Introduction
²Ant Column
Ant Financial Launches “Wealth Account” and Opens AI Capabilities for the First Time
Ant Financial Further Opens Huabei Installment Capabilities, Covering Approximately 4 Million Merchants
Sesame Credit 700 Points Japan 5-Year Visa Service Suspended
²Policy Updates
Five Departments Release “Financial Industry Standardization System Construction Development Plan (2016-2020)”
Provincial Price Bureau Issues Notice to Regulate Urban Transport IC Card Deposit and Fee Management
²Payment Dynamics
UnionPay QR Code Payment First Report Released
Greenland Financial Confirms Acquisition of Payment License
UnionPay Founder Wan Jianhua Leaves Zhengtong Company, May Return to Payment Industry
² Financial News
Baidu to Reach Strategic Cooperation with Agricultural Bank of China to Explore Internet Finance
SPDB Plans to Establish Independent Legal Entity Direct Bank
JD Finance Launches Payment Account Security Insurance for 618 Shopping Festival
Anbang Insurance’s Financial Platform Announces Strategic Cooperation with Xuanji
²Information Services
Healthcare: WeChat Medical Insurance Payment Accelerates Nationwide Rollout
Public Transport: Nanning Metro to Introduce Bluetooth Direct Access
²Industry Observation
Fintech, Wealthtech, Techfin, Which One is the Future of Finance?
Body
『Ant Column』
Ant Financial Launches “Wealth Account” and Opens AI Capabilities for the First Time
On June 14, Ant Financial’s one-stop wealth management platform “Ant Ju Bao” announced its upgrade to “Ant Wealth” and officially launched the “Wealth Account”, fully opening to various financial institutions such as fund companies and banks. At the same time, Ant Financial also announced for the first time that it would open its latest AI (Artificial Intelligence) technology to financial institutions. On the same day, seven fund companies including Tianhong, Bosera, Guotai, Jianxin, Southern, Xingquan, and Minsheng Jianyin joined the “Wealth Account”. In addition, three banks including SPDB, CITIC, and Industrial Bank also joined at the same time. (Source: Mobile Payment Network)
Interpretation: Ant Financial’s announcement to fully open AI capabilities has surprised and excited the industry. On Wall Street across the ocean, artificial intelligence is thriving, with established top investment banks like Goldman Sachs and JPMorgan Chase not only declaring themselves as technology companies but also investing heavily in new technologies represented by AI. For many domestic financial institutions, especially small and medium-sized financial institutions, the importance of AI is self-evident, but independently developing core capabilities is very difficult.
Ant Financial Further Opens Huabei Installment Capabilities, Covering Approximately 4 Million Merchants
On June 9, Ant Financial announced on June 7 during the Ant Open Day in Shanghai that it would further gradually open Huabei installment capabilities to online and offline merchants. According to current user data, Huabei’s credit limit ranges from 500 to 50,000. Data shows that the number of Huabei users has exceeded 100 million, with users born in the 1990s accounting for 47.25%. After merchants integrate Huabei installments, the average customer transaction value has increased by 41%. In the recently concluded May, over 1/4 of transactions in brand mobile phone online sales chose to use Huabei installments. (Source: Zero One Finance)
Interpretation: The enhancement of credit consumption awareness among young consumer groups and the establishment of a forward-looking consumption concept directly promote consumption upgrades and lay a solid foundation for the development of consumer finance. Many new transaction models combining “mobile applications + consumption scenarios + installment payments” have emerged. The opening of Huabei installments can be seen as another new move by Ant Financial to create an “open platform focused on business and finance”.
