Banks on the move

Establishing FinTech enabled Private Banks and Wealth Managers in China

In line with China's economic progress over the past decades, both the public and private sectors have accumulated an increasing amount of wealth – to such an extent that we believe it has become the second largest wealth management market in Asia Pacific. Not surprisingly, China is also said to have the fastest rate of wealth creation in the world, coining four new billionaires per week. This results in a significant increase in accessible banking assets in Mainland China.

Regulators have taken additional steps towards a less restricted financial sector, leading to the fact that a variety of foreign players have commenced efforts to enter the race for Chinese assets, but are facing fierce competition from incumbents – large state-owned financial institutions, tech giants and FinTech players.

We assessed advantages and considerations when partnering with FinTechs as well as critical regulatory considerations and trends in government policies. We also looked at demographics and supportive policy initiatives to evaluate a potential starting location. Based on our analysis, we have the following observations:

1. Put clients at the heart of your journey

Understanding, connecting and serving customers better is one of the key differentiating factors in an environment of fierce competition. Building skills and applying technologies to support sophisticated relationship management ultimately puts the clients at the core of the business.

2. Plug into the FinTech ecosystem to enable speed and agility

A modularized operating model allows for a higher degree of agility, flexibility and speed – key factors to compete in China. In a fast paced and highly innovative market, new entrants can only compete by plugging into the local ecosystem and partnering with a mix of best-in-class tech giants and innovative FinTechs. The Greater Bay Area (GBA) is one of the prime locations in this regard offering a variety of interesting aspects as a new firm's potential preliminary site.

3. The rapidly evolving regulatory environment is adding to complexity

The Chinese regulatory environment is constantly evolving, forcing firms to have a regulatory strategy in place which comprises both legal entity structure considerations and license deliberations. In order to be sustainable, it must be aligned with the business strategy and the potential future product provisioning and location.

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