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At a Crossroads: The Next Chapter for FinTech in China

March 15, 2021

Three stages of industry development


The computerization of China’s banking sector was completed to provide the country’s financial system with a modern payment infrastructure. Notable events in this stage included the Golden Card Project launched in 1993 and the Data Centralization Project initiated in 1999. Innovation dynamics during this stage were top-down, which meant that the process was dominated and planned by regulatory agencies and was implemented by traditional financial institutions (which were state-owned and licensed).


The internet began to play a crucial role in financial businesses, particularly in personal banking, and the launch of Alipay in 2004 marked the defining event of this second innovation stage. Alipay was the first company in China to offer online payment services and later to enable mobile payments. In 2007, China’s first peer-to-peer (P2P) lending company, PPDAI, went online. In 2013, Yu’ebao, an internet-based money market fund sales platform, was launched. These financial innovations triggered a new wave of FinTech progress, and innovation dynamics during this stage were bottom-up, driven first by technology companies (which were usually not licensed, at least in the beginning) and then embraced by traditional financial institutions, with regulatory authorities gradually catching up.

2015 until today

Intelligentization, meaning the comprehensive and penetrative use of D-BASIC technologies (see Section 6, The third stage: intelligentization of finance) to replace manual labour in financial businesses, is the defining characteristic of the third and current innovation stage. D-BASIC technologies helped financial institutions lower costs, improve efficiency and disrupt old business models while creating new businesses and products. Notable events during this stage included the selection of eight pilot companies for personal credit reporting licences in 2015, the rise of internet-based microlending companies in 2017 and the rapid growth of the online mutual aid market in 2018. Dynamics during this stage can be characterized by a hybrid of top-down and bottomup innovations. Technology companies, traditional financial institutions and regulatory agencies continue to attempt to find their respective places within the new ecosystem, while competing in some areas and collaborating in others.

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