency symposium, held on 20 January 2016:
http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3008070/index.html
12
News story reported by the Hong Kong Economic Journal, on 28 March 2017: http://www1.hkej.com/
dailynews/headline/article/1524739/%E9%87%91%E7%AE%A1%E5%A4%A5%E7%99%BC%E9%8
8%94%E9%8A%80%E8%A1%8C%E7%A0%94%E6%95%B8%E7%A2%BC%E8%B2%A8%E5%B
9%A3

20 Global FinTech Survey China Summary


Despite their limited knowledge of
Blockchain, Chinese respondents are
even more enthusiastic than their
global peers when it comes to
embracing Blockchain. Almost 60% of
respondents have included it in
strategic plans or are in the early
stages of evaluating strategy and
potential tech partners, compared to
40% globally. One explanation for this
is that Blockchain is one of the key
technologies cited by the Chinese
government in its 13th Five Year Plan13.

Figure 19: Knowledge of Blockchain technology

How involved is your organisation with Blockchain technology?

China respondents Global respondents

24% Not included it in the strategic plans 38%

Included it in the strategic plans but have not


38% 20%
started to evaluate
In the early stages of evaluating strategy and
21% 21%
potential tech and/or strategic partners

4% Currently experimenting it in proof of concepts 10%


Concluded proof of concepts and are highly
6% optimistic about implementing it in production 5%
business use cases
6% Currently using it in production business use case(s) 3%
Concluded proof of concepts and are not likely
3% to proceed with in production business use at 3%
the moment

13
The 13th Five-year Plan for National Information Technology Development, by Chinese
Government, published on 27 December 2016: http://www.gov.cn/zhengce/content/2016-12/27/
content_5153411.htm

Global FinTech Survey China Summary 21


5. Conclusion

The financial services industry will Under this new model, the function of
change fundamentally in the next branch networks will shift to product
three to five years due to FinTech and service development, with
disruption. Regardless of the transaction execution moving to smart
technologies it adopts, FinTech is channels. At the same time, financial
supposed to follow the basics of services will be more deeply embedded
financial services, which are closely in daily life, anticipating customer
related to the development of the real needs from their daily transactions.
economy.
In summary, the new financial services
As the Chinese economy evolves, model will include three elements:
business models and lifestyles are products and services, applications and
shifting to digital, smart and smart channels with technologies
personalised trends. Financial being a key driver of this
services need to transform to a 3.0 transformation.
model evolve from a product and
channel-oriented model to a
customer-centred one.

22 Global FinTech Survey China Summary


Appendix

This is the second edition of PwCs Global FinTech Survey, with country summaries releasing for the first time. More than
1,300 respondents, from 71 different countries around the world participated the survey. The China Summary presents the
views of 125 respondents across mainland China (excluding Hong Kong, Macau and Taiwan). Their breakdown is as follow:

Figure 20: Global survey respondents by territories

3.4% 2.9%

Europe Africa
8.9%
12.8% 38.5% Mainland China Oceania

Other Asia

Latin America

North America

33.5% 9.6%

Figure 21: Chinese survey respondents by types of organisation

1%
1%
10% Banks Fund Transfer and Payments institutions
2%
3% Securities brokers / Investment advisors Asset Management companies
5%
FinTech companies Mobile operators
42%
Insurance / Reinsurance companies Others
17%
Venture Capital / Private Equity firms
19%

Figure 22: Chinese survey respondents by positions

2% 2%
2%
3% Front desk practitioners CEOs
5%
Directors / Heads of Department Heads of IT / Digital / Technology
10% CFOs Heads of Innovation
52%
Heads of Products Heads of Strategy
11%
CROs / Risk managers
13%

Global FinTech Survey China Summary 23


Contacts

Matthew Phillips James Chang Wilson Chow


PwC China and Hong Kong Financial PwC China Financial Services PwC China and Hong Kong TMT
Services Leader Consulting Leader Leader
+852 2289 2303 +86 (10) 6533 2755 +86 (755) 8261 8886
matthew.phillips@hk.pwc.com james.chang@cn.pwc.com wilson.wy.chow@cn.pwc.com

Jimmy Leung Yuqing Guo William Gee


PwC China Financial Services PwC China Financial Services PwC China FinTech
Leader Consulting Partner Partner
+86 (21) 2323 3355 +86 (21) 2323 2655 +86 (10) 6533 2269
jimmy.leung@cn.pwc.com yuqing.guo@cn.pwc.com william.gee@cn.pwc.com

Margarita Ho Jianping Wang Chun Yin Cheung


PwC China Banking and Capital PwC China Financial Services PwC China FinTech
Markets Leader Consulting Partner Partner
+86 (10) 6533 2368 +86 (21) 2323 5682 +86 (21) 2323 3927
margarita.ho@cn.pwc.com jianping.j.wang@cn.pwc.com chun.yin.cheung@cn.pwc.com

Richard Zhu Vivian Ma


PwC China North Financial Services PwC China Financial Services
Leader Partner
+86 (10) 6533 2236 +86 (21) 2323 3398
richard.y.zhu@cn.pwc.com vivian.ma@cn.pwc.com

24 Global FinTech Survey China Summary


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