Assignment Mobile banking in China .pdf

WHICH IS THE KEY FACTOR FOR SUCCESS OF
MOBILE BANKING STARTUPS IN CHINA?
ESTELLE GOULLIOUD


Entrepreneurship

Tongji University - Spring 2018

WHICH IS THE KEY FACTOR FOR SUCCESS OF MOBILE BANKING STARTUPS IN
CHINA?

INTRODUCTION
MOBILE BANKING IS A SERVICE PROVIDED BY A FINANCIAL INSTITUTION THAT
ALLOWS ITS CUSTOMERS TO CONDUCT FINANCIAL TRANSACTIONS REMOTELY
USING A MOBILE DEVICE SUCH AS A SMARTPHONE OR TABLET.
MOBILE BANKING IS USUALLY AVAILABLE ON A 24-HOUR BASIS.*
Not to be mistaken with « Internet banking » (no software needed)

MOBILE BANKING 

FUNCTIONALITIES

ACCOUNT INFORMATIONS
INVESTMENT

MOBILE BANKING 

STARTUPS: FINTECHS
50,8% MALE

23.7%
27.7%
33.9%

25-34 YEARS-OLD
35-44 YEARS-OLD
45-50 YEARS-OLD

14.7%

SUPPORT

NEWS AND CONTENT SERVICES

= Companies/Startups specialized in financial transactions using technologies and softwares
‣ Payments (money transfers, remittance, digital and cryptocurrencies), lending/credits
(crowdfunding, credit scoring, peer-to-peer, factoring), investment (robo-advisors, personal
financial management), insurance

49,2% FEMALE

18-24 YEARS-OLD

TRANSACTIONS

* Source: Wikipedia

MOBILE USE IN CHINA

TOP 5 MOBILE APP IN CHINA IN 2018
WeChat, QQ, Alipay, Taobao, iQiyi

MOBILE PAYMENT TRANSACTION VALUE
US$5.5 trillion (2016)>US$15.4 trillion (2017)
Source: QuestMobile

WHICH IS THE KEY FACTOR FOR SUCCESS OF MOBILE BANKING STARTUPS IN
CHINA?

MOBILE BANKING IN CHINA : SWOT ANALYSIS
Strenghs Weakness
es

‣ China’s ubiquitous

connectivity: 1.47 billion

mobile phone subscriptions
(March 2017-2018)

Implementation of Chinese


‣ Government subsidy
programs


‣ E-trust and no customers
fears about data protection


‣ The Chinese Government Is
the Largest VC Investor in
the World


‣ Easier to be a women as a
startup funder in China (than
in the US)


‣ Startup inner advantage:
flexible structure to adapt
easily to market changes




and consumers needs


‣ Tech giants and banking
institutions as main

Opportunities
‣ China is the largest market for digital payments, online
lending, making up 3/4 of the global market


competitors (means:

‣ 1/5 of China’s adult population remains « unbanked »


customers data, regulation

‣ Early adopters country: Chinese people are receptive to

knowledge, financial

new ways of interacting with technology such as mobile

resources, technological

banking and payments.


know-how and manpower)


‣ China’s barrier to entry:
Banking payment regulation,
increasing cost of living,

‣ Mobile banking apps grew by 69.2 % (2015)

‣ Increasing adoption of online-to-offline services (O2O)

‣ Negative image of traditional banks from a customer pointof-view


difficult access to talent and

‣ Chinese rising middle class to target


corporate taxes


‣ Network effects of virality and popularity


‣ Necessity of finding a local
partner to expand in China
(specific corporate culture to
deal with)


‣ Women founders have more
difficulties to build

‣ China’s shifting regulations (financial reform to launch
private online banks)


‣ Quick on boarding funnel :fingerprint authentication, « get
verification code », QR code adepts


‣ Cheap manpower

‣ Chinese incubators, accelerators and co-working space

relationships with investors

increases( Government support + considerable investment

(source: Startup Genome

from China’s corporate giants)


2017)


Threats

‣ Entry barriers in terms of deep tech knowledge for starting a
Fintech company are comparatively low


‣ High China’s control on cybersecurity
and regulations

‣ Internet giant are driving innovation
(BAT: Alibaba, Tencent, Baidu) and lead
the mobile banking war (Alibaba/Ant
Finacial)

‣ WeChat pay: all-in-one app very simple
to use (collect interest on your savings,
request loans, get a credit score)

‣ Different startup ecosystem from a city
to another (Shanghai=/=Hangzhou)

‣ The current scale of Government
financial support is unprecedented, and
its effects on the entrepreneurial
landscape remain to be seen

‣ Cross-border competition: Chinese
firms have invested in U.S. tech
companies to the tune of $6 billion in
2014, according to the Rhodium Group

WHICH IS THE KEY FACTOR FOR SUCCESS OF MOBILE BANKING STARTUPS IN
CHINA?

