Traditional financial centers such as London and New York are witnessing increased competition from Chinese cities like Shanghai and Shenzhen with the rise of FinTech. While China’s traditional financial sector is relatively undeveloped and restricted from foreign participation, the country’s Internet Finance, or Financial Technology (FinTech), industry has developed rapidly in recent years with an outburst of innovations and startups.

Now, China is in many respects a leader in this emerging industry. By the end of 2015, the country had 500 million FinTech users, and its overall market size exceeded RMB 12 trillion (1.87 trillion USD). Four Chinese companies, namely Tencent, Alibaba, Baidu, and JD, were also amongst the top 10 public internet companies in the world. In 2016, China had eight of the world’s 27 FinTech “unicorns”- companies that investors value at more than 1 billion USD.

By any measure, China’s FinTech industry is rapidly expanding, presenting opportunities for both FinTech companies and complementary firms. However, like China’s traditional financial sector, foreign participation in the industry can be challenging.

Traditional financial centers such as London and New York are witnessing increased competition from Chinese cities like Shanghai and Shenzhen with the rise of FinTech. While China’s traditional financial sector is relatively undeveloped and restricted from foreign participation, the country’s Internet Finance, or Financial Technology (FinTech), industry has developed rapidly in recent years with an outburst of innovations and startups.

Now, China is in many respects a leader in this emerging industry. By the end of 2015, the country had 500 million FinTech users, and its overall market size exceeded RMB 12 trillion (1.87 trillion USD). Four Chinese companies, namely Tencent, Alibaba, Baidu, and JD, were also amongst the top 10 public internet companies in the world. In 2016, China had eight of the world’s 27 FinTech “unicorns”- companies that investors value at more than 1 billion USD.

By any measure, China’s FinTech industry is rapidly expanding, presenting opportunities for both FinTech companies and complementary firms. However, like China’s traditional financial sector, foreign participation in the industry can be challenging.

Opportunities

In a growing market, there are many opportunities for the various players, including in the most competitive, developed, and innovative segments, such as third party payments and the business-to-consumer end of the industry. However, FinTech is also expanding into other segments and niche sub-segments, and it is in these segments where there will be the most opportunities in the future. For example, non-financial core companies are active in the business-to-business segment, while some companies are getting involved in niche sub-segments like offering loans for cosmetic surgery.

As well as there being opportunities for FinTech players, there are also opportunities for companies that are not usually viewed as being inside the industry. Given the importance of the collection and analysis of big data to the industry, there are opportunities for data analytic companies to collaborate with FinTech players that do not have the capability to do this by themselves.

There are also many ways that artificial intelligence (AI) companies can collaborate with FinTech players. For instance, AI can be used in FinTech by eliminating or reducing face-to-face interaction, which will help reduce transaction costs. Baidu’s stock trading app, StockMaster, already uses AI to predict share price changes.