Sesame Credit 700 Points Japan 5-Year Visa Service Suspended
On June 10, Sesame Credit, a subsidiary of Alipay, announced the suspension of the service that allowed users with 700 points to apply for a 5-year visa to Japan without submitting bank statements, due to a misunderstanding by its partner Meixing International Travel Agency regarding visa issues with the Japanese embassy. Alipay will compensate all users who participated in the event and successfully made payments with 400 yuan (excluding compensation from Meixing International Travel Agency). (Source: E-commerce Report)
Interpretation: In the visa field, Sesame Credit aims to minimize the materials users need to submit, making the visa application process more convenient. The issue that arose this time was clearly due to a lack of strict review on Sesame Credit’s part. However, under the characteristics of internet companies where products are easily replicated and updated quickly, simplifying the launch process is an inevitable choice for internet companies.
『Policy Updates』
Five Departments Release “Financial Industry Standardization System Construction Development Plan (2016-2020)”
Financial industry standards are the technical support for the healthy development of the financial industry and the foundational system for the modernization of the financial governance system and governance capabilities. Recently, the People’s Bank of China and four other departments jointly released the “Financial Industry Standardization System Construction Development Plan (2016-2020)” emphasizing the need to coordinate the supervision of systemically important financial institutions, financial holding companies, and important financial infrastructure, as well as to be responsible for comprehensive statistics in the financial industry, prevent and resolve financial risks, and strengthen the development and implementation of key standards. (Source: Payment Encyclopedia)
Provincial Price Bureau Issues Notice to Regulate Urban Transport (Bus) IC Card Deposit and Fee Management
The Zhejiang Provincial Price Bureau recently issued the “Notice on Regulating Urban Transport (Bus) IC Card Deposit and Fee Management”, requiring that starting from August 1, all newly issued urban transport IC cards in the province must not charge any fees other than deposits, with the deposit standard reduced from no more than 20 yuan to no more than 15 yuan, and also stipulating the cancellation of depreciation fees charged by issuing units from urban transport (bus) IC card deposits. (Source: Zhejiang Provincial Government Website)
『Payment Dynamics』
UnionPay QR Code Payment First Report Released
During the 62 activities, UnionPay Wallet, as one of the app entrances for UnionPay QR code transactions, saw a 402% increase in new users compared to the previous period; in terms of transaction volume, it accounted for three-quarters of the transaction volume during this event, showing the best performance. Data from some participating merchants indicates that during the event, the proportion of UnionPay QR code transactions surged rapidly, comparable to or even surpassing other scanning payment methods, with UnionPay QR code accounting for nearly 1/3 in Wanning and almost half in Haolilai. In addition to UnionPay QR code, various mobile payment methods including Apple Pay, Samsung Pay, Huawei Pay, and Mi Pay saw a daily transaction volume increase of 308% compared to last year’s 62 activities. (Source: Mobile Payment Network)
Interpretation: UnionPay will continue to explore and improve the normalization of marketing mechanisms, focusing on cultivating user habits. This will revolve around daily high-frequency consumption scenarios such as supermarkets, convenience stores, dining, and entertainment.
Greenland Financial Confirms Acquisition of Payment License
On June 14, Greenland Financial publicly stated at the “China·Shanghai First Financial Technology Fintech Forum” that the company is building the Greenland Jike Tong system, claiming that Jike Tong is a comprehensive financial service platform linked by Greenland Lianhang Payment. This public statement essentially confirms the fact that Greenland Financial has acquired a third-party payment license, with the “Lianhang Payment” brand being the payment brand of Shandong Electronic Commerce Comprehensive Operation Management Co., Ltd., which obtained the “Payment Business License” for “Internet Payment” on June 27, 2012. (Source: Mobile Payment Network)
Interpretation: Greenland Group’s entry into the internet payment business is another significant move for Greenland Financial to tap into financial technology. Greenland Lianhang Payment will focus on internet finance as its core, providing internet payment services for various member enterprises of Greenland Group, integrating various information and capital flows within the group, and building a complete financial technology industry ecosystem while fully utilizing the group’s advantageous resources to actively expand community financial services.
