New Impacts and Opportunities of 2019 Financial Technology Industry

Finance has always been inseparable from science and technology, and technology empowerment has always been a weapon for the financial industry to break through tradition and upgrade innovation. Since 2019, with the overall development returning to rationality and in-depth innovation of core sources, technology is gradually rising from the underlying infrastructure to the core elements that are indispensable for the front-end financial solutions. Technology accelerates the promotion of financial business, scenes, and intelligence. It has increasingly become the fulcrum of the industrial lifeline.

The role of science and technology in finance has been continuously strengthened, and vigorous development of financial technology has become the consensus of the financial industry. Artificial intelligence, big data, cloud computing, blockchain and other technologies are deeply integrated with financial business services, reconstructing the contact and customer systems, and promoting continuous optimization and improvement of profit structure, business structure, asset-liability structure and credit structure. The ability to detect risks and build a more efficient and convenient format will drive the financial industry from the networking and mobileization of the IT era to the digital and intelligent development of the digital age.

In recent years, the core change brought by financial technology is that with the help of technology, the starting point of financial products is no longer just the financial institutions located on the supply side structural reform. More and more businesses are created by customers, and customers are gradually becoming financial. The source of demand and the originator, especially from the huge demand that individuals and small and micro enterprises have yet to meet. Digitization and intelligence break up financial elements, dismantle them, form new factor markets, and then flexibly combine them into full-stack full-cycle financial products that are oriented to customer needs and embedded in actual scenarios. Flexible, customized, and lean financial solutions are becoming a trend.

Financial technology has become a hot industry favored by global capital. It is regarded as an excellent soil for cultivating unicorn enterprises. The financial industry’s “unicorn” total valuation ranks first in the global “unicorn” total valuation.

According to KPMG data, global venture capital, equity investment and M&A funds for financial technology companies totaled US$46 billion in 2018, with Asia accounting for US$16 billion. China is the country with the largest number of unicorn companies in the world of financial technology. According to data from the Entrepreneurship Research Center, among the more than 200 unicorn companies in China, there are 25 unicorns in the field of financial technology, accounting for 12.5% ​​of the total, and the valuation accounted for 30%. Ant Financial, Jingdong Digital, etc. are among the best.

At the same time, Chinese financial technology companies also ushered in a second listing boom. Since the beginning of 2018, more than 10 financial technology companies have completed IPOs, including 51 credit cards, Weixin Jinke, Remittance World, 360 Finance, Tiger Securities, and Futu Securities.

Since the emergence of financial technology five years ago, it has been in full swing and is now silently integrated into every aspect of economic life. In the 2018 “dark moment” after frequent violent thunder, it returned to rationality and the new normal, and a new generation of innovative enterprises represented by intelligent finance emerged. At the same time, the state attaches great importance to the development of financial technology. The financial technology development plan and industry supervision rules are also actively deployed. Relevant policies are expected to be introduced in the near future, which will create a more active and orderly ecological space for long-term sustainable and healthy development.

Entrepreneurship is committed to providing entrepreneurs with cutting-edge thinking and industry insights, and interpreting new opportunities and new models in the financial technology industry. This time, in conjunction with outstanding enterprise cases in the field of financial technology, the “2019 Financial Technology Industry Research Report” was launched, focusing on integrated financial service platforms, consumer finance, Internet insurance, third-party payment, financial big data, smart investment, intelligent marketing, and intelligent wind. Financial technology track and underlying technology such as control and supply chain finance.

Overview of the development of financial technology industry
I. Characteristics of financial technology industry
The connotation and category of financial technology

The technological revolution led by big data, cloud computing, artificial intelligence, blockchain and mobile internet has led to the continuous breaking and reconstruction of the boundaries and research paradigms of the financial discipline.

With regard to the connotation of FinTech, the International Financial Stability Board (FSB) defines the international common standards as: financial innovation brought about by technology, generating new business models, applications, processes or products, thus financial markets, finance The way in which institutions or financial services are provided has a significant impact, including deposit and loan and financing services, payment and clearing services, investment management services, and market infrastructure services. The International Organization of Securities Commissions (IOSCO) believes that financial technology is a business model and emerging technology that has the potential to transform the financial services industry.

In China, financial technology emphasizes the role of cutting-edge technology in the support, support and optimization of licensed and compliant financial services. The application of technology still needs to follow the inherent laws of financial services and comply with current laws and financial regulatory requirements. The ultimate provider of financial technology products and services is also focused on the scope of financial institutions that operate in compliance.