KEY FACTOR FOR SUCCESS: CUSTOMER CENTRICITY
‣
‣

« 70% OF MILLENNIALS WOULD RATHER
VISIT THEIR DENTISTS THAN THEIR
BANKERS. »

Source: DBS Bank

CHALLENGERS MAIN WEAKNESSES
๏ Non user-friendly banking apps and technology

๏ All-in-one app

๏ Front office management

๏ Do not target specific niche markets

๏ Heavy regulations
BANKS

๏ Heavy administration
๏ All-in one: retail banking, corporate banking, capital
markets, payments, wealth management

TECH GIANTS




HARIT TALWAR, HEAD OF MARCUS AT GOLDMAN SACHS

๏ Heavy structure and management
๏ Have to constantly anticipate consumers
needs

> FIND THE RIGHT CHINESE LOCAL PARTNER, TARGET A SPECIFIC CONSUMER MARKET AND FOCUS ON YOUR CORE
TECHNOLOGY TO DEVELOP A USER FRIENDLY AND SIMPLE DESIGNED MOBILE BANKING APP

WHICH IS THE KEY FACTOR FOR SUCCESS OF MOBILE BANKING STARTUPS IN
CHINA?

RECOMMENDATIONS



USER-FRIENDLY EXPERIENCE
‣ Simple menus, icons that make sense, features that only appear when needed.
‣ Fewer clicks to purchase.

SIMPLE AND EFFICIENT BUSINESS MODEL
‣
‣
‣
‣

Focus on serving the customers who enjoy using your service rather than conquering the « mass » market
Fundraising by venture capital
Associate with market top leaders
IPO as a long-term goal

ADAPT TO CHINESE RULES
‣ Get a Chinese investor and partner
‣ Empower local staff
‣ Target specific type of customers: the « unbanked », the wealthy…

BE AT THE LEADING EDGE OF TECHNOLOGY
‣ Focus on startup strenghs and core competencies
‣ Avoid internet giant territory
‣ Focus on artificial intelligence/blockchain

WHICH IS THE KEY FACTOR FOR SUCCESS OF MOBILE BANKING STARTUPS IN
CHINA?

SUCCESS STORIES - EXAMPLES
Luxfax is the unicorn with the highest
valuation-started as a peer-to-peer lending
platform in 2011 with registered capital of 837
million of yuan. Luxfax was set up by China
Ping An Group, one of the country’s leading
insurance and finance companies. It is actually
more of a corporate entrepreneurship project
than a startup.

* Source: Navigating the startup ecosystem 2017

ZhongAn Insurance was launched in 2013 by PingAn,
Tencent and Alibab as China’s first online-only
insurance company.

WHICH IS THE KEY FACTOR FOR SUCCESS OF MOBILE BANKING STARTUPS IN
CHINA?

CONCLUSION
THEORICAL SUCCESS FACTORS TO A
PERFORMANT STARTUP MODEL
▸ The founder 

Mindset/ambition

Company’s go-to-market strategy

Know-how

The talents hired (access, quality, cost of
manpower)
▸ The founding 

Ease for early-stage funding

Early stage capital invested

Experienced VC firms
▸ The startup experience
▸ Global/Local connectedness
▸ Global market reach
▸ Organizations
▸ Economic impact

KEY FACTOR TO A PERFORMANT MOBILE BANKING STARTUP
MODEL IN CHINA

‣
‣
‣
‣

UNDERSTAND PERFECTLY CONSUMERS NEEDS
MASTER YOUR TECHNOLOGY
MAKE THE BEST OF LOCAL POTENTIAL BENEFITS
MAKE THE RIGHT ALLIANCE DECISIONS WITH LOCAL
PARTNERS

WHICH IS THE KEY FACTOR FOR SUCCESS OF MOBILE BANKING STARTUPS IN
CHINA?

REFERENCES
▸ https://www.chinainternetwatch.com/23931/top-mobile-apps-2018/
▸ Deloitte survey 2015: http://www.199it.com/archives/407671.html
▸ https://techcrunch.com/2015/02/03/cnnic-2014/
▸ https://www.statista.com/statistics/278204/china-mobile-users-by-month/
▸ https://medium.com/startup-grind/chinas-tech-scene-at-a-glance-60b96668af7f
▸ https://www.fungglobalretailtech.com/wp-content/uploads/2017/08/Navigating-the-ShanghaiStartup-Ecosystem%E2%80%94An-Essential-Guide-September-28-2017.pdf
▸ https://fr.slideshare.net/ZhenFund/opportunities-in-chinas-startup-ecosystem-23150783
▸ https://www.svb.com/uploadedFiles/Content/Trends_and_Insights/Reports/
Startup_Outlook_Report/China/SVB-SUO-China-report.pdf
▸ https://www2.deloitte.com/cn/en/pages/financial-services/articles/banking-industry-outlook.html