Recently, the China Banking and Insurance Regulatory Committee (CBIRC) issued the “Notice on Strengthening the Supervision and Management of Microloan Companies” (关于加强小额贷款公司监管管理的通知) to control the risks of the online lending industry. Loans financed by banks and shareholders should not exceed the lender’s net assets, and funds raised via bond sales and asset-backed securities will be capped at four times net assets. In the future, Chinese microloan companies will face further restrictions on using leverage.
Standard Chartered Bank announced that it has officially launched its virtual bank Mox in Hong Kong, whose founders include PCCW (电讯盈科), HKT (香港电讯), and Trip.com. Mox provides a suite of retail banking services entirely via its app. In addition to supporting various mobile payment tools, Mox also allows users to access an all-in-one numberless bank card. After ZA Bank, Airstar, WeLab and Livi, Mox becomes the fifth virtual bank to enter the Hong Kong market.
Vanguard, one of the world's largest investment companies, recently appointed Luo Dengpan, a former official at the China Securities Regulatory Commission (CSRC), to be the general manager of its soon to be launched mutual fund management firm. Vanguard is preparing to apply for a mutual fund business license in China but has yet to submit its application. Three foreign-funded asset management companies including Blackrock, Neuberger Berman, and Fidelity International, have already submitted their applications, but only Blackrock has so far obtained regulatory approval.
On September 22nd, the Shenzhen Stock Exchange and the Bank of Shanghai signed a strategic cooperation agreement to ease the financing problems for micro, small and medium enterprises. The two parties will focus on promoting in-depth partnerships between commercial banks and capital markets. The next step will see the two parties further deepen their cooperation in the fields of fixed income, product innovation, cross-border services, and asset securitization.
On September 24th, Eric Jing, the Chairman of Ant Group, introduced “Alipay+” at the Inclusion Fintech Conference in Shanghai, announcing that Ant had launched the solution this year. Alipay+ connects global merchants and e-wallet users. More specifically, Alipay+ works with various e-wallet providers, such as Alipay and South Korea’s Kakaopay, to help merchants receive payments from customers worldwide. South Korean users, for example, can use Kakaopay to pay an overseas merchant in Korean won who will receive the payment in their own currency in real time.
On September 21st, the Chinese government issued its “China (Beijing) Free Trade Pilot Zone General Plan” for the newly created Beijing Pilot Free Trade Zone (FTZ). Under the plans, the FTZ will support the establishment of a fintech center by the PBOC’s Digital Currency Research Institute; create a statutory digital currency trial zone; create a digital finance system; and form a trade finance blockchain standardization system based on the PBOC’s financial blockchain platform.
On September 25th, Ant Group’s online lender MYBank officially unveiled, at the Inclusion Fintech Conference hosted by Ant in Shanghai, that it was using satellites to monitor farmers' assets in remote rural regions in order to reduce the difficulty of granting loans in these hard-to-reach areas. The technology can measure the size of the farm and which crops are planted on it. The value of a farmer's future harvest is then estimated based on industry prices, climate projections and through the use of risk control models. According to MYBank the service has already assisted over 50,000 farmers in 690 counties despite having just started.
JD Digits announced that it had signed an official strategic cooperation agreement with the PBoC’s Digital Currency Research Institute on September 21st. The two parties intend to jointly promote the research of basic mobile and blockchain technology platforms, based on DCEP (Digital Currency Electronic Payment) projects. Additionally, they plan to build a crypto-yuan wallet ecosystem together. Besides JD Digits, Didi – the Chinese Uber – has also announced its participation in the central bank's project to promote the adoption of digital currency in smart transportation.
The National Clearing Center of the People's Bank of China recently announced that it had launched an identification verification service. Institutions can voluntarily join to cross check identity information. The verification service can handle customer identity verification under various business scenarios such as opening a bank account, issuing online loans, and signing a financial product contract. The data source used is the second-generation ID card system database from the Ministry of Public Security. The National Clearing Center has said that it will continue to update the system to provide additional technical services to payment institutions.
On September 16th, the Payment & Clearing Association of China (PCAC) officially launched its online filing system under new regulations requiring acquiring outsourced service providers to register with the PCAC. Such institutions are required to submit their applications to the PCAC before October 31st this year. Additionally, payment institutions are required to make sure that their acquiring outsourced service partners have completed their filing by June 2021, or terminate their partnership with them. Currently, around 60 outsourcing institutions have completed their filing applications, including China UnionPay Merchant Services (银联商务), Lakala Payment (拉卡拉) and All In Pay (通联支付).
On September 13th, the State Council, China’s cabinet, unveiled new rules to regulate market access for financial holding companies. The new regulation requires non-financial companies or other eligible entities, which control at least two financial institutions, to apply for a license from the People's Bank of China to establish a financial holding company. The movement aims to deepen financial reforms, reduce systematic risks, and enhance support for the real economy. The regulation will take effect from November 1st this year.
On September 11th, the Chongqing Banking and Insurance Regulatory Bureau approved Mashang Consumer Finance’s (马上消费金融) application to list on the A-share market with an issuance size of no more than 1.33 billion shares. If it succeeds, Mashang Consumer Finance will become the first listed consumer credit company in China. The company, with registered capital of 4 billion yuan (USD592 million), provides consumer financial services, focusing mainly on micro consumer loans. The company will use the net proceeds to supplement its tier-1 capital.
On September 16th, the Agricultural Development Bank of China (ADBC) (中国农业发展银行) signed a strategic agreement with Ant Financial’s MYBank (网商银行), to deepen cooperation on the provision of rural village finance. ADBC is one of the three policy banks in China, alongside the Export and Import Bank, and the China Development Bank. This is the first comprehensive strategic partnership between a policy bank and a digital bank in the country. The two banks will expand cooperation in industrial finance, joint risk control, and fintech, with the goal to further reduce the difficulty and cost of financing for micro and small enterprises.
HSBC Insurance (Asia-Pacific) Holdings Limited announced on 9th September that it has launched a new fintech company, HSBC Fintech Servco, in the Shanghai free trade zone of Lingang. The company is expected to commence operations before the end of the year. HSBC Fintech Servco will initially provide digital solutions to HSBC Group’s new mobile financial planning services in China, before subsequently expanding its services to include support for licensed financial institutions both within and outside of the Bank. This movement marks HSBC’s continued efforts to capture high growth opportunities in the fintech sector in China.