The scope and segmentation of financial technology in this report includes:

The development of financial technology industry

The era of financial technology 1.0 (1980? 2004): In 1980, Wall Street in the United States began to use the term “Fintech Financial Technology.” In China, in 2004, Alipay came out. Financial technology moved forward from the background and penetrated into the traditional financial non-core business. The business models of credit, crowdfunding and lending continued to emerge. ATM, POS, online banking and banking transactions, Liquidation, lending systems, etc. have become typical business forms.

The era of financial technology 2.0 (2005? 2015): With the emergence of Yu’ebao in 2013, various organizations began to accelerate the layout in the industry, and there were business models such as Internet banking and Internet insurance. At this stage, the Internet and mobile Internet are widely used in the financial system, and a large number of users are gathered through Internet technology to realize the interconnection of assets, transactions, and payment terminals in financial services. Typical businesses include mobile payment, Internet insurance, and the Internet. Funds, etc.

The era of financial technology 3.0 (2016-present): Since 2016, the growth rate of Internet users in China has slowed down, the demographic dividend of the Internet industry has gradually disappeared, and the mode of rapid growth of Internet finance relying on user scale has come to an end. At this time, the importance of technology began to be discovered by practitioners in the financial industry, and financial technology completely replaced Internet finance. The ecosystem of traditional financial institutions is moving from a closed mode to an open, financial boundaries are constantly being broadened. Many financial technology companies have begun to intervene in financial markets with their specialized and vertical business models and become participants in financial technology.

New Features of Financial Technology Development

★ 2B becomes the focus of market competition

With the strong supervision and Internet traffic dividends gradually being divided, the development of B-side business and the provision of (2B2C) related technology services for financial institutions have become the focus of the future layout of many financial technology companies.

Ant Financial Service is fully open, Jingdong Finance is turning to 2B, and Feijin Financial Technology is fully open to technology, and the overall technical solution for mobile credit is exported. In addition, some traditional financial institutions have already been deeply integrated, and various Internet companies and vertical technical service providers are actively expanding the B-end market of financial technology, exporting resources such as traffic and technology, and banks and trusts. Licensed financial institutions such as insurance and insurance jointly build a financial technology ecosystem. The technology enterprise will enable the B-end and the service C-end will become the mainstream business model. At present, the platform ecology brought about by the development of 2B2C has begun to take shape.

In the era of new consumption, with the disintegration of the mass society, the customized and niche society has gradually emerged as a trend. Merchants focus on improving the ultimate experience of users, and individualized needs can be better satisfied. The consumer market segmentation, focusing on specific groups of people, the new sector has become an important weapon for consumer companies to adapt to consumption upgrades.

★In-depth cooperation between financial institutions and financial technology companies

Financial technology innovation is undergoing a process from financial technology company leading to deep cooperation between financial institutions and financial technology companies, leading and exporting by leading financial institutions, including financial institutions such as banking, insurance, securities investment and asset management. Participants and leaders have become a force to be reckoned with in financial technology innovation.

Financial institutions began to broaden their business scope, conduct cross-border investment, and develop into integrated operations; Internet financial institutions laid out in multiple business areas such as securities, funds, and asset management, and expanded financial service boundaries. Some of the core businesses of traditional financial institutions, such as payment, are gradually being replaced by products of third-party payment companies.

More and more traditional financial institutions are beginning to incubate financial technology subsidiaries. With a deep understanding of the banking business, market-oriented mechanisms and service advantages, the finance science and technology subsidiaries have grown rapidly, such as Ping An Financial Accounts and Zhaolian Consumer Finance, which have become “unicorns” in the industry. In April 2018, China Construction Bank started the “first shot” of the establishment of a financial technology company by a state-owned bank. It is expected that more large banks will join the ranks in the future.

★ Supply side structural reform accelerates diversified technology integration and innovation

The open platform restructures the products, services and processes of financial institutions, and gradually establishes new business models, which not only can effectively promote the transformation and upgrading of traditional financial services, but also be crucial to the future development of financial technology. Connect multiple markets according to established rules, create an ecosystem or ecosystem with win-win cooperation and development potential, and simplify and reorganize traditional industrial value chains.

