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The Chinese road to platform disruption

The Chinese road to platform disruption

Business Forum,
12 October 2015

How China’s FinTech players will change how the world thinks about banking

Financial institutions find themselves in a race to adapt and evolve as FinTech, blockchain and digitalisation continue to make their mark, and traditional lines between technology and finance continue blurring. Against this backdrop, China's FinTech giants have emerged as formidable disruptors.

The BAT - Baidu, Alibaba and Tencent - are leading the Chinese wave of disruption in financial services, making deeper inroads than their western counterparts, say Haydn Shaughnessy, Co-Founder of advisory firm The Disruption House, and Zennon Kapron, Director at market research firm Kapronasia, who have published a new research paper in association with Innotribe: The Platform for Disruption: How China's FinTech will change how the world thinks about banking?'

FinTech in the West is not without strong disruptive players, but the BAT benefit from a growing capital base and protection from global competition through China's omnipresent Great Firewall.

The success of these disruptive Chinese companies means that they are no longer considered as emerging players. While their origins are in FinTech, their impressive numbers evidence their progress towards mainstream adoption:

  • Search giant Baidu sold out its own RMB 3 billion big data based mutual fund within three days of its 2014 launch
  • Alibaba’s Alipay service handles nearly 80% of all Chinese mobile payments
  • Tencent’s chat application is used by over 500 million people for daily communication, as well as payments and wealth management

The highly-scaled Internet and mobile platforms of the BAT boast an IT infrastructure that is fully capable of supporting digital banking. Unlike some banks' legacy systems, BAT's technology was built with the agility to handle millions of internet searches, online transactions and mobile communications.  In pursuit of effective digitisation, western banks have focused on platform renewal, alliances and acquisitions and, most recently, blockchain. But will these strategies stand up against China's stiff competition? 

The new paper draws upon primary and secondary research, including interviews with professionals involved in China's financial industry, one-on-one discussions with Chinese consumers, and a survey of 1,000 mainland Chinese millennials.

The authors' case for China's disruptive advantage is convincingly argued: "China's big tech companies are powered by big data, informed by automated feedback loops from customer activity, driven by business experimentation rather than IT, function at an unprecedented scale and operate at a new degree of service integration."

Citing China's unique economic growth, tech restrictions and platform approach, the paper describes how China is a catalyst for disruptors with unique characteristics that in turn, are in the position to drive change globally.

The paper concludes with an overview of implications for the West and recommendations for banks' FinTech development.  It is clear that there are many ways to respond to disruption, but for banks, the ultimate question is: Are we capable of changing our core operations? Can we begin thinking like an enterprise platform?

The paper was launched today at Sibos, the world's premier financial services event, taking place from 12-15 October in Singapore. It is the third in a series published with the support and contribution of Innotribe to highlight topics at the top agenda of this year's Innotribe@Sibos programme. The paper is available on together with previous research on Power Women in FinTech and Millennial Generation.