Chinese bankers worried about falling behind in fintech investments
March 12, 2019 Category China News Round-up, Weekly
Chinese bankers’ concerns about falling behind on fintech investment are at a three-year high, as they consider their existing information technology system to be “a major drag” on business. Results from the Chinese Bankers’ Survey 2018, jointly conducted by consultancy PwC and the China Banking Association, found that about 38% of the bankers viewed the current IT systems at their banks could “barely satisfy” ongoing business operations and see it weighing on their operations. The percentage rose from 30.4% in 2016 and 34.1% in 2017.
The findings come as new internet banks like MYbank, backed by Ant Financial, and Tencent Holdings-backed WeBank, could potentially use their parents’ finch expertise to challenge the dominance of traditional banks. PwC China’s Richard Zhu said that the bankers’ growing frustration reflects their heightened awareness on how fintech investment is increasingly impacting banks’ competitiveness. Li Jian, Director of the Research Department of the China Banking Association, said this explains banks’ growing investment on fintech research and development – on average 2-3% of their operational income every year. “Since 2015, we have also seen a trend among banks to set up their own dedicated fintech units, with a mandate to develop fintech specifically to support internal risk management, and help banks price their loans,” said Li.
Currently, six banks – China Construction Bank, China Minsheng Bank, China Merchants Bank, China Everbright Bank, Industrial Bank and Ping An Bank – have set up fintech units. But Zhu said he does not foresee internet banks necessarily posing a significant threat to banks. If Chinese banks speed up their fintech investment, and make use of technologies to improve their internal risk management, they were unlikely to lose out to their virtual banking competitors, Zhu added. The survey, which collected 2,380 responses from 127 banks, also found that Chinese bankers overall remain optimistic on the outlook of the Chinese economy, the South China Morning Post reports.
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