The value of data has spawned a new wind control model. Data has gradually become an important asset for institutions, and it has enormous commercial value. In the financial technology industry, data is the core and foundation of the commercial credit system. It can “protect and escort” credit risk management and fraud risk prevention and control, and plays a vital role in improving the quality of risk control. Based on a deep understanding of the customer’s transaction data and behavioral information, the 360-degree panoramic image of the customer is constructed, which lays a foundation for predicting customers’ future needs, insight into customer behavior characteristics, accurately assessing customer risk status and improving risk prevention and control.

Artificial intelligence provides new development momentum. The large-scale parallel computing capability, massive data mining technology and neural network algorithm advancement have promoted the rapid popularization and commercial application of artificial intelligence. On the basis of online risk assessment, product portfolio recommendations, special fund management, risk-based portfolio allocation and automatic asset adjustment, we will fully promote the automation and intelligence of investment and wealth management services and transaction processing. On the one hand, intelligent investment and wealth management services can accurately identify customer needs and risk preferences. “Customer selection” is the most interesting and suitable investment and wealth management products for customers; on the other hand, it can dynamically track the risk situation of clients and products, and dynamically Asset allocation adjustment to achieve full lifecycle services.

2. Analysis of investment and financing of financial technology industry
Overall overview

Investment in the global financial technology sector has shown rapid growth since 2014. After that, the enthusiasm has declined. In 2018, the company resumed its acceleration. The total amount of PE/VC and strategic investment reached US$46 billion, and at least 1,700 projects were awarded a record high. .

Among them, Ant’s new round of financing reached 14 billion US dollars, accounting for 30% of the global investment in financial technology. The United States, China, and the United Kingdom led the financial technology investment and financing market, accounting for 39% of the total number of events.

In 2018, the number of investment cases in China’s financial technology sector reached 590, and the investment amount exceeded 200 billion yuan. From January to June 2019, the number of investment cases in China’s financial technology sector reached 109, with a total amount of 21.4 billion yuan, a significant slowdown in the overall market size compared to last year.

The cold winter has accelerated the pace of deep integration and innovation in the field of financial technology, and promoted enterprises to focus more on the user experience and the value of the solution itself. Banks, credit, insurance, etc. have been given new industry value, promoting the government to upgrade supervision and improve the ecology. In the first half of 2018 and 2019, consumer finance and mobile payment were the most popular segments of the capital market.

In the first half of 2018, in the first half of 2019, nearly 20 companies in the domestic financial technology field were listed, raising more than 4 billion US dollars, including 9 companies including Futu Securities and Tiger Securities in the US; remittance to the world, 51 credit cards. The six companies listed on the Hong Kong Stock Exchange. The industry that raised the most funds was securities trading. The amount raised by Huatai Securities reached US$1.54 billion, and the funds raised by Shenwan Hongyuan Securities were HK$9 billion.

2018-2019/06 List of financial technology listed companies Source: Entrepreneurship Venture Capital Library, Entrepreneurship Research Center

listed company

Unicorn enterprise

Financial technology is one of the most numerous tracks in the world and in the birth of unicorn companies in China. The company valuations of Ant Financial, Lujin, Jingdong Science, Weizhong Bank, Ping An Medical Insurance, and Financial Accounts have exceeded US$8 billion, making it a super “unicorn”.

The financial technology unicorn company born in the giant enterprise, relying on the industry and market advantages of its parent company, has obtained strong support in technology, data, scenarios, capital, ecology and other aspects. The business started high and quickly entered the market. Occupy share. Financial technology companies derived from giants such as Alibaba, Tencent, and Ping An Group are more likely to obtain licenses, gain market favor, and drive the overall development of the industry.

2019 Financial Technology Unicorn Enterprise List Source: Entrepreneurship Venture Capital Library, Entrepreneurship Research Center

Geographical Layout Source: Entrepreneurship Venture Capital Library, Entrepreneurship Research Center

Source of financing rounds: Venture Capital Venture Capital, Entrepreneurship Research Center

Geographical layout

From the perspective of geographical distribution, financial technology enterprises are deployed in most areas of China.

Beijing is the main gathering place for financial technology enterprises. More than one-third of enterprises choose to deploy in Beijing. In 2018, Beijing Zhongguancun Management Committee, Beijing Municipal Bureau of Local Financial Supervision and Beijing Municipal Science and Technology Committee issued the “Beijing Promotion”. The Financial Technology Development Plan (2018? 2022) pointed out that Beijing will actively develop and build financial technology enterprises and support financial technology enterprises to gather in specific regions and buildings, which also provides industrial advantages for the development of financial technology enterprises in Beijing. Guangdong Province has also built a financial high-tech zone, focusing on building an industrial cluster of “blockchain + finance” to help expand the industrial ecosystem of financial technology companies. As the financial center of China, Shanghai is actively reforming the “financial + technology” system based on the location of major financial companies, giving full play to the advantages of free trade zone construction, improving the corporate development policy environment, and building a financial technology center.

