1、Future of Financeword文档 可自由复制编辑The Rise of China FinTechMancy Sun+852 2978-6072mancy.sun Goldman Sachs (Asia) L.L.C.Payment: The Ecosystem GatewayFintech companies are reshaping the way Chinese consumers pay, borrow and invest. Innovators from Tencent and Ant Financial to JD and Ping An have muscled
2、 in to the financial sector and are offering everything from easier and faster ways to pay withjust a swipe of a smartphone to creating attractive online saving products and loans. With consumers financial needs unmet by traditional banking and the help of cutting-edge technology, vast new profit po
3、ols are being created. In the first of our series on The Rise of China FinTech, we focus on unique trends investors need to understand and the emergence of electronic new payment methods that have become a crucial gateway for innovators closed-loop ecosystems.Piyush Mubayi+852 2978-1677piyush.mubayi
4、 Goldman Sachs (Asia) L.L.C.Tian Lu, CFA+852 2978-0748tian.luGoldman Sachs (Asia) L.L.C.Stanley Tian+852 2978-1945stanley.tian Goldman Sachs (Asia) L.L.C.Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm m
5、ay have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non
6、-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.The Goldman Sachs Group, Inc.Table of contentsPortfolio Managers Summary4Sizing the addressable market: Untapped consumer demand 10Key shaping trends #1: Integration 12Key shaping trends #2: Regulation 14Key shapi
7、ng trends #3: International 17Third-party payment: The current state of play 22Key payment channels by type of transaction: B2C, C2C and B2B 28How does it work? Traditional vs Third-party 30How do they make money? Traditional vs Third-party 33Enablers of growth 36Late mover advantage in digitization
8、 of money 36Fee structure that is closer to cash vs cards 37Unique infrastructure set-up 39Proliferation of e-commerce /social platforms enables viral growth 41Improving ease of use with technology advancement 44Understanding the key players and competitive landscape 46Alipay 49Tenpay 51Sizing the a
9、ddressable market 55Key debates for future #1: Monetization 58Key debates for future #2: Regulatory 60Key debates for future #3: Fee competition and M&A 64Appendix 66Disclosure Appendix 69Contributing Authors: James Schneider, Ph.D; Andrew Lyons; Katsunori Tanaka; Lara Fourman, CFA; Frank Shi; Tianb
10、o Yu; Robert D. Boroujerdi; Shin Horie; Philippa Vizzone, CFA; Richard Manley; Timothy Moe, CFA; Andrew Tilton; Eliot Camplisson; Heath P. Terry, CFA; Hugo Scott-Gall; Richard Ramsden; Jernej Omahen; Ryan Nash, CFA; Adam Hotchkiss; Daniel Powel; Thomas Wang; Shuo Yang, Ph.D; Elsie Cheng, Ronald Keun
11、g, CFA; Lucy Li; Katherine Liu; Michelle Cheng; Anita Yiu and Sef ChinAcronym buster:TPV: Total Payment Value, B2C: Business to Consumer, C2C: Consumer to Consumer, B2B: Business to Business, QR code: Quick Response code, POS: Point of SaleThis is the latest report from our Future of Finance series,
12、 where we explore how Tech is changing the shape of Finance. See related reports below or visit our GS360 portal for the full coverage:Payment Ecosystems, Aug 4, 2017The socialization of finance, Mar 13, 2015Redefining the Way We Pay in the Next Decade, Mar 10, 2015Watch a video summary from the aut
13、hor hereword文档 可自由复制编辑China FinTech in numbersword文档 可自由复制编辑THIRD-PARTY PAYMENT GROWTH$155bn$11.4trnThird-party payment value in China grew more than 74X from 2010 to 2016. About 16% of that is consumption- related. 56% is peer-to-peer transfer. (p. 22-29)INTEGRATION MINDSETINTERNET LENDING$4bn$156b
14、nTotal internet loan balance outstanding in China grew more than 36X from 2013 to 2016. But in context it is small compared to Chinas gigantic financial system, at only 0.8% of total social financing. (p. 13)PRIVATE CAPITAL OWNING INFRASTRUCTURE95Alibaba mentioned the word ecosystem 95 times inPriva
15、te companies (non-state owned) own 60% of the new centralized clearinghouse for online payments.60%their 2016 annual report. Similar mentions are observed from other leading FinTech players Ping An, Tencent, JD, Baidu etc. For context, ICBC mentioned the word FinTech or Internet 22 times. (p. 13)The
16、 largest shareholders besides the Central Bank and the State Administration of Foreign Exchange are Ant Financial (9.61%) and Tencent (9.61%). This compares to Chinas existing basic infrastructure, which are state-owned. (p. 16)INTERNATIONAL EXPANSIONPAY WITH YOUR PHONE28Chinese consumers can use th
