A slowing Chinese economy has prompted disruption in the country's financial sector. Chinese banks are seeing declining revenues and profits as well as increasing defaults, while new internet-based financial technology companies are gaining customers and market share by offering more personalized services with lower fees. In response, the Chinese government has declared "Internet Plus" a national strategy and Chinese financial firms are adopting digital strategies and investing in fintech to remain competitive. Israeli fintech companies are seen as potential partners since they excel in technologies like cybersecurity, insurance tech, and blockchain that could help Chinese firms transform and capture the growing Chinese digital finance market.
2. A slowing Chinese economy has
stimulated the disruption of local
financial institutions. The tool of
disruption is financial technology and
the race is on for adoption.
3. China’s Economic Growth is in Decline
Source: Embassy of Switzerland in China "China Economic Report", 2016
4. Chinese Bank Revenue in Decline
Source: EY China, "Banking Industry Report: Decline in profit growth drives transformation of listed banks", May 2016; Translated by: Upround Ventures
5. Bank Profits Slide to Negative
Source: Bloomberg, Company Statements, China's Banks Are Running Out of Ways to Keep Profits Growing. 2016 figure based on estimates in a Bloomberg Survey
6. Loan Defaults on the Rise
Source: EY China, "Banking Industry Report: Decline in profit growth drives transformation of listed banks", May 2016; Translated by: Upround Ventures
7. Banks Reduce Headcount
Bank* # of Employee Exits % of Total Employees
Bank of China -6,881 -2.22%
Industrial and
Commercial Bank of
China
-7,635 -1.64%
Construction Bank of
China
-6,721 -1.82%
Agriculture Bank of China -4,023 -0.80%
Bank of Communications -577 -0.63%
Source: Sohu Finance, "25,000 employees leave the national-five-banks in first half year of 2016", Sept. 2016; Translated by: Upround Ventures
*Representative Sample
8. Key Talent Flee to Disruptors
Executive Former Position & Bank Current Position & Internet Finance
Li Renjie Industrial Bank, President Lufax, Chairman
Wang Yongli Bank of China, VP LeEco Finance, CEO
Huang Hao China Construction Bank,
Department of Internet
Finance, GM
Ant Financial, Executive Assistant
Zhang Xuyang Everbright Bank, Department
of Asset Management, GM
Baidu, Vice President
Cao Tong Export-Import Bank of China,
Vice President
We Bank, President
Source: "Why Bank managements abandon their golden bowl and join Internet Finance?", ChinaVenture.cn, July 2016
*Representative Sample
9. Chinese Banks Lack “Inclusive Finance”
Deferred Action for Childhood Arrivals
Source: McKinsey Greater China FIG Practice, "Disruption and Connection: Cracking the Myths of China Internet Finance Innovation", July 2016
11. Internet Finance Delivers Where Banks Fail
Low Fees 24/7 Availability
Personalization
of Services
The Ignored 80% Rush to Internet Finance
12. Creating Competiton for 100% of the Market
Entrant
Service
Payment X X X X X X
Loan X X X X
Wealth Mgmt. X X X X X X X
Insurance X X X X X
Securities X X X X X X
Banking X X X X
Credit X X X X X
Funding X X X X X X
Crowd-Funding X X X X X
Source: Layout of Internet Finance Industry in 2015, SINA Technology & IT Orange Internet VC Database, 2016 Translated by: Upround Ventures
14. China’s Digital Finance Delivers Full Service
Source: Deloitte, "The New Journey of "Internet +", Online Overhaul: Banking in the Digital Stage", 2016
15. Leading to Soaring Internet Finance Adoption
Source: McKinsey Greater China FIG Practice, "Disruption and Connection: Cracking the Myths of China Internet Finance Innovation", July 2016
1.Including money market funds
2.Including mutual funds
16. Chinese Internet Finance | $2 Trillion and Growing
Source: McKinsey Greater China FIG Practice, "Disruption and Connection: Cracking the Myths of China Internet Finance Innovation", July 2016
(Units in RMB 100 million)
Fund sales
Other Wealth Management
products(trust, PE, etc.)
Small and micro loan
P2P
Crowd funding
Insurance
Cloud, direct banking
and others
17. Digital Finance Provides a Competitive Edge
Source: McKinsey Greater China FIG Practice, "Disruption and Connection: Cracking the Myths of China Internet Finance Innovation", July 2016
19. Powered by the PM
"The internet market is massive in
China...We can have the great
acheivement if we integrate the
crowd's intelligence... (with)
internet innovation."
