There has been an astonishing rise in the Asian giant's share of global investment in fintech, a report by Oliver Wyman shows.

China’s financial technology sector drew in $6.4 billion of investment in 2016, which meant the country’s sector grabbed almost half the global total (47 per cent), surging from just 7 per cent as recently as 2013, according to figures from consultancy Oliver Wyman.

The report, Fintech In China – Hitting A Moving Target, predicts that in the investment field, for example, online platforms could hold RMB5 trillion ($743 billion) of assets among self-directed investors by 2020 on current growth rates.

The country is already home to one of the world’s largest, if not the largest, fintech firms by some measures – Alibaba, the e-commerce group that already provides financial and wealth management services. 

Big-data analytics, the Internet of things, and blockchain are the three technologies that hold the greatest potential for new avenues for growth, owing to their ability to acquire, assemble, analyse, and apply information. Data treatment and information processing are at the heart of decision making for financial services, especially in China where data are often incomplete, opaque and sometimes questionable, the report said.

Such developments are affecting wealth management, such as in the use of AI to discover investors’ risk tolerances, prospect for new clients, and handle asset allocation adjustments. The report contained a warning against hype about fintech, however.

“Despite impressive growth, not all players who emerged in this wave of transformation are truly ‘fintech’ in nature. Some of their business models merely represented a shift of channels from offline to online without true technology innovation,” Cliff Sheng, Oliver Wyman partner and author of the report, said. “By using the ‘fintech’ label, these entities have been less regulated and grown rapidly by leveraging such arbitrage to offer products that were stringently regulated in the traditional financial services system. Tightening regulations are now curtailing this approach,” he said.