UnionPay Founder Wan Jianhua Leaves Zhengtong Company, May Return to Payment Industry
On June 14, Wan Jianhua, chairman of Zhengtong Co., Ltd., quietly left his position, with the successor being Zhang Sining, former director of the CSRC’s Anti-Fraud Bureau. Reports indicate that Wan Jianhua will continue to leverage his expertise in the payment industry and is considering a position at a third-party payment company, although specific details are still under discussion. (Source: Caixin)
Interpretation: The founding members of Zhengtong Company include 36 institutions, including 20 securities companies, 9 public fund management companies, 2 private fund management companies, 4 futures companies, and the China Securities Depository and Clearing Corporation. The joint launch of a broker version of “UnionPay” by multiple securities firms is predicted to be a strong contender for the second domestic payment clearing license.
『Financial News』
Baidu to Reach Strategic Cooperation with Agricultural Bank of China to Explore Internet Finance
On June 14, Baidu officially announced that it would hold a press conference on the 20th of this month to announce a strategic cooperation with the Agricultural Bank of China. This cooperation will enable Baidu Finance to achieve commercial application of financial technology capabilities and attract customer traffic for financial services. It is reported that Baidu Group Chairman Li Yanhong, Baidu Senior Vice President and FSG General Manager Zhu Guang, Agricultural Bank Chairman Zhou Mubin, and Agricultural Bank Vice President Guo Ningning will attend this press conference. Additionally, a financial technology joint laboratory established by Baidu Finance and Agricultural Bank will also be officially announced at the conference. (Source: Mobile Payment Network)
Interpretation: Baidu excels in technology. Its artificial intelligence, big data, and cloud computing technologies are actually leading both domestically and internationally. Baidu Finance hopes to empower the entire financial institution and financial industry by leveraging its financial technology capabilities, which has great potential.
SPDB Plans to Establish Independent Legal Entity Direct Bank
On the evening of June 12, SPDB announced that its board of directors approved the proposal to establish an independent legal entity direct bank. According to public information, since the establishment of direct banks by Minsheng Bank, Industrial Bank, and others in early 2014, other banks have quickly followed suit. This year, at least 20 banks, including CITIC Bank, China Merchants Bank, and Huishang Bank, have announced plans to establish independent legal entity direct banks. Currently, the number of direct banks in China has reached at least 70. In addition to joint-stock banks, direct banks established by city commercial banks and rural commercial banks have become the main force. (Source: Mobile Payment Network)
Interpretation: Following the approval of the first independent legal entity direct bank, Baixin Bank, in January this year, many banks are eager to try, with Minsheng Bank and Guangfa Bank also proposing plans to establish independent legal entity direct banks.
JD Finance Launches Payment Account Security Insurance for 618 Shopping Festival
Once again, it is the 618 shopping season, and major e-commerce platforms have recently launched various promotional activities. While shopping frantically, users’ payment security issues also deserve high attention. Recently, it was reported that during the 618 period, users who log in with their JD accounts and complete payments will have the opportunity to receive a free account security insurance with a coverage period of one month, with a maximum compensation amount of up to 1 million yuan. It is reported that the account security insurance launched by JD Finance is jointly created with China People’s Property Insurance Co., Ltd. and officially launched during the 618 period. (Source: Mobile Payment Network)
Interpretation: JD’s 618 annual mid-year shopping festival announced five major strategies: “Technology + Retail, Brand + Retail, IP + Retail, Finance + Retail, Multi-Terminal + Retail”, collaborating with hundreds of thousands of global brand merchants and stores, as well as thousands of offline JD Help service stores, home appliance specialty stores, JD-selected spaces, maternal and child experience stores, and new channel service stores. The account security insurance provides protection for users’ payments across all scenarios. JD and China People’s Property Insurance win together.
Anbang Insurance’s Financial Platform Announces Strategic Cooperation with Xuanji
Anbang Insurance Group’s comprehensive financial platform Anbang Finance announced a strategic cooperation with financial technology service provider Xuanji Zhituo. The two parties will jointly develop a digital financial service “Anbang Finance & Xuanji Intelligent Investment Advisory Platform” and conduct in-depth cooperation in areas such as financial security and artificial intelligence. (Source: Financial界)
Interpretation: Currently, Anbang Finance’s business scope includes insurance (self-owned business), Bangronghui (internet financial management platform), securities (Century Securities), and banking (Chengdu Rural Commercial Bank). Xuanji Zhituo selects up to 12 low-correlation assets for global asset allocation based on investment goals, risk tolerance, and other factors.