Financing round distribution

From the 2018 to the first half of 2019, from the latest financing rounds of enterprises, the proportion of financial technology companies that obtained early financing was 44%, the proportion of B rounds was 21%, and the proportion of C rounds was 16%. Despite the accumulation of giants in the field of financial technology, there has not been a monopoly. The market has always been optimistic about the development opportunities in this field, and capital is more invested in enterprises during the growth period. During this period, China’s supervision of Internet finance has been strengthened, but 8% of enterprises are listed, including 51 credit cards and remittances.

Segment financing event

The number of financing events in the first half of 2018 to 2019 shows that the most subdivided areas of financing events are financial big data, and a total of 166 financing events occurred. As a financial technology underlying technology level enterprise, more funds are needed to support the enhancement of its own technical strength. . There were 151 third-party payment enterprise financing incidents. With the tightening of the supervision of the payment market and the intensification of competition in the industry, the financing incidents can also reflect that enterprises in this field are gradually expanding their influence through financing, thereby improving their competitiveness.

Financing amount distribution

Judging from the latest round of financing of enterprises, except for 29% of enterprises that have not disclosed gold, the distribution of investment amount is bipolar, 23% of enterprises have financing amount below 10 million yuan, and enterprises with financing amount greater than 100 million yuan. The proportion is as high as 26%, of which 5% of corporate financing is more than 1 billion yuan. Among them, the largest financing company is Ant Financial, with a financing amount of US$14 billion, Lujin’s strategic investment amounting to US$1.3 billion, Suning Financial’s strategic investment amounting to RMB5.3 billion, and large-scale financing is generally concentrated in the later stage of the enterprise. progression stage. Financial technology start-ups and mature service companies with multiple formats have gained recognition in the capital market and will use the power of capital to achieve greater development.

Third, the analysis of the development environment of financial technology industry
Policy environment factor

In the past few years, financial technology has flourished and has become an important part of China’s financial and economic system. Due to rapid development, deep innovation and obvious cross-border, the original financial supervision system lags behind the development of financial technology. The supervision ability cannot match the development reality of financial technology, which leads to the development of financial technology and the reform of financial supervision system.

While the development of financial technology has brought convenience to consumers, it has also pushed the issues of information security and personal privacy protection to the forefront. The regulatory authorities have gradually realized the importance of doing a good job in the management of the financial technology industry and have begun to study and formulate relevant regulatory requirements.

In March 2019, the first meeting of the Financial Science and Technology Committee of the People’s Bank of China was held. The meeting emphasized that in 2019, we should continue to adhere to the principles of “keeping: integrity, security, inclusiveness, and openness”, establish a system of financial science and technology supervision rules, improve management mechanisms, and create favorable conditions. A sound policy environment for the development of financial technology. Make full use of financial technology to optimize the credit process and customer evaluation model, reduce the financing cost of enterprises, relieve the problems of financing difficulties and financing of private enterprises, small and micro enterprises, and enhance the economic ability of financial services.

In July 2019, at the China Financial Forty Forum (CF40) and the Fourth Global Financial Technology (Beijing) Summit, Li Wei, Director of the Science and Technology Department of the People’s Bank of China, said that the central bank will focus on strengthening key information technology application management and strengthening financial information. The security protection, strengthening the management of financial science and technology innovation products, doing a good job in demonstrating financial technology, and doing a good job in the coordinated development of finance and technology. The central bank is formulating a development plan for financial technology, guiding financial institutions to make forward-looking arrangements in terms of institutional mechanisms, talent teams, technology reserves, business innovations, etc., and has promoted orderly coordination in relevant departments, and will be able to introduce them in the near future.

Sources of financing events in the sub-sector: Venture Capital Ventures, Entrepreneurship Research Center

Source of financing amount: Venture Capital Venture Capital, Entrepreneurship Research Center

At the same time, the central bank focused on building a basic system of financial technology supervision.

First, it will study and formulate regulatory rules for cloud computing, artificial intelligence, blockchain and other technical applications, and propose management requirements for technical architecture, security management, and business continuity.