Li Keqiang, Prime Minister of China
Speech at Executive Meeting of State Council
June 24, 2015
Source: The State Council, China
20. The Genesis of "Internet Plus"
Nov. 2012: "Internet Plus" coined by Yu Yang, Chair of Analysys International @
the fifth Yiguan Mobile Internet Expo in Beijing
Nov. 2014: World Internet Conference: Prime Minister, Li Keying presents on
innovation & entrepreneurship
March 2015: Ma Huateng, Tencent Chairman & Founder, proposes "Internet Plus"
at NPC
July 2015: Prime Minister acclaims "Internet Plus" in work report
Dec. 2015: Alibaba, Baidu and Tencent establish "China Internet Plus Alliance"
22. New Entrants to Internet Banking
Created by: Ant Financial (Alibaba) Tencent
Founded: 2015 2014
Customer base: Alibaba's business customers &
TaoBao e-commerce retailers
WeChat & QQ
Focus: SME financing and personal loans big data, blockchain, consumer financing
and machine learning
23. Baidu | Internet Search to Finance
Financial Services
• Financial Baidu Wallet
• Baidu Finance
• Baidu Wealth
• Baixing Bank
• Baian Insurance
• Baidu's & CITIC
Source: 2015 China Internet Finance Investment Analysis, China Big Data Industrial Observation, February 2016
24. Alibaba | Extending the E-Commerce Empire
Financial Services
• Alipay
• Yu'e Bao
• Ant Financial
• My Bank
• Zhima Credit
• Tianhong Fund
• ZhongAn Insurance
• Huabei
• Ant Small Loans
Source: 2015 China Internet Finance Investment Analysis, China Big Data Industrial Observation, February 2016
25. Tencent | Finance Meets Social
Financial Services
• Tencent Pay
• WeChat Pay
• WeBank
• Zhongan Insurance
• People Loan
• Tencent Credit Rating
Source: 2015 China Internet Finance Investment Analysis, China Big Data Industrial Observation, February 2016
26. JD.com | Consumer & Supply Chain Financing
Financial Services
• Chinabank Payment
• Supply Chain Financing
• Consumer Financing
• JD Insurance
• MOM Wealth
Management
Source: 2015 China Internet Finance Investment Analysis, China Big Data Industrial Observation, February 2016
29. Traditional Banks Embrace Technology
Omni-Channel
Inclusive of
Physical and
Digital
Comprehensive
Platform of
Products
and Services
Smart Bank
Client
Management
Source: Deloitte, "The New Journey of "Internet +", Online Overhaul: Banking in the Digital Stage", 2016
30. Everbright: Pioneer in Big Asset Management
Sunshine
(Online) Bank
Cloud Payment
Digital Mall and
E-Wealth Mgmt.
31. Ping An: 2016 Best Internet Innovative Bank
Orange E
• "Safe Loan"
• Online Wealth
Mgmt.
Pingan Manager
SaaS Platform
• SME/e-
Commerce
• Cross-Border
Pingan
Orange Pocket Bank
• Personal Banking
Additional
Innovation
• IoT in Warehouse
• Port &
Manufacturing
32. Minsheng:'16 Leading SME Service Provider
Retail Banking
• Ruyi Bao: Online
Wealth
Management
Mobile Platform
• SMB one stop
mobile loan
processing
platform
Payments
• Support
ApplePay &
developed
Minsheng Pay
Consumer Loans
• Credit and debit
card financing
channel
Consumer Credit
• Online multi-
channel platform
37. Ping An Insurance | Industry Pioneer
Digital Products
• Life and property
insurance
Innovative Credit
System
• Merging public and
in-house credit
history
Healthcare Insurance
Reimbursement
• Quick customer
approval process
38. Tai Kang | Merging Internet, Insurance & Healthcare
Combine mHealth Tech
& Services
• Train clients to form
healthy habits
Healthcare Endowment
Community Investment
• $100B RMB
Introduce Big Health to
Internet
• Wearables I.e.
diabetes detection
39. ZhongAn | IT Dipping into Insurance
A joint venture funded by Tencent, Alibaba and Ping An Group
Product Design
• Scenario
Customization
Big Data Analytics
• Personalized
Dynamic Pricing
Transparent
Reimbursement
Process
• Built on Ali Cloud
41. Banks Need New Technology to Compete
CLOUD TECHNOLOGY BIG DATA CAPABILITY OMNI-CHANNEL
• IT cost savings
• Increasing operational
efficiency
• Faster application
process
• IT risk reduction
• Customer targeting
• Service personalization
• Fraud detection and
cyber security
• Seamless
personalization
• Digital apps
• In-person
and telebanking
• Live person or bot
42. ...And Tackle the Breadth of Fintech
Source: Deloitte "The New Journey of "Internet +", Online Overhaul: Banking in the Digital Stage", 2016
53. China-Israel Collaboration Since 2013
Bilateral
incubators
Pure financial
investment
Acquiring mature
enterprises
China-Israel
industry park
Strategic investment
in Israeli funds
Market penetration
and tech transfer
Joint research lab &
innovation center
60. China Needs Israeli FinTech To...
Capture 80% of long tail customers
Create competitive advantage to
grow market share
Replace the U.S and UK. as the
leading fintech powerhouse
Deliver enhanced products and
services: better, faster, cheaper
Source: KPMG & CB Insights "Pulse of FinTech Q3" 2016
61. Upround. Disruptive Israeli Tech.
China First.
esther@uproundventures.com; shir@uproundventures.com; yequ@uproundventures.com
Hinweis der Redaktion
See Draft 13’s graph—looked better
Need space between logo and the boxes
Too odd to only color Tech?
Not sure all the blues are the same