China may be on its way to becoming the first cashless society, according to the inaugural report of South China Morning Post, which explored the financial technology (fintech) ecosystem of one of the world’s largest economies.

“China Fintech Report​” reveals China’s massive domestic financial market has an estimated 87% of consumers using fintech services, a $29 trillion (200 trillion yuan) mobile payment market in 2019, and the largest global market for online securities trading.

The report is a comprehensive resource on the latest trends and future trajectory of the world’s largest financial technology ecosystem. It contains detailed information on one of the fastest-growing sectors in business and technology. The ​South China Morning Post, is a global news company, with headquarters in Hong Kong, has reported on China and Asia for more than a century.

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“The fintech companies of China, which are already pushing boundaries and setting the bar higher than any other company anywhere else, are expected to expand beyond Chinese shores into the broader world,” said Eugene Tang, Business Editor, SCMP. “The coronavirus pandemic, which has led to paradigm shifts in the way humans earn and pay, will only accelerate the rise of fintech, with increased investor and consumer appetite for online financial services.”

Mobile payments

The report noted that the digital shift will be driven by mobile payments, which already accounts for 4 of 5 payments, more than half the value of all non-cash retail payments in China.

Tech companies in China play a crucial part in this push on fintech. Startups have received significant investments from major players including Alibaba Group Holding, Ant Group, Baidu, JD.com, Tencent Holdings, and Ping An. (It is interesting to note that Ping An is an insurance giant which made a pivot to become a major tech player.

These tech giants are instrumental in the rise of digital-only banks with Tencent-founded WeBank, Alibaba-backed MYBank, Baidu’s aiBank and Xiaomi’s XWBank dominating the industry.

Utilizing all available traditional and new technologies like artificial intelligence, these banks analyzed client data useful in further innovations. The report noted that maximizing the potential of data and analytics may contribute to the financial sector’s stability.

Blockchain

Another technology that may play a role in the full adoption of cashless transactions is blockchain technology which is now a “national priority,” according to the report. China’s banks are ramping up blockchain use with applications in lending to small and medium enterprises, risk management, and operation efficiency, while China prepares to launch the world’s first sovereign digital currency, with a large-scale rollout expected to come before China hosts the 2022 Winter Olympics.”

Ping An’s pivot may have also signaled the rise of insurtech as the “China Fintech Report​ saw that “online insurance premiums currently account for less than 8% of total Chinese insurance premiums, suggesting the sector has a long way to grow as China overtakes the United States to become the world’s biggest insurance market by the mid-2030s.”

The “China Fintech Report” was produced by SCMP Research.