21 February 2017
Visit EBAday.com

Economic woes spell doom and gloom for Chinese fintech sector

08 January 2016  |  6795 views  |  0 Chinese flag

Fintech startups in China look set for a bumpy ride in 2016, as the Government backtracks on legislative easing and the big banks prepare to reassert their dominance over the management of consumer finances, according to J Capital Research.

China has been singled out as a bellwether market for fintech innovation as the government opened up competition in the banking sector and the country's giant e-commerce conglomerates Baidu, Alibaba and Tencent advanced on the sector.

Fintech startups hoping to hitch a ride on the reformist agenda may be in for a rude awakening, warns J Cap, which is forecasting mass consolidation and multiple failures as the era of cheap money comes to an end, exposing unsustainable business models.

The Hong Kong-based research firm singles out the rise in US interest rates, a reversion of capital inflows to outflows in China and the action of the country's central bank to slash interest rates as creating a perfect storm for the country's emerging fintech sector and e-commerce giants alike.

It points to a decline in returns for private sector payments revenues as capital dries up and margins are squeezed, pushing P2P lenders out of business and raising entry costs for all but the most large-scale operators. While Western alternatives to banks have been forced to compete on service and product innovation, Chinese firms have relied on the strength of the Renminbi to guarantee a solid return on consumer money held in the float.

States JCap: “It’s very likely that China’s e-commerce companies, far from representing the rise of consumption in China, are creatures of China’s Era of Capital and will fall like stars."

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Apple and Samsung set to take on Chinese tech firms with m-payments launch

Apple and Samsung set to take on Chinese tech firms with m-payments launch

18 December 2015  |  7266 views  |  0 comments | 7 tweets | 9 linkedin
China UnionPay unveils mobile payments service

China UnionPay unveils mobile payments service

15 December 2015  |  8598 views  |  1 comments | 17 tweets | 15 linkedin
Baidu and China Citic plot Internet bank JV

Baidu and China Citic plot Internet bank JV

17 November 2015  |  4182 views  |  0 comments | 10 tweets | 10 linkedin
From Unicorns to dragons, meet the new face of banking disruption

From Unicorns to dragons, meet the new face of banking disruption

12 October 2015  |  12046 views  |  0 comments | 25 tweets | 21 linkedin
China and India drive non-cash payments growth

China and India drive non-cash payments growth

06 October 2015  |  8777 views  |  0 comments | 19 tweets | 12 linkedin
China revives controversial bank procurement rules - Reuters

China revives controversial bank procurement rules - Reuters

25 August 2015  |  5001 views  |  0 comments | 5 tweets | 5 linkedin
Alibaba moves into financial data and information services

Alibaba moves into financial data and information services

04 June 2015  |  11945 views  |  0 comments | 34 tweets | 21 linkedin
China puts controversial bank IT rules on ice

China puts controversial bank IT rules on ice

17 April 2015  |  3899 views  |  0 comments | 4 tweets | 6 linkedin
Tencent launches China's first online-only bank

Tencent launches China's first online-only bank

05 January 2015  |  6696 views  |  1 comments | 22 tweets | 9 linkedin
Samsung ties up with China UnionPay for mobile payments service

Samsung ties up with China UnionPay for mobile payments service

03 October 2014  |  8415 views  |  0 comments | 3 tweets | 10 linkedin
Bank of China puts big data at centre of new online platform

Bank of China puts big data at centre of new online platform

07 January 2014  |  6263 views  |  0 comments | 10 tweets | 3 linkedin

Related blogs

Create a blog about this story (membership required)
visit BNP paribas

Top topics

Most viewed Most shared
IBM and Visa join forces to turn billions of connected devices into points of saleIBM and Visa join forces to turn billions...
17596 views 11 comments | 54 tweets | 88 linkedin
Nesta launches £5 million Open API challengeNesta launches £5 million Open API ch...
10379 views comments | 21 tweets | 19 linkedin
Jaguar embeds payments into digital dashboardJaguar embeds payments into digital dashbo...
10375 views comments | 49 tweets | 58 linkedin
The fintech effect: Banks buy in to benefits of boosting financial well-beingThe fintech effect: Banks buy in to benefi...
9288 views comments | 17 tweets | 12 linkedin
Kevin the bot uses blockchain to offer insurance for P2P transactionsKevin the bot uses blockchain to offer ins...
8421 views comments | 17 tweets | 14 linkedin

Featured job

Six Figure Base + Commission + Stock Options
London

Find your next job