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Financial Inclusion, Regulatory Protection, and My Recent Trip to China


Let me just begin by saying that I’m no expert on China or Southeast Asia, but I am committed to learning and keeping up. The market is incredibly complex and is advancing very fast. Based on my last two trips, I’m floored by how quickly the market is developing.

When thinking about China, it can be difficult to fathom the scale, particularly for those of us who have spent the majority of our lives on the outside looking in. You hear stories and anecdotes. You read the numbers. The estimated population of 1.4 billion in 2017 is ranked number one globally and is approximately 18.5% of the total world population.[1]

It’s also pretty clear that the development in the region, particularly in the financial services and technology sectors, is happening at a staggering pace and scale. As of September 2016, China had 8 of the 27 current fintech “unicorns” at an estimated US$96.4 billion total valuation with US$9.4 billion in capital raised—including the four largest valuations globally: Ant Financial (US$60 billion), Lufax (US$18.5 billion), JD Finance (US$7 billion), and Qufenqi (US$5.9 billion).

To help put those numbers in perspective, the U.S. is home to 14 fintech “unicorns” at an estimated US$31 billion combined valuation with US$5.7 billion in capital raised.[2]

The region is also seemingly light-years ahead in terms of innovation and adoption of these new technologies by a large base of underbanked and unbanked consumers—something I learned first-hand by being on the receiving end of scowls from the various vendors I interacted with when I tried to pay with cash. Mobile payment is everywhere, and is the preferred method of transacting at the point of sale. While most places I visited begrudgingly took my paper yuan, I was obviously a tourist and wholly unprepared for the reality on the ground. It was an eye-opener. Silicon Valley and my home in New York felt very far away, and that feeling wasn’t based solely on geography.

China’s approach to fintech has been to focus on financial inclusion over financial protection, and this has led to rapid innovation and incredible growth. Lending has become synonymous with mobile payments in China and in many cases can be as easy as sending a text message. The country’s largest technology companies are working to create services that touch every aspect of their customers’ lives, from ecommerce to social media, banking, investment, insurance, and wealth management. As a result, there has also been an explosion in the number of fintech companies in the market. For example, as of 2016, there are currently over 5,000 lenders offering a variety of credit products.[3]

Of course, this type of rapid innovation and growth hasn’t come without issues. Just last week it was reported that 41 people had been jailed as a result of a US$10.2 million fraud at a Chinese peer-to-peer lender Baiyin Wealth Co.[4] And the Chinese government has made it clear since Q4 of last year that they are stepping up regulatory enforcement and shifting their stance from promoting financial inclusion and rapid innovation to also ensuring financial protections are in place and enforced. In the short term, this will likely thin the herd of startups to the benefit of the largest technology companies. A recent study estimated that only about 500 of the approximately 5,000 existing lenders may survive the crackdown over the next year.[5] But in the long term, by enacting these measures and focusing on developing a world-class infrastructure and regulatory environment, China may help to ensure a more stable, innovative financial ecosystem in the future.

One of the big takeaways for me from this trip was that by balancing innovation and financial inclusion with financial protection, we can all work towards building a global marketplace that supports the need for innovative approaches to financial services while ensuring they are properly regulated and that they promote a stable, growing economy. As two of the largest markets for fintech, firms in the U.S. and China should spend the time to build the necessary relationships and bridges to take advantage of this opportunity.

Another takeaway? A significant area where the U.S. is ahead of China in this space is on the capital markets side. Most lending platforms in China are still funding loans using the peer-to-peer model. However, in my discussions with lenders, that does seem like something that is shifting. Some of the bigger platforms indicated that they are now seeing 20% to 30% of their originations purchased by institutional investors. I’m definitely keeping an eye on this trend, and suspect that the recent shift in regulatory focus will help attract the attention of institutional money.

Overall, it was a fantastic trip, and I’m looking forward to heading back in two weeks. Thanks to everyone who helped make it happen. Below you’ll find some notes on my travels. Please keep in mind what I mentioned at the outset, I’m not an expert. I view the region, and the innovations being developed there, as being well ahead of the curve and important for anyone involved in fintech to follow. This is not intended to be an exhaustive description of the places I visited or a complete list of the companies I met with. I hope to provide regular updates as Orchard continues to explore and engage with companies and experts in the region.


Often referred to as ‘The Switzerland of Asia,’ Singapore has become a leading global financial center in the region. It is also very pro-fintech. The Monetary Authority of Singapore (MAS) has taken a forward-looking approach to engaging with the market by developing and supporting initiatives like the recently launched Lattice80 which provides startups access to office space and networking opportunities in the heart of Singapore’s financial district. MAS also established its fintech innovation lab, Looking Glass @ MAS, last year to encourage financial institutions to locate their tech innovation labs there. As a city-state, with just over 5.6 million residents, the local market isn’t at a massive scale, so many of the startups are also focused on creating products for other countries in the region like the Philippines, Malaysia, and Vietnam.

