SHANGHAI, Dec. 11, 2019 /PRNewswire/ -- Lufax chief executive officer Greg Gibb shared his thoughts on the future of FinTech, presaging inter-discipline partnerships and cross-platform scenarioization, at the Committee of 100 Greater China Conference and Gala 2019, held at the Ritz-Carlton Shanghai, Pudong.
Gibb observed that China's FinTech landscape is restructuring dramatically – a process that started about 12 to 18 months ago, and, according to Gibb, will continue for another 12 to 18 months, "Before restructuring started, there were thousands of companies operating in the FinTech space. That number is going to come down to about a couple hundred." Gibb however did not see the consolidation leading to a winner-take-all situation – he thought it is more likely that the top 10-15 players will command most of the market, "It is a very crowded space with lots of niches. The bar of play is going up very fast, and the winners are those armed with financial DNA, a lot of data, and breakthrough technologies." Gibb, as a practitioner in the industry, welcomed restructuring and consolidation as a timely remedy, "In the early days you could literally become a FinTech company by purchasing a system on Taobao for a couple hundred Renminbi. Whereas the restructuring may be painful in the short term, it will be a good and necessary step in the long run."
The way to play in China's FinTech scene is also changing on the fundamental level, reminded Gibb. "If you roll back to four or five years ago, a lot of FinTech was much more siloed. Each company tried to fight in its own space, do its own thing, and control the process end-to-end," noted Gibb. "Going forward, we will see much closer co-operation amongst FinTech companies, as well as between FinTech companies and traditional financial institutions, much like the recent Google-Citi partnership." Likewise Gibb foresaw an increasing level of co-operation between platforms. E-commerce platforms are leveraging social platforms to achieve amazing growth, and Gibb called for FinTech companies to follow suit, "This is the open banking model for China – high-traffic platforms that have hitherto not entered the FinTech space will help provide scenarios for banks and FinTech companies to take advantage of the massive flow of traffic and data."
Gibb predicted that the "scenarioization" of finance will drive a lot of growth in the coming years. "Payments was the first area where FinTech demonstrated its transformative power. Since then consumer finance has been growing very rapidly and shown great promise," remarked Gibb. "But in second- and third-tier cities, the lack of assets and funding among businesses is still evident." Time is ripe for a technological solution to help make asset management and financing more inclusive. "The asset management sector will present even more opportunities in the next five years, as the allocation of resources – where does the money go and how does it get there – becomes ever more important," explained Gibb. "FinTech that connects the right customer to the right product, done with more transparency, more intelligence, and more investor education, can help direct money to the right areas and support the real economy."
Gibb opined that institutions that inhabit financing scenarios, and gain point blank access to, as well as real understanding of, customers will command the lion share of the profit, "The profit cycles of FinTech rarely go beyond three years. Business models that have once induced value creation will reduce quite swiftly as time progresses. Those who capture the most value and avoid diminishing returns are the ones who continue to be ahead the innovation curve." He submitted that one of the key issues going forward is to find a way to create more dialogue between innovation and regulation.
Gibb argued that China's FinTech model will see the best application and fastest growth in other emerging markets. "A lot of the success we saw in China was thanks to the unique combination of first world technology and emerging market growth," said Gibb. "The FinTech story will continue to be a fast-growing, emerging market story."
"The low-hanging fruit is gone. FinTech now needs a scala of scale or skill to reach its goal," analyzed Gibb. "A large customer base, financial DNA, or unique capabilities to integrate different forms of data, content, and offerings can each prove an asset; while the winning combination of all three will continue to see value."
Gibb believed there is still tremendous potential for growth, "If you look at the banking and finance scene today, in terms of revenue and asset under management (AUM), FinTech still only accounts for 5-6% in China's financial market; it has a small base, but is large in the global context and still poised for a lot of growth from unmet needs." Gibb suggested that the key behind that growth will be AI, driven by chatbot capability, allowing financial services to leave the screen of an app and become a truly two-way interactive experience that prioritizes investor education in wealth management.
Lufax is a world-leading comprehensive online wealth management platform and a provider of turnkey technological solutions for financial institutions and local governments. The company leverages its global financial footprint and technological innovations in building its robust risk management apparatus, and providing institutions, enterprises, and investors with secure, professional, efficient financial services and information.
About Committee of 100
Committee of 100 (C100) is a non-profit U.S. leadership organization of prominent and extraordinary Chinese Americans in business, government, academia, and the arts. Founded by world-renowned architect I.M. Pei and internationally acclaimed cellist Yo-Yo Ma, among others, it is an institution of U.S. citizens of Chinese heritage. For 30 years, C100 has served as a preeminent organization committed to the dual missions of promoting the full participation of Chinese Americans in all aspects of American life and constructive relations between the United States and Greater China.