17、eir favorite third-party payment method outside of China at physical retailers in 28 countries and regions. (Alipay: 28;Tenpay: 15). (p. 18)Third-party payment done via mobile devices account for 75% of the total payment value. For context, 20% of the US e- commerce payment is via mobile devices. (p
18、. 23)75%CASHLESSTRANSACTION SIZE40%Retail consumption paid via third- party payment companies is growing and now comprise 40% of retail. (US: third-party 7%; totalcashless 75% by 2015). We expect this to rise to 68% by 2020. (p. 55-56)In China, traditional bank cards average transaction size of US$9
19、30 is almost 10X larger than third-party payments average transaction size of $88. (p. 24)10xUSER BASE3.4bnThere are in total 3.4bn third-party payment accounts in China (2016). (p. 47)GAMIFICATION OF CASH14bn virtual red packets (Chinas traditional cash- filled red envelope that people give each ot
20、her during festivals) were exchanged via WeChat Pay on Chinese New Years EveAugust 7, 2017China: TechnologyGoldman Sachs Global Investment Research3Alipay: 520mn (Mar 2017)Tenpay: 600mn (Dec 2016)For context, Paypal has 197mn users globally (Dec 2016)in 2017. (p. 43)Portfolio Managers Summaryword文档
21、可自由复制编辑Why read this report?See five real-world case studies for payments on pages 25-26, 43, 48, 53Infographic on China FinTech ecosystem: Pages 6-7List of key players: Page 9Total addressable marketTrend #1: Integration New conglomerate Ecosystem Closed-loopTrend #2: Regulation Pro-growth Risk man
22、agement Private capital participationRegulatory changes and new technologies are re-shaping Chinas banking activities. The pace and magnitude of the development is vastly different versus the rest of the world. A group of hybrid tech/finance companies, such as Ant Financial, Tencent, JD and Ping An
23、have emerged at the heart of Chinas financial industry, making financial services more convenient and accessible for consumers. This has resulted in China leapfrogging from a world where consumers largely relied on cash, to cashless or even cardless transactions, paying, borrowing and investing, all
24、 through their smartphones. We expect the changes to continue over the next 5-10 years, with new entrants emerging and new profit pools being created. Within this report our first in a series we lay out addressable markets with large untapped consumer demand, then explain three key shaping trends th
25、at investors need to understand about the China FinTech space before looking at individual business lines, such as the high integration, evolving regulations and internationalization. Lastly, we focus on third-party payment, an area with the most innovations so far, through real-world cases and a de
26、ep dive into business models. In our view, payment is a crucial gateway to most other services, and where the innovators have gained the strongest footholds in China.Untapped consumer demand drives FinTech opportunities:Historically, the traditional banks in China focused more on serving the state-o
27、wned enterprises, leaving the financial needs of consumers and SMEs underserved. As Chinas economy slows, consumer spending has become pivotal to transform the economy that was heavily reliant on investment. Some innovators, before they enter the financial sector, had already built a sizeable consum
28、er (and SMEs) user base in their core businesses. To name a few: Ant Financial (33% owned by Alibaba, Chinas largest e-commerce platform) and Tencent (tech giant who owns Chinas most popular messenger app WeChat), or Ping An (Chinas largest non-state owned financial company with a focus on consumer)
29、. With the help of technology and the initially supportive regulatory environment, the innovators were able to tap into and expand their existing user base, and capture the unique opportunity set of Chinese consumers. We highlight these addressable markets: Payment: US$4.6 trillion in 2020E in consu
30、mption-related third-party payment value, from US$1.9 trillion in 2016. The key drivers would be e-commerce growth and increasing penetration in offline retailers as third-party payment replaces cash. Lending: US$764 billion in 2020E in loan balance from non-traditional players (internet lenders and
31、 consumer finance companies), from US$156 billion in 2016. The majority of the addressable market comes from consumers (US$480 billion) Chinas consumer credit is only 7% of GDP vs 20% in the US in 2016 (excluding mortgages). Investing: US$11.9 trillion in 2020E in financial asset under management, f