The second is to strengthen the security protection of financial information, clearly cover the strategy of collecting, transmitting and destroying financial information throughout the period, access control, propaganda and guidance to strengthen the protection of financial information, and continuously improve the importance of financial information security for all.

The third is to strengthen the management of financial technology innovation products, through social publicity, industry filing to create autonomous autonomy, industry discipline, government supervision and coordinated management of financial technology, and reserve sufficient development space.

The fourth is to strengthen the practice of financial technology, explore the use of natural language analysis, generalized regulatory rules, extract the quantitative indicators in the text rules packaged into a machine-readable API, to achieve formal, digital, and programmatic financial supervision, improve systemic, The ability to prevent and resolve cross-cutting financial risks.

In order to prevent potential risks, foreign financial regulatory authorities will adopt a mode of monitoring sandboxes in order to prevent potential risks, so that financial technology can initially innovate and try financial applications in a small scope, which takes into account the dual requirements of encouraging innovation and maintaining financial security. . On the basis of learning from foreign regulatory experience, China has also launched the Chinese version of the financial technology regulatory sandbox. The central bank will conduct pilot projects in financial technology applications with relevant ministries and commissions in ten provinces and cities including Beijing, Shanghai and Guangzhou.

From the perspective of regulatory thinking and government attitude, the financial industry will return to the track of supporting the development of the real economy in the next 5-10 years. Whether it is for the technology innovation business sector of existing financial institutions or for the startups in the financial technology field, it is easier to meet the needs of the main business and find new opportunities and create value from the main business. Market and a model that is accommodated by the entire environment.

2018-2019 List of major financial technology policies

2018 typical city financial technology development and policy summary

Economic and social environmental factors

In 2018, China’s GDP was 90.03 trillion yuan, a year-on-year increase of 6.6% at comparable prices. In 2018, the total revenue of China’s financial technology enterprises was close to 1 trillion yuan, a year-on-year growth rate of more than 40%. It is estimated that by 2020, the total revenue of China’s financial technology enterprises will reach 2 trillion yuan.

Residents have been carefully considered for investment due to the external economic environment caused by the trade war. Investment preferences have shifted to lower-risk financial products. However, China’s capital market is stable and can quickly dilute risks, and the economic trend is in a new normal.

The per capita life expectancy of the Chinese population has increased significantly, and the characteristics of aging have become increasingly prominent, which has put tremendous pressure on social security payments. The demand for commercial insurance, especially health insurance products related to pension and retirement, will become increasingly strong. At the same time, due to real estate expenditures, the household asset-liability ratio has gradually increased. The post-85s and post-90s younger consumers have higher leverage, and the rise of mobile payments and consumer finance has caused many younger generations to overdraw future income. The user’s consumption habits have gradually been converted into “flowers for the future”. Traditional financial institutions and financial technology companies have started consumer finance businesses, such as installment loans and credit loans.

Global users have changed in financial consumer demand and behavior. Some users no longer purchase traditional single offline financial products and services, but rely on their one-stop service on the Internet to seamlessly integrate and respond in real time in practical scenarios. The daily finance of users will be more dependent on the mobile Internet, and online shopping, mobile payment, and online banking are all built on the financial technology system.

The study found that currently three-quarters of users expect “instant” service, which means full-process service within three minutes of online docking. In this context, “brush face” (face recognition) has become a new standard for financial services such as transfer, account opening, ATM deposit and withdrawal, etc., and has also been deeply involved in such as access control, ordering, hotel staying, air travel, etc. Every aspect of life.

In this process, more and more financial service modules have passed the SDK/API, and they are not embedded in various scenarios. As technology continues to mature and apply, residents’ understanding of financial technology continues to deepen, and expectations for financial services and products continue to rise. The leader in the future financial technology track must also be a provider of good user experience.

The development of the main enterprises in the financial industry has gradually diversified. Traditional financial institutions, Internet companies and retail industries have actively explored the financial technology market, accelerating the extension of various financial formats. Users have chosen appropriate fund management solutions based on their different net asset values. The combination of application models and financial technology has promoted innovation in financial formats.

Internet activity and mobile device penetration in emerging market countries and regions still have a lot of room for development. Some countries in Southeast Asia and South Asia, such as India, also have huge demographic dividends. With its mature domestic development experience and internationally leading emerging technologies, Chinese financial technology companies are leveraging the Internet and demographic dividends of emerging countries and regions to promote their business to more markets.

