Eric Jing, Ant Group’s Executive Chairman Stresses Compliance with Supervision Is the Cornerstone of Fintech Development
After the halt of what would have been the world’s largest IPO, Ant’s chairman Eric Jing gave his first public remarks at the Fourth China Internet Finance Forum and talked about Ant’s future plan. He promised to make Ant Group more ‘transparent and predictable’ to the public.
For years fintech in China developed quickly, but with limited regulation, not just because the regulator encouraged innovation, but also because of the challenges in regulating a company as new and quickly moving as Ant. Now with more regulatory focus on the firm, we are likely to see more restrictions and regulatory action.
Sunmi Technology Files for A-share IPO
Established in December 2013, Sunmi is an IoT technology company and part of Xiaomi’s ecological industry chain; Xiaomi has also invested in two consecutive rounds of Sunmi’s financing. The company provides intelligent commercial hardware and solutions. Its products are sold in over 200 countries with 1.5 million active merchant clients. Sunmi smart POS can support self-checkout and facial payment and its smart camera helps merchants analyze customer shopping behavior.
China’s Regulator Signals Tighter Oversite Over China’s Fintech Sector
Guo Shuqing, the chairman of the China Banking and Insurance Regulatory Commission (CBIRC), said that “the regulator will take timely and accurate measures to eliminate new systemic risks” in a presentation at the recently held Singapore Fintech Festival. He pointed out that a few technology companies occupy a dominant position in the micropayment market, involve the interests of the general public, and have the characteristics of an important financial infrastructure. Furthermore, he said, some large-scale technology companies are involved in various financial and technological fields, and multiple cross-border operations. These points have been interpreted as a signal that fintechs in China will come under greater supervision in the near future.
China Construction Bank Obtains Singapore Qualifying Full Bank license
On December 8th, China Construction Bank’s Singapore branch officially acquired its Qualifying Full Bank (QFB) license from the Monetary Authority of Singapore (MAS). According to the MAS, foreign banks with QFB privileges may undertake universal banking and operate a total of 25 branches. With the new license, CCB will set up a commodity trade financing center, an investment banking business transaction center, and a financial technology innovation center in Singapore. Together with CCB Singapore’s original infrastructure construction service center and private banking business center, those businesses will become CCB Singapore’s key local services in the future.
CMB and JD Digits Receive Approval for China’s Second Direct Selling Bank
On December 11th, China Merchant Bank (CMB) announced that it had received approval to launch a “Direct Selling Bank.” The bank, named Zhaoshang Tuopu Bank (招商拓扑银行), will be 70% held by CMB and 30% by Chinabank Payments (网银在线), a wholly owned subsidiary of JD Digits. This is the second such license issued after Baixin Bank, jointly owned by CITIC Group and Baidu, received its license in 2017. With the license, Zhaoshang Tuopu Bank will conduct business online with no physical branches. In terms of business scope, a direct selling bank license is not much different from a private internet bank license, such as those issued to Webank or Mybank. For JD Digits, it is meaningful that it has finally entered the online banking competition, joining competitors such as Ant, Tencent and Xiaomi, which have already acquired their own respective internet banking licenses.
DCEP Undergoing Second Pilot Testing in Suzhou
Suzhou is currently conducting China’s second public pilot test of the digital RMB (DCEP), following the first pilot recently held in Shenzhen. Under this second public test being held in Suzhou, 100,000 red pockets, totaling RMB20 million will be issued. These will be valid from December 11th to December 25th. Over 10,000 merchants have signed up to participate in this second public pilot round. Meanwhile, JD.com is also participating in this second round, becoming the first ecommerce platform to get involved.
Central Bank Digital Currency Research Institute and UnionPay To Explore Further Cooperation
The central bank’s Digital Currency Research Institute and China UMS, a subsidiary of China UnionPay, signed a strategic cooperation agreement on December 8th. The parties will leverage UnionPay’s consumer network, conduct joint research, and expand the product functions and application scope of the digital renminbi. UMS is one of the largest comprehensive payment service providers in China. Its POS business was ranked the 1st in APAC according to Nelson in 2018. Its existing payment network will further promote the construction of the digital renminbi ecosystem.
