The focus for fintech in China is changing from end users to businesses, not least small businesses, according to the financial affiliate of one of China's biggest e-commerce groups.
In an interview during Fintech Week in Hong Kong, Meng Zhaoli, the dean of JD Finance’s fintech research institute, outlined where she thinks the greatest potential for revenue growth lies.
The short answer is the corporate sector: “In the next five years, the fintech market will shift from a business-to-consumer (B2C) mode to a business-to-business (B2B) mode,” she told FinanceAsia.
By B2B, Meng in large part has B2SME in mind, in keeping with state-sponsored Chinese efforts to reduce the funding costs of its small and medium-sized enterprises (SMEs).
“We focus on issuing loans of between $28,900 to $144,300. This is a blank market for traditional banks, as the cost of managing loans is too high for them and revenue is low," she said. "We are solving this problem with fintech, completing due diligence with fintech.”
“Companies used to sell cloud storage services alone,” Meng said, by way of example. “But where a bigger market lies is how this cloud data can help to improve company efficiencies. Apart from the cloud storage services, we also provide cloud computing and data analysis to help business reorganisation. This is where we will focus on.”
JD Finance is also reducing the amount of its own capital that it lends to SMEs and looking to act as more of a conduit for financial institutions, to better comply with Chinese financial regulations.
One way it is doing that is via the asset-backed security platform it launched in June. Using blockchain technology to monitor sales and control risk, it provides institutional investors with a stronger grasp of the underlying assets.
The platform also helps to meet the demands of regulators, Meng said, since they need to be able to keep up with new financial developments and track down assets to manage default risks.
But there is still a lot more that could be done, given the huge amounts of additional data that is still to be collected as 5G spreads and the cost falls and as other technologies such as machine learning and the Internet-of-Things go from strength to strength.
"We can expect more changes to come,” Meng said.
And to identify and commercially exploit the new opportunities as they arise, fintech companies like JD Finance will need to work closely with other professionals from other industries, she added.