The financial technology explosion: China goes cashless, consumers abandon banks

The U.S. International Trade Administration (ITA) said China is entering a cashless era, with consumers shifting from traditional banking systems to more efficient and user-friendly financial technology (Fintech).

KPMG, one of the "Big Four Global Auditing Firms" with an annual revenue of more than US$25 billion, recently released the Fintech 100 list, listing the largest and most profitable companies in the global financial technology market.

China's Ant Financial and Qudian were on the list, ranking first and second respectively. Lufax, ZhongAn Insurance and JD Finance were also in the top ten, and Chinese companies accounted for half of the top ten in the fintech100.

Hundreds of millions of Chinese users are abandoning the banking system

As various research surveys, such as KPMG’s Fintech 100 and ITA’s Global Financial Technology Report, show, China is leading the development of the global financial technology industry. Hundreds of millions of Chinese users are abandoning the restricted and limited banking system and turning to non-bank services and financial technology platforms.

In fact, according to Asia Times reporter Johan Nylander and Shenzhen Starbucks manager Lily Li, a large number of Chinese consumers use their mobile phones to settle daily expenses and spending. Few people use cash or even credit cards because it is inconvenient and has high fees.

When buying simple items, such as a latte from Starbucks, Chinese consumers can use mobile financial technology applications to conduct transactions by simply holding their phones close to the store's NFC sensor. Ant Financial's Alipay currently accounts for 58% of China's entire online payment industry, according to reports.

The fast-growing financial technology industry

Ant Financial’s current valuation is $60 billion, which is higher than the market value of the global digital currency Bitcoin.

Money Bazaar founder and CEO Mofei Chen said in an interview that foreign investors and users are barely aware of the rapid development of China's financial services industry. Chen explained that Chinese financial technology has developed to the point where people can't even remember the last time they used a wallet.

He said:

"I've almost forgotten the last time I used a wallet. Foreigners have little idea of ​​how quickly and advanced new payment functions and mobile financial services are developing in China."

Allen Yu, who runs stock-picking service MJL, has a similar view to Chen, saying that Chinese people rarely use bank accounts. Some companies even pay salaries through Alipay.

"I hardly use my bank account anymore. My salary is paid through Alipay and most of my payments are also made through Alipay. And the interest rate of Alipay is better than that of ordinary banks."

Blockchain seizes the opportunity of China's financial technology development

The explosive development of financial technology in China is driving the transformation of China's payment industry model. New financial technologies are constantly emerging, and blockchain technology, which has always been considered to subvert the entire financial industry, is driving the development of financial technology and payment fields. For example, Ant Financial has already stated that their blockchain technology will be launched soon and will be used first in Alipay. JD Finance is also working with IBM and Stanford University to explore blockchain technology. There is no doubt that the vigorous development of China's financial technology has brought good development opportunities for blockchain.