Pinduoduo Tests New Wallet Function
Duoduo Wallet, launched by Pinduoduo, China’s largest e-commerce platform, is currently undergoing internal testing. The payment service is provided by Fufeitong (付费通), a third-party payment company controlled by Pinduoduo through affiliates. Fufeitong, established in 2003, has numerous 3rd party payment licenses, including internet payment and mobile payment. In the second quarter of 2020, the e-commerce platform had approximately 643.4 million monthly active users. Pinduoduo currently supports Alipay and Wechat Pay, which charges merchants for withdrawal or transfer. The new wallet Duoduo will support free withdrawal to bank cards to acquire new users.
Big Data Analytics Vendor Bairong Inc Applies for IPO on the HKEX
Bairong Inc, which closed Round C financing of RMB1 billion in 2019, submitted its IPO prospectus to the HKEX on December 8th. Set up in 2014, the company has an AI-enabled platform and provides big data analytics services to financial institutions. Its products include smart marketing for client acquisition, loans issuance, insurance, client maintenance, and after-loan management.
VZoom CreditTech Receives Initial Approval for STAR Market IPO
On December 7th, the Shanghai Stock Exchange announced that VZoom CreditTech, a big data credit information and big data risk control service provider established in 2014, had passed initial discussions to float on the Shanghai Stock Exchange Science and Technology Innovation Board (STAR), China’s science and technology focused equities market. The company’s 2nd biggest shareholder is Ant Group, which recently failed its IPO. Moreover, Mybank, Ant Group’s internet banking arm, was VZoom’s largest client in 2019. To proceed further, the STAR listing committee now requires more information on how VZoom collects and uses credit data. Should it succeed, the company will become the 1st credit technology company to be listed on STAR.
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Tencent Invests RMB280 million in Samsung P&C Insurance. Becomes 2nd Largest Shareholder
On December 10th, Samsung Property & Casualty Insurance announced that the company intends to increase its registered capital from RMB552 million to RMB876 million. Participating companies in the new shareholder subscription include Tencent, which will now own a 32% stake in the firm. Tencent has invested across the insurance industry in recent years. In property insurance, the company holds a 15% stake in ZhongAn Property & Casualty Insurance and now its aforementioned stake in Samsung Property & Casualty Insurance. In life insurance, the company has a 15% stake in Hetai Life Insurance and a 20% stake in Aviva Life. Finally, Tencent also has full control over Weibao Insurance Agency and Tengnuo Insurance Broker.
The Hong Kong Monetary Authority Announces Cross-border Wealth Management Scheme in the Greater Bay Area
The Hong Kong Monetary Authority intends to open up a broader market for the financial sectors of Guangdong, Hong Kong, and Macao, while providing more wealth management product choices for the residents in the Greater Bay Area. The initiative will help to promote the cross-boundary flow and use of the RMB, while reinforcing further Hong Kong's position as the global offshore RMB business hub. Moreover, the introduction of the cross-boundary wealth management connect pilot scheme will bring enormous business opportunities for Hong Kong's entire financial industry value chain and other professional services.
AllScore Payment Services Fined by Regulators
The State Administration of Foreign Exchange's Beijing branch recently announced that AllScore Payment Services, a Chinese payments technology firm, has been fined 2.9 million yuan ($443.5 thousand) for multiple rule violations, including the illegal transfer of domestic foreign exchange overseas. In 2019, AllScore was acquired by Wirecard, giving the German provider access to a potentially lucrative Chinese license for processing credit-card and mobile transactions. This recent penalty follows the People’s Bank of China’s record high 116 million yuan ($16.4 million) in fines and penalties imposed on AllScore over multiple rule violations, including unauthorized suspension of payments and misappropriation of provisional funds.
Guangdong Issues Special-Purpose Bonds to Support Four Rural Banks
Guangdong province plans to issue 10 billion yuan ($1.52 billion) of special-purpose bonds to recapitalize four rural commercial banks, becoming the first local government to use part of this year’s quota of such borrowings to replenish bank capital. Yunan Rural Credit Cooperatives will receive 4 billion yuan from the special-purpose bonds (SPBs), Puning Rural Commercial Bank 3.7 billion yuan, Jiedong Rural Commercial Bank 1.4 billion yuan, and Luoding Rural Commercial Bank 900 million yuan. Some small and midsize banks, especially rural credit cooperatives, have suffered a surge in bad debt over the past few years after a rapid expansion in credit left a large amount of nonperforming loans on their books as economic growth slowed.