32、rom US$8.3 trillion in 2016. We note that the innovation in the asset management industry is still at an early stage much of it is happening within or driven by the incumbents themselves. So it would be too early to define what is non-bank and what is not.Key trends that are shaping the China FinTec
33、h Ecosystem Integration: A few hybrid tech/finance companies have started to dominate the space by owning the entire supply chain and distinctive ecosystem around it. Others are trying to enter as they strive to close the loop of their own. The integration mindset defines how Chinese entrepreneurs v
34、iew their strategy, competition and profitability. Regulation: Regulation plays a vital role in determining the future evolution. In China it is still pro-growth, but getting more sophisticated in risk management/customer protection. Private capital has uncharacteristically high participation in the
35、 FinTech infrastructure build-out vs other industries. We will pay particular attention to the evolving regulations and dynamic balance between regulators and innovators.Trend #3: International User base DM vs EM International: Chinese FinTech players started to expand overseas for a broader user ba
36、se. Local conditions legacy infrastructure, regulation, demographic and culture norms will dictate the adoption. We point out low hanging fruit (leveraging Chinese tourists) and explore early cases in exporting their technology standards (QR code).Exhibit 1: Total Addressable Market by 2020EThird-pa
37、rty PaymentInternet LendingInvestment* (traditional and non-traditional players)$4.6trnSME loan,$284bnConsumer credit,$480bn$11.9trnConsumption-ralated payment valueLoan balance outstandingFinancial Asset Under Management*For investment, the traditional asset managers have been investing/acquiring A
38、I based services and expanding online distribution channels. We see great uncertainty around the final market structure between traditional and non-traditional players.Source: iResearch, National Bureau of Statistics, WIND, PBOC, CBRC, the Asset Management Association of China, China Trustee Associa
39、tion, Goldman Sachs Global Investment ResearchThird-party payment: payment processed by non-bank firmsThe market created:$11bn annual fee poolThird-party payment in China is replacing cash, not only cards; See our case study on page 20.Our takeaways for third-party payment Enablers of growth: The co
40、mbination of 1) technology 2) digitization of money 3) low fees 4) unique infrastructure set-up 5) proliferation of e-commerce and social platform allowed China to leapfrog from cash to cashless, or even cardless transactions. The addressable market is large and the share is shifting rapidly. New te
41、chnology is also expanding the pie in markets that were historically underpenetrated by banks. $11bn annual consumption-related revenue/fees pool to be created by 2020E: Immediate revenue opportunities come from B2C payments, which is just a small portion of the overall payment value. Monetization i
42、nitiatives for other transactions (mainly C2C) are still in the early stages. Direct profitability might not be the big players top priority, as payment is often viewed as the gateway for their integration. Disruptors and competitive landscape: 40% of the retail consumption today in China is done vi
43、a third-party payments. Alipay and Tenpay now dominate the space with 84% market share, but sizeable players from other industries are joining the race.Key debates for future1. Monetization: Direct profits from payment are thin in China, due to low fees, high competition and marketing spending. Howe
44、ver, payment serves as a key infrastructure for the big players ecosystem by granting targeted access to users, and profitability remains secondary. Future monetization will likely come from targeted advertising, consumer financing and wealth management.2. Regulation: There is an increasing need for
45、 regulators to monitor the money flow via the closed FinTech ecosystems and payment is the starting point. However, instead of simply banning this activity, regulators are working with the payment companies as thats where the technology know-how lies. This creates unique access for private capital i
46、n the next generation of financial infrastructure.3. Fee competition/M&A: We expect fee competition to intensify and expect to see more M&As in the payment space, as players in adjacent industries scramble for payment licenses to close their own loop, and banks themselves catch up in innovation. FinTech Ecosystem - China vs. US and Japan word文档 可自由复制编辑INCUMBENTSDISRUPTORS1OTHER DISRUPTORS
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