Challenges and opportunities for European fintechs expanding into China

fintech china

PUBLISHED: 02 October 2019
AUTHOR: FINTECH CIRCLE

In recent months fintech deals between Europe and China have highlighted the importance of partnering with domestic market leaders, understanding the competition and the technical integration into some of the largest digital platforms, banks and payment networks in the world. Michael McDevitt at MiFinity, Paul Prendergast at Blink and Jason Walsh at CPP Group share their views gained from recent first-hand experience with the Chinese fintech ecosystem.

Jason Walsh, Group Chief Executive, CPP Group Plc, UK

China is a fascinating market for us and one with great opportunity. One of the main tricks is to try and establish how as a foreign business we can be successful in such a different market and one where technology is at the absolute cutting edge with local players popping up everywhere. IP is a big concern for some companies but the reality is not half as bad as the perception and Chinese IP legislation is actually very advanced and provides protection for foreign players – in part because they want to export capability themselves and see that they need to be reciprocal in their approach. Our strategy is to look for domestic partners to link up with so that the IP question becomes virtually a moot point, but also because of a real alignment of interests. Domestic players can often access parts of the market from a distribution perspective that foreign companies would find very difficult and the product innovation angles that we find we can bring can act as the other side of the equation so it becomes a win-win.

Paul Prendergast, CEO, Blink, Ireland 

China is an incredible innovative market for Insurance products and in many ways is leading the charge globally with major players Zhong An and Ping An leveraging technology to change the insurance market fundamentally. Companies need to understand the level of innovation and need a very strong product offering to make an impact in China. Along with major opportunities there are some areas that need real focus for companies entering the market. One key area is data residency. As no data can leave mainland China it is important to build and host the solution locally. This can prove difficult for companies who do not have the correct technical architecture. Super-apps such as WeChat are critical and integration is essential as email is not the primary communication channel in China. There are other areas such as regulatory and compliance that require substantial investigation to ensure companies are compliant.

Michael McDevitt, Chief Product Officer, MiFinity, UK

MiFinity went through a very extensive and robust testing and product certification process with UnionPay International. This requires extreme patience in order to comply with UnionPay’s regulatory requirements as a state sponsored bank. MiFinity was subject to and met the extensive KYC requirements undertaken by UnionPay.  As a FCA regulated company MiFinity was able to demonstrate rigorous controls and monitoring in line with AML requirements. Developing a localised product in Simplified & Traditional Chinese was a significant requirement to meet the needs of our target market. MiFinity has partnered very closely from a technical perspective with UnionPay over the years. You have to be prepared to invest time and build a strong partnership. Unfortunately this takes time! Recently we rolled out a remittance solution to allow consumers to remit funds back to mainland China from UK and Europe which is generating extensive interest.

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