The Chinese government attaches great importance to the construction of China’s modern credit culture system. Improving social credit is conducive to improving the efficiency of the financial industry and reducing the moral hazard caused by dishonesty. In the transformation of China’s social structure, residents have separated from the traditional concept of transferring assets to the next generation, and instead rely on financial instruments such as insurance and financial securities markets. The market has gradually replaced households to provide economic security for individuals.

Fourth, financial technology goes to sea
The outflow of domestic financial technology companies to the sea has shown an explosive trend in recent years. The Internet giants represented by Ant Financial, Xiaoman Finance, Tencent Finance, and Jingdong Digital are actively deploying in the sea strategy. Payment, wealth management credit products and underlying technologies are the main sea-going businesses. In terms of destinations, offshore companies mainly target emerging countries and regions such as Southeast Asia, the Pacific region and South America, and actively carry out business layout.

Reasons for financial technology going to sea

China’s Internet dividends and demographic dividends have gradually subsided. Internet activity and mobile device penetration in emerging market countries and regions still have a lot of room for development. Some countries in Southeast Asia and South Asia, such as India, also have huge demographic dividends. With its mature domestic development experience and internationally leading emerging technologies, Chinese financial technology companies are leveraging the Internet and demographic dividends of emerging countries and regions to promote their business to more markets.

China’s financial regulatory policies have become stricter. The financial industry has been strictly regulated by the state throughout the world. After the rise of financial technology, its related supporting policies have become increasingly strict. This is also an important reason for Chinese financial technology companies to go to sea.

The formation of the concept of “community of human destiny”. The concept of “community of human destiny” advocates cooperation and win-win. The development of China’s financial technology industry is widely empowered in China. It should also benefit the whole world and cooperate with emerging countries and regions to bring new development momentum.

Financial technology to the sea’s main products

Pay for the product. Ant Financial, Xiaoman Finance, Jingdong Digital, and Tencent Finance all expanded their payment business overseas. The main way to go abroad is through cooperation with local payment companies, investment mergers and acquisitions, and establishment of overseas companies. Chinese tourists’ cross-border tourism, sea scouring, and study abroad have led to an increase in cross-border payment needs. Emerging markets also have great potential in the field of mobile payments. This is the motivation for payment to become the primary business of financial technology.

Financial credit products. Most emerging markets have low credit card penetration rates. According to World Bank data, credit card penetration rates in Southeast Asia, sub-Saharan Africa and Mexico are much lower than in China. At the same time, thanks to the upgrading of consumption and the improvement of consumption concept, the demand for consumer finance and microfinance in emerging markets has gradually increased. However, due to the underdeveloped financial market and technology, the interest rate of borrowing funds is relatively high, and the risk control and credit reporting system is imperfect. This provides space for Chinese financial technology companies to go out to the sea in the financial products business.

The underlying technology output. The underlying technologies related to financial technology in China, such as big data, cloud computing, artificial intelligence, and blockchain, have developed rapidly. With the launch of related businesses, the output of the underlying technology has also become a trend of financial technology. Typical enterprises such as Titanium and Tongdun Technology provide services for financial enterprises such as consumer finance, payment, Internet credit, and banking in emerging markets, and enable the development of new financial fields while digitalizing and intelligently transforming traditional finance.

Financial technology trend

The payment scenario is more diverse. After the payment business is more mature, the payment support scenarios will be more diverse, whether in cross-border payments or local residents’ payments. Shopping, transportation, catering, etc. can be paid using Alipay, WeChat, etc. The currency is also exchanged in real time through payment tools, which will benefit both the Chinese and the local people.

The underlying technology will be the main seafood product. The development of emerging technologies such as artificial intelligence, big data, and blockchain in China is in a leading position in the world, and there are certain technical barriers to export in emerging markets. Compared to the specific business, the bottom-level technology can be applied to more industries and more easily localized. In the future, the output of the underlying technology will become the main product of financial technology.

Portrait of a startup in the financial technology field

The Entrepreneurship Research Center conducted statistical analysis on the basic information, fields, and business development of the 2019 financial technology TOP30 list companies, and obtained the overall characteristics of the entrepreneurs in the financial technology field.

From the perspective of the establishment of financial technology companies, 62% of enterprises are set up in 2011 and 2015. This is the time when China’s online credit transactions broke out. In 2016, financial technology began to enter the 3.0 development stage. New businesses accounted for 26%. Financial technology companies have experienced a certain period of precipitation. The strength of new-born enterprises should not be underestimated. After the establishment of the company, it will develop rapidly and seize the financial technology market.

