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Webinar: China 2017 Financial Industry
Trends and OutlookJanuary 24th, 2017 - 5:00-6:00 PM Beijing
The webinar will start in a few minutes.
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kapronASIA
Top 10 China Financial Industry
Trends and Outlook for 2017
Moderated by: Paul Robinson
Presented by: Zennon Kapron
January 25, 2017
The overarching 2017 China Financial Industry themes…
1. How to manage
innovation and
change in a declining
economic and
financial industry
situation.
2. Digital.
In some ways, it’s almost the same as 2015…
December 2016 day in Beijing
where AQI reached nearly 500,
50 times WHO recommended
amounts.Image sources: Tech in Asia
Continue to see bad P2P deals,
foreign companies struggle and
challenges.
Systemic Issues still Exist…
And banks are struggling…
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Chinese Bank's Interest Margin
Lower Lending Limit Higher Deposit Limit
Higher Lending Limit Lower Deposit Limit
And bad debt…
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
0.0
500.0
1000.0
1500.0
2000.0
2500.0
3000.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
NPL for China Commercial Banks
NPL Amount NPL Rate
Government opening the market…
Evolution of China’s
Cross-border
investment programs
SH-HK
Stock
Connect
Mutual
Recognition
RQFII
QFII
Interbank
Bond
Market
QFII
QDII QDII
RQFII
QFII
QDII
SH-HK
Stock
Connect
RQFII
QFII
QDII
Mutual
Recognition
SH-HK
Stock
Connect
RQFII
QFII
QDII
Equities,
bonds,
fundsQFII
Equities,
bonds
Funds
Equities
Equities,
bonds,
funds
Equities
2014 2015 20162006 20112003
?
Mutual
Recognition
SH-HK
Stock
Connect
RQFII
QFII
QDII
2017
Shenzhen-
HK Stock
Connect
Shenzhen
-HK Stock
Connect
Bonds
Interbank
Bond
Market
But in other ways it wasn’t…
$60 billion valuation
450 million Alipay Users (150 million Rural)
200 million transactions per day
Lent RMB 750 billion 2010-2016
“One in four Chinese consumers born after
1990 now uses Ant Credit Pay”
But in other ways it wasn’t…
$18.5 billion valuation
2H2017 IPO Target: $50 billion
RMB 300+ billion AUM
6 million active investors
2 million borrowers
Product Range:
• P2P Lending
• Fixed Income
• Public Funds
• Private Funds
• Insurance
• Money Market
• Structured
Notes
Spend is shifting to digital
44% 41%
42%30%
8% 16%
6% 12%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
China Retail Consumption by Payment type(% of total payments)
Cards Cash Internet Mobile
43,73974,759
42,266
54,926
8,100
29,820
5,992
21,662
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7e
201
8e
201
9e
202
0e
China Retail Consumption Value by Payment Type RMB billion
Cards Cash Internet Mobile
Mobile Payments unstoppable
0
2
4
6
8
10
12
2012 2013 2014 2015 2016
Mobile Payments By ValueYearly Total Mobile Payments, Trillion RMB
Alipay WeChat
Having Chat helps
0%
20%
40%
60%
80%
100%
2012 2013 2014 2015 2016
Integration of payments into WeChat has helped Tencent capture mobile payment market share from the market leader AlipayPSP market share: mobile payments
Alipay WeChat
Will social be the driver of payments in 2017?
195
355500
697806
0 197
1,480
3,917
10,533
0
2,000
4,000
6,000
8,000
10,000
12,000
2012 2013 2014 2015 2016
0
500
1,000
Use of WeChat for payments has grown faster than the usage of the platform itselfRMB and millions of users
Active Monthly Users Annual Total Payments per User
Big Hit on Fees
93
547
985
395583
152
402
0
200
400
600
800
1,000
1,200
2010 2015 2020E 2015 2020E
China’s banks lost RMB 152 billion (US$20) billion in card fees in 2015RMB billion
Fee losses due to Online Spending
Fee losses due to Card Spending
Total fee losses due to Non-Cash Spending
Total non-cash potential
merchant fees Transaction
fee
lost to 3rd
party players
Remaining
transaction
fee
Dwarfing the west
Comparison of Key Mobile Functionalities
Launched Voice calls Video Calls Payments
Monthly
Active Users
(Millions,
2015)
Mobile
Payments
processed
(US$B 2015)
WeChat January 2011 July 2012 July 2012 August 2013 697 396
Paypal 1998 None None 1998 179 50 (est.)
Alipay 2004 None None 2004 450 1,316
WhatsApp 2009 April 2015November
2016 None 1,000
not
applicable
MessengerAugust 2011 April 2013 April 2015 March 2015 1,000 not available
Finance is going digital
5% 3%
92%
2015
BAT
Third party
Traditionalfinancialinstitutions
9%
19%
72%
2020
BAT
Third party
Traditionalfinancialinstitutions
RMB 17.5 Trillion RMB 55.1 Trillion
Wealth Management Marketshare
Advisor market getting crowded
The key question: when will investors be ready for portfolio
management?
Platform
Funding
RMB
million
Latte Bank 100
juaicai.cn 20
7min.com.cn 10
Qianjing 20
Clipper Advisor 17
Caigin USD 2
LicaiMofang 10
Micai Inc. 10
Youduoapp, Inc. 20+
Zipeiyi.com -
Betterment 1,400
WealthFront 890
Private Banks Continue to GrowDate Name
In
Operation
2015 前海微众银行 Webank
浙江网商银行 Mybank
上海华瑞银行 SHRB
温州民商银行 Wen'zhou Minshang Bank
天津金城银行 KCB
2016 重庆富民银行 Chong'qing FuMin Bank
四川新网银行 Si'Chuan Xinwang Bank
湖南三湘银行 Hu'nan San'xiang Bank
Already
approved
by CRBC,
waiting to
open
2017 安徽新安银行 An'hui Xin'an Bank
福建华通银行 Fu'jian Hua'tong Bank
武汉众邦银行 Wu'han Zhongbang Bank
北京中关村银行 Bei'jing Zhongguancun Bank
江苏苏宁银行 Jiang'su Suning Bank
威海蓝海银行 Wei'hai Lanhai Bank
吉林亿联银行 Ji'lin Yilian Bank
辽宁振兴银行 Liao'ning Zhenxing Bank
Investors include fisheries, property, medical equipment, door/window makers…
But Impact seems limited…
RMB 132.9 billion
in AssetsRMB 22 trillion
in Assets
Moving Beyond Finance: Ant Forest
• 450 Million people
have a carbon
account
• Raises awareness
and attention to
individual carbon
footprints
Conclusion
• Tough economic environment
• Digitization: Moving beyond digital payments to digital
everything
• Regulatory environment still unclear
• Blockchain, AI, Cloud in, IoT is a ?
Webinar: 2017 China Financial Industry
Outlook and Trends
For more information about the topics covered in this webinar or Kapronasia, please visit
www.kapronasia.com or send us an email: [email protected].
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