Published on: Apr 1, 2020

How FinTech is making financial services widely available in China

Industry Blogs

In recent years, China has been praised for their efforts to increase financial accessibility amongst its population. A large part of this success is thanks to their upcoming Financial Technology (FinTech) companies. As of now, China is widely considered as an example of how to correctly implement FinTech solutions in real-life cases. Some of the solutions are providing financial services such as loans and insurance to those who did not have access before.

Intelligent risk management has a huge impact on the accessibility of loans. Before, the risk assessment procedure took longer than necessary. Mainly because of the requirement of due diligence and a lack of credit score histories. With the implementation of AI systems that can automatically assess a person’s credibility using online consumption and behaviour, the procedure is now completed in a matter of seconds.

MyBank is an affiliate of the Alibaba group. The company is a good example of how AI technology can make financial services more accessible. Using its parent company’s enormous database, Mybank has lent 2 trillion yuan (290 billion USD) to almost 16 million companies since it was founded in 2015. Their loan assessment procedure is exclusively AI-driven and takes a couple of minutes. Still, their default rate is around one per cent despite the claims that their loan approval rate is four times greater than that of traditional lenders.

Several other Chinese companies are developing AI systems applicable in financial services. Ping An OneConnect is developing methods to manage fraud and default risks utilizing AI. Amongst these methods, the company tries to apply micro-expression recognition and natural language processing (NLP). The goal is to improve the due diligence procedure. Specifically in cases where banks lack certain information on loan appliers.


Source: SCMP research

There are more instances where AI is changing the financial landscape in China. Virtual assistants utilizing AI technology are becoming more common in customer service. These programs are able to respond to a wide variety of customer queries and requests. Most virtual assistants allow for intelligent, human-like dialogue between consumers and a business. Conversations are captured and analyzed to increase the abilities of the virtual assistant.

If the virtual assistant is smart enough to handle most customer queries, it can reduce the cost of customer service. A good example is Tencent’s WeBank. They claim its virtual assistant handles 98 per cent of all customer queries.

Robo-advisors are digital platforms providing algorithm-driven financial planning services with almost no human supervision. Such a system collects information from clients about their current financial position and future goals. Robo-advisors usually employ online surveys and use the data to automatically invest a client’s assets. Currently, China’s robo-advisor market is still small. However, there are certain players who already offer similar services. China Merchants Bank, Ping An Insurance and ICBC are companies who created such services or collaborated with partners to offer them.

Forecast: Assets under robo-advisor management in China

Source: Statista

Another example of improvements being made in the financial sector is Ant Financial. Currently, the company is working on the automation of insurance claims. Using a combination of its Ding Sun Bao app and computer vision, clients can take pictures of their vehicle damage. After uploading them to the app, their AI program automatically analyses the severity of the damage. It calculates the estimated repair costs and provides information about the effect on their insurance premiums.

Altogether, China is a pioneer in the field of FinTech. Efforts of many of their companies have made financial services more accessible for a large part of the population. Even though some of the technologies mentioned in this article are still in development, they will see real-world application in the upcoming years.