『Information Services』
Healthcare: WeChat Medical Insurance Payment Accelerates Nationwide Rollout
Following Shenzhen, Chengdu, and Guangxi, WeChat Medical Insurance Payment is accelerating its nationwide rollout, with residents in Shantou, Zhengzhou, and Tongchuan recently using the convenient WeChat Medical Insurance Payment. Regions such as Xinjiang, Weifang, Jiaxing, Taizhou, Xiamen, Harbin, Nanchang, Shenyang, Yongkang, and Kaifeng will also launch WeChat Medical Insurance Payment soon. China’s medical insurance covers over 700 million people, with medical insurance payments accounting for 70% of visits, making it the primary payment method for residents seeking medical care. WeChat Medical Insurance Payment connects medical insurance cards with convenient mobile payments, freeing users from the hassle of queuing for payments. (Source: Mobile Payment Network)
Interpretation: Currently, nearly 20,000 certified hospitals across the country provide services to over 100 million patients through various types of public accounts. Among the top-tier hospitals nationwide, 80% have opened their public accounts, and 60% of these accounts provide practical functions and services such as appointment registration, electronic medical record inquiries, and in-hospital payments. By connecting medical insurance cards with convenient mobile payments, WeChat Medical Insurance Payment is expected to bring a new experience for hospitals and patients, further promoting the implementation of smart hospital models in core provinces and cities across the country.
Public Transport: Nanning Metro to Introduce Bluetooth Direct Access
It is reported that Nanning Metro is also expected to launch a new payment method, allowing citizens to use their phones for “one-click access” in addition to cash ticket purchases and citizen card swipes. Unlike Guangzhou Metro’s “Cloud Flash Payment”, Nanning uses low-power Bluetooth technology instead of NFC technology, allowing for authentication and information transmission through interaction with low-power Bluetooth modules. If successfully introduced, Nanning citizens can directly skip the ticket purchase process and achieve “one-click access”. (Source: Mobile Payment Network)
Interpretation: It is understood that Nanning Metro will adopt the “Mi Pay” mobile payment solution, which may be the first commercial application of low-power Bluetooth technology in the metro payment field. Guangxi Mi Pay Network Technology Co., Ltd., established in 2014, is a high-tech enterprise specializing in the research and development of mobile payment IoT products and is one of the first companies invited to settle in the Nanning Zhongguancun Innovation Demonstration Base.
『Industry Observation』
Fintech, Wealthtech, Techfin, Which One is the Future of Finance?
Internet finance, financial technology, tech finance, wealth technology… under various fancy concepts, the biggest fear is to become a marketing gimmick. However, fortunately, overall, traditional financial institutions, internet financial institutions, third-party startups, fund distribution companies, and media-related companies have begun to attempt to apply accumulated financial product data, user transaction data, and user behavior data to the design and promotion of financial products.
When finance meets the internet, a new chemical reaction occurs, leading to the emergence of many concepts. From internet finance to financial technology (Fintech), and then to the recent wealth technology (Wealthtech) and tech finance (Techfin). Under the dominance of technology, products such as intelligent investment advisory, robo-advisors, and digital asset allocation have begun to appear. With the pursuit of these products, some doubts have also arisen: has the way investors manage their wealth really changed because of technology? Is big data really like magic, making products completely new?
1. Concepts and Products, Neither Can Be Lacking
Internet finance has been very popular in recent years, receiving attention from all sides. In 2016, the more technology-oriented financial technology (Fintech) entered the public’s view and was frequently mentioned. Subsequently, Lufax proposed the concept of wealth technology (Wealthtech), and Ant Financial positioned itself as tech finance (Techfin). Regardless of how the concepts change, a commonality can be seen: the weight of technology cannot be underestimated.
