Partnerships that create ecosystems will be key to success in China’s growing fintech market. That’s according to the inaugural China Fintech Report from news publisher South China Morning Post.
The market is not only ripe for growth, but also for new ideas and ways to redefine payments and online finance. That’s all great news for Bitcoin SV (BSV), providing its network has the right connections and ability to communicate its message of scalability, stability, and integration with local financial networks and regulations.
Some familiar reasons
Why is China particularly poised to embrace a massive market for fintech services? We’ve heard several of the reasons before.
The two most obvious ones are China’s huge population of almost 2 billion, and its expanding economy. This new wealth and middle class is seeking investments and opportunities to put their money to use, as well as seek out new services that make life easier to manage.
The Chinese population’s willingness to embrace new technologies, compared to the rest of the world, also makes an appearance. With 1.6 billion mobile phone accounts (half of which use internet-connected devices) and a growing 5G mobile network, and a greater cultural willingness to accept new financial technologies like payment over mobile platforms (like WeChat and AliPay), there are plenty of opportunities that don’t exist elsewhere.
SCMP’s report highlighted online wealth management and “insuretech” as two key growth areas. Personal investable assets are projected to grow from US$23 trillion in 2019 to $42 trillion by 2025. Its owners are expected to invest $10 trillion in online platforms by the same year. As for insurance, it’s tagged as having growth potential because online platforms account for only 8% of that market currently.
The country is poised to become the world’s first cashless society, and indeed it’s already well on the way. Four out of five payments, and over 50% of all non-cash retail payments, are already conducted via mobile platforms like WeChat and Alipay.
There have been constant reports in recent years that China is set to introduce the world’s first sovereign digital currency, most likely on some sort of blockchain platform. According to SCMP’s report, banks in China are already using blockchain-based applications to handle SME lending, risk management, and operation efficiency.
SCMP business editor Eugene Tang summed up the environment as follows:
The fintech companies of China, which are already pushing boundaries and setting the bar higher than any other company anywhere else, are expected to expand beyond Chinese shores into the broader world. The coronavirus pandemic, which has led to paradigm shifts in the way humans earn and pay, will only accelerate the rise of fintech, with increased investor and consumer appetite for online financial services.
Partnerships and regulation
Anyone who’s done business in China will tell you that personal relationships and connections are essential to making money. Without existing ones, a newcomer to the market would need to be good at finding and building these quickly, and/or have a solid understanding of the local language and culture.
Dealing with Chinese regulations has also been a sticking point for foreigners (and locals) trying to enter the Chinese fintech market, particularly those in the blockchain and digital asset space. While the Chinese government has regularly stated its aim to become a world leader in “blockchain technology,” it’s also been extremely wary of the digital asset industry that lives on open platforms.
That difficulty is thanks in large part to the old “wild west” image of blockchain-based assets (and behavior of their proponents). China embraced Bitcoin (and in particular, Bitcoin mining and trading) with greater gusto than the rest of the world from the beginning. Regulators have always watched them with an eagle eye as well, limiting their promotional activities and eventually shutting down all trading platforms after the ICO craze of 2017-18.
Much of regulators’ suspicion was justifiable, given the large number of token creators and “anarcho-capitalists” willing to exploit the inexperienced Chinese retail investor market and fleece it with worthless schemes promising easy digital asset wealth. Faced with growing anger from those being targeted, the government acted.
Given this history, any open blockchain faces a challenge against those promoting closed proprietary systems (which negate many of open blockchains’ benefits). There are definitely opportunities for Bitcoin BSV to promote its compliance and security angle here, as long as both the message and timing are right. Even then, it will take some convincing and the aforementioned connections to gain trust.
The BSV society is also fortunate in China to have a large existing network of transaction processors (who can tout their professionalism as superior to the old “Bitcoin miners”), skilled blockchain developers, and users. The Bitcoin Association also has a large presence in China, and the local team has been active in organizing conferences and educational events aimed at pointing out its advantages over other blockchain offerings.
If China’s economy and appetite for new fintech products is as booming as SCMP’s report suggests, BSV could have an advantage. There’s still a lot of hard work to do, but all the foundations are there for growth. People and relationships, technology and marketing, all will play an important role if BSV builders can capitalize on them.
If you’re looking for the full SCMP report and statistics, it’s available here for purchase.
See also: Jimmy Nguyen’s opening presentation at CoinGeek Live, titled, One World, One Chain.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
