W33 - Reflections on "China's FinTech Innovation"

This week I browsed a newly published book, "China's Fintech Innovation — Practical Digital Finance Application Scenarios." Framed around Internet+ industrial finance, it catalogs domestic companies' practical cases across banking, securities, insurance, payments, and regulation. At 110,000 characters, it never mentions Ant Group. The prose is rather dry and awkward, as if compiled from different companies' activity reports. For example, it randomly shifts into technical architecture discussions, presenting common distributed architectures on the internet and even touting HTTPS and RESTful as technical highlights. Overall, it can broaden one's perspective, but it's not worth close study. Below I note two points that I found personally valuable.

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

Blockchain is mainly used to leverage features like immutability and consensus to solve large-scale trust problems in a decentralized way. Data sharing aims to address data silos. Because institutions within the financial system rarely share data for security reasons, much of the data needed by financial institutions sits outside the financial sector. I need to brush up on blockchain knowledge next.

In the chapter on payments, the author makes an important argument: for a fairly long time to come, the competitive breakthrough for third-party payments will be in the “B-side + offline market.”

Why B-side? The B-side payments discussed here are completely different from the B-side payments in our own business context. Our B-side checkout is essentially still a consumer-facing checkout; our distinction is based on user attributes — the payer is either a Meituan merchant or a consumer. The book's concept of B-side payments, as I understand it, is a full payment-settlement product. That product can be 2B2C or 2B2B and is designed to meet an enterprise's settlement and acquiring needs. For example, acquiring scenarios between supply-chain upstream and downstream involve much deferred purchasing and selling, bill circulation, and low efficiency in cash flows and goods flows; B-side payments have significant potential there. When selecting a payment partner, B-side customers care not only about convenience and fees but more about transaction security and privacy, and customized services for different application scenarios. At present, no company can fully meet these B-side requirements.

Why offline? Because the online market structure is already set and dominated by a few players. There is still room offline, especially in cross-border payments.