New products and new concepts often complement each other. Intelligent investment advisory, robo-advisors, personalized recommendations, digital asset allocation, and intelligent asset allocation, despite the different names used by various companies when launching products, it can be seen that technologies such as big data, artificial intelligence, and machine learning have been applied in the design and marketing of internet financial products, and the products purchased by investors already have the embryonic form of intelligence and personalization.
2. Traditional and Newcomers, Both Prefer Big Data
Overall, traditional financial institutions, internet financial institutions, third-party startups, fund distribution companies, and media-related companies have begun to attempt to apply accumulated financial product data, user transaction data, and user behavior data to the design and promotion of financial products.
Among them, internet financial companies are more enthusiastic about exploring the application of technology and big data in their products. For example, Lufax, JD Finance, Ant Financial, and Xuanji have all launched intelligent and digital products. At the same time, third-party startups such as Blue Ocean Intelligent Investment, Latte Finance, and Mi Finance have been in the intelligent investment advisory market for some time. Additionally, platforms like Xueqiu and Financial界 have accumulated users and corresponding big data through forums and news to launch intelligent investment advisory products. Third-party fund distribution platforms, such as Yingmi and Haomai, have also launched robo-advisory products focusing on funds. Among traditional financial institutions, the intelligent asset allocation systems of China Merchants Bank, Guangfa Securities, and Ping An Securities are well-known.
3. Funds—The Absolute Protagonist of Asset Allocation Plans
From the asset allocation plans launched by various companies, funds remain the main product. Analyzing the reasons why funds are the first choice, it is mainly due to the wide variety of funds available in the market, the large and standardized transaction data, which is conducive to model building. At the same time, funds can almost cover all risk preferences, making them highly accepted by investors. However, even among products positioned as funds, some companies promote domestic funds while others promote overseas ETFs and QDIIs.
It is worth noting that some platforms, due to their own or partner institutions’ involvement in the development of fixed-income products or P2P products, will also suggest users allocate some of these assets while recommending funds.
4. Where Are the Highlights and New Trends?
In the process of applying technology to internet financial products, doubts about some companies marketing concepts and the lack of intelligence in intelligent investment advisory have never ceased. Fortunately, it can be seen that some products are beginning to show new highlights.
1. Scenario-based is the Trend
In traditional investment advisory, confirming the user’s investment duration, age, and purpose of funds is a very important process. Early intelligent investment advisory products typically used questionnaires to test investors’ preferences. Recently, products have begun to incorporate scenarios. However, the purpose of funds at a future point in time has a significant relationship with the allocation of funds in the asset allocation plan. For example, when children are young, funds planned for their education can be allocated to assets with longer durations. Retirement pension funds will certainly prioritize the safety of funds.
For example, the “Egg Roll Family Wealth Plan” launched by Egg Roll Fund offers seven types of combination plans, adjusting the types of funds based on different age levels and adjusting them as age increases. Similarly, Lufax’s Dream Wealth product designs four scenarios for users’ purposes, such as buying a house, getting married, children’s education, and retirement, and after users select a scenario, they receive recommended asset allocation plans based on investment duration, amount, and risk preference assessment.
2. Personalized for Each User
Personalization for each user was initially a precise marketing plan launched for Taobao buyers. Going further back in time, Amazon used user behavior data to achieve precise product recommendations based on user preferences, gaining a great reputation in the industry. Registration information, webpage browsing records, product purchase records, and information left by users in other subsidiaries and partner institutions constitute user profiles. The more dimensions of data, the more detailed the user profile can be depicted. For example, Ant Ju Bao can provide personalized financial products and information based on users’ asset situations, personal attributes, and browsing records; Lufax utilizes the advantages of the group, combining internal subsidiaries of Ping An Group, Lufax itself, and third-party big data to depict user profiles to achieve personalization.