Established time distribution data source: Entrepreneurship financial technology list questionnaire data

Location data source: Entrepreneurship financial technology list questionnaire data

Company size distribution data source: Entrepreneurship financial technology list questionnaire data

Distribution data of the sub-sector industry: Entrepreneurship financial technology list questionnaire data

2018 income distribution data source: Entrepreneurship financial technology list questionnaire data

From the perspective of geographical distribution, in line with the overall financial technology venture capital market environment, the main base of financial technology enterprises is Beijing, and nearly half of the enterprises choose to lay in Beijing. Shanghai and Zhejiang tied for second place, accounting for 14%; registered enterprises in Guangdong Province were 12%, followed by Shanghai and Zhejiang. Due to various limitations of policies and technologies, financial technology is mainly concentrated in cities with better economic and financing situations, and promotes the development of the city’s financial industry.

In terms of scale, most of the companies on the registration list are still in the growth stage. The proportion of companies with less than 500 employees is as high as 71%, and 45% of them have less than 200 employees. More than 1,000 companies accounted for 19% of the total, mainly concentrated in integrated financial services companies. Although the size of the enterprise is still dominated by small and medium-sized enterprises, as the development trend of the financial technology industry is improving, the demand for personnel will be further increased, and there will be more employment opportunities in this field in the future.

According to the industry breakdown of registered enterprises, 25% of enterprises are concentrated in the field of consumer finance. In recent years, China has implemented the development of inclusive finance, and consumer finance companies have emerged. 18% of enterprises are mainly engaged in the application of smart investment, and smart investment is centered on securities, funds, wealth management and other aspects of the business, involving a wide range. As a technical cornerstone of the financial sector, financial big data has 14% of companies.

From the perspective of the amount of revenue disclosed by the applicants in 2018, the income is in a state of polarization. 31% of the enterprises’ income is less than 5 million yuan, but 39% of the enterprises still have incomes of more than 100 million yuan, of which 500 million yuan and 1 billion yuan respectively account for 10% and 5%. Due to the high cost of technology development, financial technology companies are still facing great growth pressure for start-ups.

Prospects for the trend of financial technology industry
I. Judging the trend of financial technology industry
5G and smart internet will bring new impacts and opportunities to the financial technology industry

In the 4G era, the wave of financial technology has arisen, and the upcoming 5G will bring new impacts on the financial market. In May 2019, China issued 5G licenses, marking the official entry of commercial mobile networks into the era of coexistence of 4G and 5G.

5G has three characteristics: high broadband, high reliability, low latency and massive material connectivity. For the financial industry, the biggest change will focus on ultra-low transaction delays, which increases the possibility of “instant finance”. Its extremely fast network speed can simplify the financial transaction process and improve efficiency. The business process and the risk control process can be made without any effect. The online service can be used to meet the customer’s entire process within three minutes. For the company’s operations and products. Dimensions such as services and services will be comprehensively upgraded.

There will be more possibilities for technologies such as artificial intelligence, big data, and cloud computing. The characteristics of 5G network Internet of Things can promote the explosive growth rate of the financial industry in the collection of basic data. Big data companies can analyze the natural attributes and economic behavior of enterprises and individuals through massive data. The financial credit evaluation system with wider sex and higher credibility constantly improves the scope of data collection and lays a good foundation for the application of financial products.

Top-level planning and regulatory upgrades, promoting “regulatory sandboxes” to build financial security barriers

While financial technology is changing the industry, it also promotes the transformation of regulators in terms of regulatory concepts and coping styles. Multinational and multi-regional regulators are pushing a series of mechanisms such as technology subsidiaries, open banks, virtual banks, and regulatory sandboxes to actively embrace and promote financial technology change. Regulators are also actively guiding financial technology to play a greater role in inclusive finance, especially small microfinance services, alleviating the difficulties of financing and financing of small and micro enterprises, and actively promoting the development of the real economy.

In the process of financial technology development, financial technology has brought major challenges to the existing financial regulatory system with its characteristics of cross-border, de-intermediary, distributed and intelligent. It is urgent to deepen reform, strengthen innovation and prevent and control risks in the financial supervision system. . The “regulatory sandbox” mechanism is a useful exploration to find a state of regulatory balance, reducing the cost of compliance while reducing the time for financial enterprise innovation applications. It unifies the dual functions of financial stability and financial services real economy, which is conducive to the supervision department to fulfill its supervisory duties and promote innovation supervision.

