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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
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Table of Contents
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.
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.
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.
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.
Which parts of the financial sector are likely to be the most disrupted by FinTech over the next 5 years in China?
Consumer
banking
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
Which entities are likely to be the most disruptive in the next 5 years?
Financial infrastructure
40% 41%
companies
ICT and large
51% 50%
technology companies
Social media websites /
39% 55%
Internet platforms
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.
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.
Decrease IT 15%
infrastructure costs
Respond to
38% competition faster
Differentiate 16%
18% 25%
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
Website 74%
Branches 37%
34%
36%
29%
34%
Commercialise
38%
$ 43%
Generate ideas
29%
61%
Implement
41%
45%
22%
31%
Chinese respondents
Global respondents
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.
What changes do you expect to see in your sources of innovation over the next 3-5 years?)
Increase
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
What is your expected annual Return on Investment on your projects related to FinTech?
38%
20%
25% Global
23% 22%
18%
16%
14%
What are the most relevant technologies for your business you plan to invest in the next 12 months?
16% 10% 6%
10%
10%
7%
5%
$ 3%
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
What business use cases do you most likely see Blockchain technology useful for?
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
Please describe the extent to which you are familiar with Blockchain technology?
2% Extremely familiar 4%
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
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
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.
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:
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%
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%
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%
2017 PricewaterhouseCoopers Zhong Tian LLP. All rights reserved. PwC refers to the China member firm, and may sometimes refer to the PwC network.
Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. HK-20170329-3-C1