W33 - Reflections on "China FinTech Innovation"

This week I reviewed a newly published book, "China's Fintech Innovation — Practical Digital Finance Application Scenarios." Framed around internet+ industry finance, it lists domestic companies’ case studies across banks, securities, insurance, payments, and regulation. At 110,000 characters, it doesn’t mention Ant. The prose is rather dry and stiff, reading like a compilation of performance reports submitted by different firms. For example, midway it shifts into technical architecture, presenting common distributed architectures and even citing HTTPS and RESTful as technical highlights. Overall, it’s useful for broadening perspective, but not worth a deep read. Below I summarize two points that I found personally valuable.

Blockchain and data sharing are the most frequently discussed topics; most areas have foundational technologies for practical implementation. For instance, in supply chain finance a key element is linking upstream and downstream data and using blockchain to enhance credit. Regulators’ AML (anti-money laundering) and KYC efforts also heavily rely on data integration and blockchain.

Blockchain is mainly leveraged for its immutability and consensus features to address large-scale trust problems in a decentralized way. Data sharing primarily tackles the issue of data silos, since institutions within the financial system rarely share data due to security concerns, and many datasets needed by financial firms reside outside the financial sector. I need to brush up on blockchain knowledge next.

In the payments chapter, the author makes a significant conclusion: over the foreseeable future, the breakthrough for third-party payment competition will lie in the B-side plus the offline market.

Why the B-side? The B-side payments discussed here differ fundamentally from the B-side payments within our own business scope. Our B-side checkout is essentially still a consumer-facing checkout; our segmentation is based on user type, differing only by whether the payer is a Meituan merchant or an end consumer. The book’s concept of B-side payments, as I understand it, is a complete payment and settlement product that may be 2B2C or 2B2B, designed to meet an enterprise’s settlement and acquiring needs. For example, downstream and upstream receivables in supply chains involve a lot of credit purchases, credit sales, and bill circulation, with low efficiency in cash flow and goods flow—B-side payments have significant potential here. When enterprise customers choose a payment partner, beyond convenience and fee rates, they care more about transaction security and privacy, and customized services for different application scenarios. At present, no single company can fully meet these B-side requirements.

Why offline? Because the online landscape is already settled and oligopolistic. There is still room offline, especially in cross-border payments.