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People's Republic of China

Open Banking

The world’s third largest country and the most populous.

In 2022, China’s internet penetration was at 71%, and its mobile connection rate was equivalent to 113% of the population. 

The Personal Information Protection Law (PIPL) came into effect in November 2021. The PIPL is partially modelled on the GDPR of the EU. It introduces the idea of consent for processing and the rights of data subjects.

Cross-border payments have been discussed involving the digital yuan with Thailand, the United Arab Emirates and Hong Kong exploring the use of distributed ledger technology (DLT), which involves the sharing of databases that track transactions.

According to the Global Findex database, 89% of adults in China had access to a bank account in 2021, leaving 11 % unbanked.

According to the Ernst & Young Fintech Adoption Index, the adoption rate of consumer Fintech in China reached 87% in 2019, meaning that 87% of China’s digitally active population use at least one Fintech service in their daily life. For anyone who has spent time in China and experienced the ubiquity of WeChat/Alipay, this will come as no surprise. The adoption rate is expected to grow as Fintech becomes more accessible to rural populations.

The People’s Bank of China (PBOC) has been developing the digital yuan since 2014 with the aim for it to replace some of the cash in circulation. Officially called Digital Currency Electronic Payment (DCEP), it is hoped to bring more unbanked communities into the mainstream economy and bring about more competition for Alipay and WeChat Pay. Unlike a standard cryptocurrency, the digital currency will be able to be tracked by the government with the aim of reducing illegal activities. Those operating digital yuan wallets will have to disclose transactions to the PBOC.

China was testing the use of digital currency by handing it out as a lottery prize in several regions of the country.

China has pivoted to believe that Open Data is key to advancing the big data industry, yet has categorised government data as non-Open Data, non-conditional Open Data (standard Open Data) and conditional Open Data, which is composed of different modes of data access, such as anonymising. 

KPMG’s 2021 China Fintech 50 Report noted that as “China continues to strengthen anti-monopoly supervision, large technology companies have started to develop scenarios around payment interconnection” and placed an open financial ecosystem one for Fintech to exploit. Their research put big data as a significant area of expertise. 

China has also introduced a Fintech Development Plan for 2022-2025, which emphasises ‘building momentum’ on the basis of  ‘accumulation’ to boost the sector’s progress by 2025. 

China’s Open Banking transformation took place in order to compete with platforms such as Alipay and WeChat, which were using bank debit cards to link between banks and the payment app. Banks then created interfaces to be embedded in these super apps giving themselves exposure to the retailer’s app.

Several banks also responded by building their own e-commerce sites, such as “Rong E Gou”, which sells consumer items throughout China, built by ICBC Bank, and integrates card loans and personal payment plans. Ping An has extended beyond this reach. The financial services provider transformed itself into huge insurance, microloan, asset manager healthcare, auto and house buying platform, being a useful provider while collecting copious amounts of user data useful for its valuations.