7 Chinese FinTech Trends to Watch in 2016

2015 has unarguably been the year for financial technology. Financial online services are faster, more convenient and offer better user experience through modern platforms, applications and technology.

FinTech companies are easing payment processes and save users’ money, for example by offering better exchange rates than banks. However, this has not always been the case, as the financial sector has for a long time been a highly regulated terrain dominated by big investment bankers and even bigger banks that resist disruption and innovation. Following the global financial crisis, years of low interest rates and customers getting increasingly used to managing their money and business online, demand for upstarts’ financial services has finally grown. FinTech – a contraction of the words “Financial” and “Technology” – promises to be either the biggest enabler for the financial industry over the next years or the biggest disruptor. In particular in China, where the demand for non-traditional lending is growing.So, the spotlight is on. But what should we actually be looking out for this year?

As mediaman recently launched its own InsurTech project massUp and is constantly motivated to provide new impulses and identify the newest trends, here are our ideas on possible FinTech developments in 2016 – with a special focus on China.

(1) China’s P2P Lending Boom Is Likely To Continue

Peer-to-peer lending (or P2P lending) offers an alternative to standard bank loans. So instead of crawling your way to a it-takes-forever bank, it now only takes a few clicks to get your monetary loan that you pay back with interest later. In the vision of FinTech entrepreneurs, online lending is the place allowing companies to grow. It became even more popular when Lending Club made its Initial Public Offering (IPO) in 2015. In China, online lending has emerged as a fast-growing sector, filling a demand from consumers and small businesses. Lending companies are getting big. Thus, Chinese P2P lender Lufax is seeking to list itself as early as the second half of this year. Also, the chosen market will not be the US, but either the stock exchange in Hong Kong or Shanghai, which is also in line with other financial services that are close to the Chinese government and will most likely seldom be taken public on ‘foreign’ exchanges.

(2) But Regulators Are Getting Their Game on As Well

The Chinese P2P sector exploded in 2015. However, there is always a black sheep in the family. In this case, it was major Chinese P2P lender Ezubao who was finally convicted for fraud, as Chinese state media announced early February that the company had cheated more than 900,000 investors causing total losses of an estimated US$ 7.6 billion and making it the second biggest ponzi scheme in history.

Obviously, Ezubao’s downfall did not remain unnoticed by the larger public. First, it is more than likely to decrease consumer confidence in the P2P lending model. Second, and perhaps even more significant, the investigation of Ezubao will lead to stricter regulations on the Chinese P2P lending market. Authorities already had plans to better control the sector, and with the Ezubao news they only got another reason to finally do so. So what does this mean? In the long run, it might actually provide P2P lending companies with a more regulated, structured market with defined boundaries and supervision. However, in the short run, companies that are not ready for a few regulatory road bumps are more than likely to get lost and experience strict crackdowns. Venture capital investors may be more hesitant to back P2P lenders until the regulatory framework is set.

(3) Chinese Financial Marketplaces Focusing on B2C

The term ‘Financial Marketplace’ is a catchall for places in the financial sector where buyers and sellers participate in the trade of assets. It is a business model based on aggregation.The Orchard platform is a good example of a use case in the financial service industry that was only possible by innovation in lending. It aggregates data of (peer-to-peer) lending platforms and combines this data with investments of funds in these assets to allow benchmarking.

To date, similar marketplaces in China such as ZhaoCaiBa and Rong360 are focusing on the B2C market and provide accumulation and comparison platforms in order to make the selection of financial service products from banks and others more transparent. Rong360 completed a series D financing round in late 2015 and is about to introduce a new facial recognition software that is ought to protect its financial institutional clients from identity theft, one of the primary challenges for China’s thriving FinTech industry.

(4) BitCoin Dreams Remain Uncertain

The virtual currency ‘Bitcoin’ has been around for a couple of years already and can be described as a digital asset. Its recent gain in popularity has various reasons and the Venture Capital investment of over US $ 1bn in 2015 is worth noting. There is a lot of uncertainty around Bitcoins from a monetary perspective. The underlying technology of the Bitcoin network, the Blockchain, does have a huge variety of use cases and is an innovative way to establish a decentralized trust-management system, for example to validate signatures on documents. Bitmex enables you to do margin trading with Bitcoin derivatives and is definitely a great success story. The founders just ‘hit a nerve’ setting up such a service platform. Remittance is on fire and apart from the more traditional approaches like Transferwise, there are also platforms such as Bitnexo that make cross border transactions more efficient relying on crypto currencies. However, Bitcoin’s volatility and the often-negative media publicity are barriers to wider acceptance.