When intelligent investment advisory first emerged in China, platforms focused more on how to use big data to establish quantitative models, placing great importance on financial product transaction data. Later, some platforms began to study user behavior data to make solutions more personalized. Of course, at this stage, transaction data remains the main data source for various companies, and the use of user behavior data is still in its infancy, primarily focused on data accumulation, but the future holds great potential.
3. Dynamic Updates for More Personalization
Updates in transaction data, changes in investor behavior data, and shifts in investors’ ages and asset situations can all affect products. Early intelligent investment advisory products often failed to dynamically update asset allocation plans after providing them. In fact, dynamically adjusting based on market changes and user behavior changes is an advantage of big data financial product design and precise marketing. Recently, products such as Wealth Magic Cube and Latte Finance have begun to make attempts in dynamic updates.
For example, Lufax’s KYC 2.0 system automatically adjusts indicators and parameters based on the continuously accumulated investment behavior data of users, reflecting users’ risk tolerance through their “Nut Financial Intelligence Score”. Moreover, this system can dynamically update assessment results based on clients’ accumulated investment experience and learning of investment knowledge, thus dynamically adjusting the products users can purchase.
5. Challenges and Issues Faced
1. Compliance First, Licenses Are Indispensable
With the gradual introduction of relevant laws and regulations, both traditional financial institutions and internet financial platforms must conduct their business in compliance, and possessing relevant licenses is key to business compliance. For example, Lufax, JD Finance, and Ant Ju Bao have all obtained fund distribution licenses issued by the CSRC.
In early May this year, news reports indicated that regulatory authorities conducted inspections on several securities firms involved in intelligent investment advisory businesses under the guise of on-site research. Before this inspection, the CSRC had stated that according to the “Securities Investment Fund Law” and the “Measures for the Administration of Securities Investment Fund Sales”, public securities investment fund managers and institutions registered to obtain public securities investment fund sales qualifications can engage in public securities investment fund sales activities. Internet platforms that conduct public securities investment fund sales activities without registration under the name of intelligent investment advisory will be investigated and dealt with by the CSRC.
2. Investors’ Wealth Management Habits Are Hard to Change
Investors’ wealth management habits are long-established and difficult to change. Currently, investors tend to prefer short-term wealth management products and have a low tolerance for fluctuations in product returns. Therefore, some products often overly focus on short-term yield and liquidity, aiming to attract users to invest within a limited time. Such asset allocation plans, which are purely transaction-scale-oriented, easily overlook users’ real needs, long-term goals, and preferences.
In addition, the traditional habit of Chinese people—keeping finances private—makes it difficult for a single platform to understand the true financial situation of investors. Therefore, due to the inability to comprehensively understand investors, some products launched by platforms may deviate from users’ real needs.
3. Products Still Need Time for Testing
Backtesting is easy, but real trading is challenging. Backtesting deals with the past, while real trading faces the future. In the asset allocation plans provided by various platforms, historical data trends under such plans can usually be seen. If simple historical data is used as a reference, expecting to guarantee the yield under that plan in the future seems overly simplistic. Various reasons can lead to significant discrepancies between real trading and previous backtesting. Additionally, the relationship between user behavior and recommended products requires a large amount of user behavior data to support it.
In other words, the products launched by various platforms have undergone a relatively short period, and investors cannot assess the quality of products over a long time frame. As investors, if they do not trust the plan, it is difficult to allocate a large amount of funds according to the plan over a long period. The products launched by platforms have not yet undergone time testing, and gaining investors’ trust is a significant challenge for big data-driven asset allocation plans.
Conclusion
Technology has made internet financial products smarter and more personalized, which should be acknowledged. It should be noted that these products are still in the early stages of intelligence and personalization, and there is still a long way to go before they mature. Indeed, some companies and products that market concepts under the guise of technology have led to some doubts about the role of technology in wealth management. However, we still need to see that the design and marketing of wealth management products under the dominance of technology have continuously made new attempts and shown new highlights. (Source: Yingcan Consulting, Author: Tong Yingman)