Companies I’m watching:

Founded in 2010. They have offices in New York, Hong Kong, and Melbourne and are headquartered in Singapore. Enables real-time access, structuring, and delivery of consumer and business data, in partnership with many of the world’s leading data sources.


Founded in 2012. They are a mobile payment platform that allows the transfer any type of payment across any social media or messaging app, globally.

Hong Kong

While innovation in online lending in the region is being dominated by mainland China, development of a fintech hub in Hong Kong is actively supported by the local government. They recently launched a regulatory “sandbox” to help support adoption of fintech by the banking sector. There also appears to be a lot of opportunity for development in the wealth management space, in particular. It is an international financial center and a location where wealth managers from China are setting up shop. Also, Hong Kong benefits from its proximity to China and a regulatory environment that is viewed as being stronger and much more transparent than China’s, i.e., making it an attractive location for foreign companies looking for a launching pad to access the Chinese markets.

Companies I’m watching:

Privé Financial

Founded in 2011. They provide a range of financial services focused on wealth management through their Privé Managers portal.


Founded in 2013. They operate Wolaidai, one of China’s largest mobile lending platforms and WeLend, an online lending platform in Hong Kong. They also partner with traditional financial services firms to provide their technology.


Beijing is the capital of China and is home to Zhongguancun, a technology hub that many compare to Silicon Valley. It is also headquarters for a number of multinational technology companies like IBM, Mircrosoft, and Apple. Beijing has a well-developed network of entrepreneurs, engineers, and the investment resources capable of supporting innovation from idea to seed to scale, and two of the top universities in China, Peking University, and Tsinghua University. While China is seeing a similar trend as the U.S., i.e., as the cost of living in technology hubs like Silicon Valley and San Francisco skyrockets startups are shifting to “2nd-tier” cities with appropriate resources and infrastructure but at lower costs, Beijing is likely to be at the center of innovation in China for some time.

Companies I’m watching:


Founded in 2000. Baidu is one of the largest internet companies in the world. It offers a range of services including search, maps, video, and social media, among many others.


Founded in 2006. CreditEase is a subsidiary of New York Stock Exchange-listed Yirendai (NYSE: YRD). They specialize in small business and consumer lending, as well as wealth management for high net worth and mass affluent investors.


Founded in 2005. Renren began as a social networking application and has since added a financial service platform called Reren Licai to provide peer-to-peer financing to their users.


Shanghai is a commercial and financial center and is home to Dianrong, Lufax, China Rapid Finance, among many others. Nearby Hangzhou is home to the emerging fintech sector as well as internet giants like Alibaba. Because of the concentration of large ecommerce, entertainment, technology and financial firms (including venture capital firms), as well as their close proximity to each other, this area could be thought of as one large fintech hub.

Companies I’m watching:

Ant Financial

Founded in 2014. Ant Financial, formerly AliPay, is a digital payments company founded by Alibaba and headquartered in Hangzhou.


Founded in 2014. CashBUS is headquartered in Shanghai and is focused on mobile, micro consumer loans using big data and machine learning to make credit decisions using non-traditional data sources.

China Rapid Finance

Founded in 2010. China Rapid Finance is one of the largest consumer lending marketplaces in China and is headquartered in Shanghai.


Founded in 2011. It is headquartered in Shanghai and is the second largest peer-to-peer lender in China. The company was incubated inside a large scale financial services company (Ping An Insurance). In a little over 4 years, Lufax has grown into one of the largest Internet Finance companies in the world.

Quark Finance

Founded in 2014. Quark Finance is based in Shanghai and focuses on consumer finance including wealth management, point-of-sale installment loans, auto finance, and small business loans.


Home to Huawei, ZTE, and Tencent Holdings Limited (some of the largest technology companies in the world), Shenzhen is the first of three Special Economic Zones created by the government in 1980. It is also a major financial center. Earlier this year Shenzhen launched a US$1.5 billion venture capital fund to continue to support innovation.[6] And last year, a Fintech Pioneering Zone was announced in Shenzhen during the 2016 China Shenzhen Fintech Summit which will provide offices and facilities to startups, as well as access to their first incubator, which was also announced.[7] 

Companies I’m watching:


Founded in 1998. Tencent is one of the largest technology companies in China and counts everything from games and other forms of online entertainment to web search, ecommerce, and messaging among its holdings. They also own China’s first online bank, WeBank, and offer personal loans through their WeChat app.  

Hongling Capital

Founded in 2009. One of the earliest peer-to-peer lending platforms in China.