Chinese Commercial Banks and Fintech-Competition and Collaboration

Fintech has significantly transformed the financial service industry and that is particularly so in China. China has the world’s largest banking sector, but it is heavily regulated, in favor of SOEs and leaves a large number of small-medium-sized enterprises and low-income households under-served or un-served at all. Fintech companies rose to fill this gap. China’s Fintech industry has driven disruption into retail banking in payment, online investment, and online lending, posing a real threat to the Chinese banking system. Chinese commercial banks respond to this challenge with both competition and collaboration. China’s large banks have managed to close the gap with Fintech companies, but small-medium-sized banks are struggling to keep up due to a lack of resources.