China’s financial services sector has long been dominated by its State-owned banks. However, abrupt changes in technology in the past year have led to new competition in China’s financial services sector by some of China’s largest technology firms.
These tech firms are offering internet-based funds that not only are providing a significantly higher interest rate than bank savings accounts, but also provide linkages to other goods and services offered by the tech firms. For this reason, they have quickly come to be seen as potential ‘industry disruptors’ in China.
This issue of China 360 dives into the emergence of these internet-based funds, by explaining how they work and how they compare to more traditional investment products. In addition, what might be the potential next steps by regulators, and how will banks respond? And finally, who is the big winner amongst this new type of competition?