Transformation from financial services to technology empowerment

In 2018, the Internet giant began a strategic transformation of “no longer doing financial business” and returned to the technology itself. Xiaoman is independent from Baidu, Jingdong Finance has changed its name to Jingdong Digital, and 360 Finance has also been listed separately from 360. From the perspective of giant companies, the value of future empowerment and cooperation is greater than competition.

Under the financial supervision system, Internet finance companies want to enter the business areas of online lending, wealth management, payment, etc., which are difficult to obtain licenses, financial constraints, and changes in asset management policies, which cannot be smoothly carried out, and the best adjustments The transformation method is to act as a technology exporter and cooperate with a formal licensee. In the context of technology, in addition to Internet giants, traditional financial IT service providers such as Digital China and Changliang Technology have joined the technology-enabled team, trying to standardize elements from finance such as user demand, product pricing, channel marketing, etc. Optimize traditional financial services in many ways and build a new Internet financial chain. It is expected that more financial technology companies will take the initiative to abandon some of the pure financial business in the future, and cut into the financial technology service field from the perspective of financial empowerment. The “platform empowerment party” is expected to occupy a place in the financial market.

Further serving the real economy

At present, financial technology mainly serves retail business, especially in the areas of online credit, agriculture, rural finance, etc., and financial technology and these scenarios are combined to improve service quality, reduce transaction costs, and meet the diversified financial needs of users. At the same time, the financial services real economy has become the main tone of the regulatory policy and the basic requirements for supporting the relevant financial formats. Small microfinance, supply chain finance, agriculture, rural finance, and scene finance can serve the real economy well. Both traditional financial institutions and internet finance companies have layouts in these fields.

Second, financial technology industry development strategy recommendations
Service mode takes care of 2C and 2B

In the past, financial technology startups and Internet giants all targeted the C-end market, and regarded online credit, online payment, and asset management as the main business docking users. In the past 20 years of development, China’s networked C-end users have become saturated. The market situation is stable. As strong regulation and Internet traffic dividends are gradually being divided, many financial technology companies have begun to focus their own layout directly on enterprises, providing financial institutions with relevant technology services.

In the new financial era, with the popularity of mobile Internet in sinking cities, users’ information search, online shopping, browsing information and other activities contributed their own information to residents. Different from traditional finance, through financial technology, this information can use big data and intelligent technology to fill the personal information of the sinking market population, in order to support the credit, risk control and other aspects.

The prospect of the enterprise-level Internet market is promising. With the participation of giants such as BATJ in the B-end market, the application of the financial sector has become significant, and the demand for financial technology in the B-end market has become more apparent. The next wave of the Internet will appear on the B side, and the B-end of the technology enterprise will gradually become the mainstream mode. Although the B-end service has a good prospect, its threshold is stricter than that of the C-side, and the business realization is more cyclical. For many financial technology companies, it is necessary to have a clear strategic plan to balance their C-side business and B-oriented business. Only when the technology is empowered, can we grasp the short-term and long-term business models.

Sinking market opportunities in the new financial era

China’s sinking market is very large. There are 289 cities in the third, fourth and fifth tier cities, accounting for 88% of the city’s total population, and the total population is close to 1 billion. Previously, the Internet market was more concentrated in first- and second-tier cities, and the growth opportunities in the future Internet market will shift to sinking cities. Nowadays, the sinking market has also begun to upgrade consumption. The demand for materials in the third, fourth and fifth tier cities and rural areas has gradually emerged. The purchasing power for buying houses, repairing houses, automobiles, motorcycles and home appliances is not lower than that. In first- and second-tier cities, the growth rate even exceeds that of first- and second-tier cities.

In the new financial era, with the popularity of mobile Internet in sinking cities, users’ information search, online shopping, browsing information and other activities contributed their own information to residents. Different from traditional finance, through financial technology, this information can use big data and intelligent technology to fill the personal information of the sinking market population, in order to support the credit, risk control and other aspects. In addition, traditional financial institutions generally link users through offline outlets. Based on cost considerations, they will not be laid out in sinking cities. The financial technology platform makes up for this. It does not require the setting of outlets. Provide users with financial products services.

The inclusiveness of financial enterprises in sinking cities will be the focus of development. Some financial products that are launched in the sinking market that are in line with their actual conditions are distinguished from first- and second-tier cities, such as vertical consumer financial products such as education, cooking, and auto repair. And microfinance products can occupy a large share of the user population in the sinking market.