Finance apps by Jason A. Howie, on Flickr. This work is licensed under a Creative Commons Attribution 3.0 Unported License

(5) The ‘Three Kingdoms’: Chinese Internet Giants Launching Their Own Banks (and Fighting over It)

Over the next years, one should definitely keep a close eye on Tencent and AntFinancial. Not only does the fact that two Internet giants launched their own financial arms offer enough content for potential future drama aka market competition (take the popcorn out guys!), but with market capitalizations over US$ 150bn (Alibaba Group) and daughter companies strictly focusing on financial services for years now, they already started to shape the Chinese financial market. So there is every reason to watch out for them. Also, Alibaba’s AntFinancial just raised new funding at $US 60 billion earlier this month, ahead of a much-speculated, possibly soon-to-happen public listing. In addition,both Tencent and AntFinancial did set up their own 100% online bank with no off-line branches. And besides Baidu launching a bank (Internet giant number three joins the party!), JD Financial also just announced a funding round of US$ 1bn for financial services.

Until now, there is no public data available evaluating these banks’ performances. However, it is confirmed that they are seeking major rounds of financing for their businesses (ca. US$ 1 billion).

(6) Digitization of Healthcare – VC-backed InsurTech companies

You are right, this is not 100% FinTech, but it is related to a lot of money and adopts P2P lending models. Also, it is not really a trend for 2016 only, but it is more like a megatrend for the 21st century. But let’s have a closer look. Technology is evolving at a very fast pace in the current insurance market and year-on-year funding volumes reach record high growth rates (far beyond 2015). We would like to introduce some players in three major fields that should be further observed this year:


Oscar was and is still one of the front runners in this space.The New York-based company aims to revolutionize insurance through data, technology and design.

P2P Insurance:

The German company friendsurance was one of the first ones to introduce a brokerage version peer-to-peer approach to insurance. Large insurance companies such as R + V quickly supported the company and also large investors jumped on the bandwagon. For example, HorizonsVentures, Li Ka-Shing’s venture fund, was completely won over for this model and hugely invested.The trend quickly rolled over to China, so Chinaccelerator graduate Tongjubao is the new promising healthcare startup, launched in November 2015.It takes on the well-working P2P lending business model and uses it to innovate in similar fashion to friendsurance.


simplesurance has the goal to make a broad range of product insurances available for the masses through an easy and developer friendly eCommerce integration. With massUp, mediaman also focuses on such niche products. More specifically, the focus is on a small variety of rater expensive gadgets such as an iPhone or an e-bike that are traditionally covered by so-called Annex-Insurances. Streamlining the process from a sales agent as well as from a customer perspective while providing the best UX possible is the goal here – quantity matters, so processes need to be as smooth as possible to make it economically feasible.Chinese companies took up this trend as well, for example online insurance provider ZhongAn became major backing from PingAn and others. ZhongAn sells insurances online and provides smart solutions to its Chinese customers.

So without any doubt, the insurance industry is changing and new players are entering the market. Venture Capitalists, Private Equity Funds and others heavily fund most of them. An interesting development is that some of the major insurance players (e.g. AXA Strategic Ventures, PingAn Ventures etc.) support this change and strategic tech investments made by corporate insurance investors rose an astonishing 725% from all of 2013 compared to 2015.

(7) Bank and Fintech Partnerships Will Evolve

The big question in 2016 will be how banks react to the disruption by Fintech companies. Are they going to innovate, are they going to change? A safe bet is that they will not stay out of the game and just watch, but change their business model or shape the FinTech industry themselves. The largest banks already started using venture capital arms to back FinTech startups and they will only continue to do so. Once, the idea is off the ground and potential has been proven, they are more than likely to acquire the start-up and make it an in-house product. But will there be more than acquisitions and investments?

It looks like uncertain times lay ahead, but exciting ones, too. FinTech companies come and go, some stay. So it is important to observe carefully, in particular in China. At mediaman we are happy to not only observe, but also to join in the new trend with our very own InsurTech product massUp. Check our blog for other articles about FinTech and anything else new in the digital world over the next months!