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.
JD Digits is planning to spend RMB1.6 billion (USD230 million) to obtain a second payment license by acquiring payment platform 99Bill Corp., which is currently controlled by Dalian Wanda Group Co. Ltd. While JD Digits already has a payment license, which allows it to provide card payment transactions services to merchants, it is limited to only Beijing. A second license would allow the company to expand its business nationwide as it seeks to bolster its growing financial services business for brick-and-mortar merchants and small businesses.
On September 17th, the China Banking and Insurance Regulatory Commission (CBIRC) approved Ant Group’s application to establish a consumer finance company (重庆蚂蚁消费金融有限公司) in Chongqing. The consumer finance company will be jointly funded by six firms, including Nanyang Commercial Bank, Cathay United Bank, and China Huarong Asset Management (中国华融). Ant Group is the third company, after Xiaomi Consumer Finance and Mashang Consumer Finance, to obtain approval from the Chongqing Bureau of the CBIRC to establish a consumer finance company in the provincial-level municipality. As of the end of June 2020, there were 26 consumer finance companies in China.
OneConnect (金融一账通), the fintech affiliate of PingAn Group, recently signed a strategic cooperation agreement with PingAn Property (平安产险), the second largest property insurance company in China, and Ipico (柏科智能), a high-tech enterprise focusing on the acquisition and analysis of automotive electronic data, to further the digitalization of the insurance industry. The three parties intend to expand their cooperation in the fields of insurance technology, smart financial product development, and the insurance ecosystem.
JD Digits, the fintech services affiliate of Chinese e-commerce giant JD.com, is seeking to raise RMB20 billion (USD2.9 billion) via its initial public offering on the Shanghai Stock Exchange’s Nasdaq-style STAR market. In a regulatory filing, JD Digits said that it plans to use the proceeds from the offering to replenish capital and to invest in areas such as big data, artificial intelligence and cloud computing. According to the filing, JD Digits plans to issue 538m A-shares, accounting for up to 10% of the firm's equity after the issuance. Guotai Junan Securities are among the underwriters for the deal.
China UnionPay recently issued a statement pertaining to changes in its interchange fees, effective from September 15th, 2020. According to the statement, certain classes of merchants including non-profit educational institutions and medical institutions will no longer be eligible for reduced interchange rates or exemptions. In September, 2016, a regulation regarding fees for the use of bankcards (interchange) in the PRC became effective. A new, uniform issuer fee table was introduced to replace a legacy pricing policy which was based on different types of merchants. The issuer fee table differentiated by card type (debit vs. credit) rather than by industry/merchant type. However, certain classes of merchants were exempted from some issuer fees and payment network service charges. The discounted rate for such merchants was originally planned to be offered until 2018, but was extended by 2 years. The exemption is due to be terminated this year.
The China Banking and Insurance Regulatory Commission plans to bring the medical insurance-like online health-care mutual aid industry under regulation and require licensing for operators of the platforms. The three biggest players in the health-care mutual aid industry are Xiang Hu Bao (相互宝), Waterdrop Mutual (水滴筹), and Easy Mutual (轻松筹), with more than 10 million members each. Mutual aid plans are essentially commercial insurance, but there is no regulatory body or standards. On September 8th, Xiang Hu Bao stated that they looked forward to more guidance from regulators and continued to implement the four principles of real-name system, no fund pool, full risk control, and openness.
The official launch of the Guangzhou-Shenzhen-Hong Kong-Macau Greater Bay Area Green Finance Alliance ("GBA-GFA") was announced in Guangzhou on September 7th. The Alliance aims to facilitate green investments and promote research to benefit the GBA. The Alliance intends to explore initiatives such as the Green Building Project, Blockchain Solar Project, Research and Practice of Solid Waste Disposal, and the Green Supply Chain Financing Action Guide. Furthermore, it will focus on promoting Carbon Connect (碳市通), which seeks to establish a carbon marketplace for cross-border trading.
On September 7th, the Beijing Municipal Bureau of Economy and Information Technology unveiled the “Beijing Digital Economy Innovation Development Action Plan 2020-2022” (北京市促进数字经济创新发展行动纲要). The plan calls for a big push to promote digital industrialization and industry digitalization over the next two years. Beijing’s digital economy is targeted to account for 55 percent of the region’s GDP by 2022. Meanwhile, Beijing is expected to set up a high-level digital trade demonstration area and international big data exchange, with the aim to further fuel economic development and seek higher-level opening-up.
On September 4th, the China Financial Standardization Technology Committee (CFSTC) announced that the international standard “Financial decentralized Ledger Technology Application Guidelines” (金融分布式账本技术应用指南), proposed by the Digital Currency Research Institute of the People’s Bank of China and jointly initiated by the China Academy of Information and Communications Technology, Huawei and other units was successfully established in the International Telecommunication Union Telecommunication Standardization Department (ITU-T) Study Group 16 (SG16). China has been contributing to the development of the financial blockchain international standard system, adding sub-standards such as reference architecture, risk control, security, and privacy protection, and financial blockchain business specifications in various fields.
On September 4th, CCB Fintech (建信金融科技), the fintech subsidiary of China Construction Bank, together with Oushu Technology (偶数科技) formally signed a " High-performance big data processing technology laboratory cooperation framework agreement" (高性能大数据处理技术实验室合作框架协议). The agreement aims to better apply big data technology to the development of finance and to solve the issues such as uncontrollable risks and information asymmetry. Oushu Technology is a leading provider of big data and AI-based platform software, especially the new generation of enterprise databases. In the future, both parties will cooperate to leverage big data and build up a cost-efficient, transparent and innovated financial ecosystem.
Online food delivery service platform Ele.me (饿了吗) launched “Cici Sheng” (次次省), a credit payment product, developed in conjunction with Alipay on September 4th. Previously, consumers had to top up their membership cards with a fixed amount to enjoy merchants’ discounted rates. With Cici Sheng, consumers whose sesame credit score meets the requirement, can enjoy merchants’ discounted prices after each purchase instead of being required to pre-pay for services in advance to access these discounted rates. However, if users are unable to meet minimum thresholds before defined expiration dates, Ele.me will deduct the discount price difference from consumers’ accounts automatically. Currently, over 20 thousand merchants including those in fitness, beauty and laundry sectors have joined the “Cici Sheng” plan. Merchants are interested in Cici Sheng as it helps to increase customers’ repurchase rates.
Ant Group’s listing application will be reviewed by the STAR Market Listing Committee on September 18th, according to the Shanghai Stock Exchange. On September 7th, Ant Group addressed questions raised by the Shanghai Stock Exchange about its ownership structure, competition in digital payments in China and overseas, customers’ privacy as well as its listing plan in Hong Kong. If the listing committee gives the green light to the listing application, the paperwork will pass to the China Securities Regulatory Commission (CSRC) for registration.