If you want to know what the future of finance looks like, leader east, where it’s already been laid down in China. Digital remittances through mobile phones are ubiquitous, and there is incredible innovation around lending, investments and digital currencies that are at the vanguard of world fiscal innovation.
Take the sheathe photo of this article: At Alibaba, facial acknowledgment application marks clients at the employee cafeteria, while visual AI determines meat on their tray and calculates a total legislation — all pretty much instantly.
Given some of the big-hearted report tales originating out of the sector the past two weeks, I wanted to get a deeper view on what’s happening in China’s fintech sell and what that threatens for the rest of the world moving forward. So I called up Martin Chorzempa, a research fellow at the Peterson Institute for International Economics who is writing a book on the development of China’s fintech sector to get his take on what’s happening and what it all means.
This interview has been abbreviated and edited for clarity.
TechCrunch: Why don’t we start with the big report from earlier this month about Ant Group and how its world-record smashing IPO was pulled at the last minute by Chinese monetary regulators. What was your take and why were so many people trying to pile into the IPO?
Martin Chorzempa: I think there’s been startle at how much interest there is in the company, and I think that’s just really an indication of the market for fintech in China. It’s certainly the world’s largest busines for fiscal engineering, and even though in the payments space things look pretty saturated between Ant and Tencent’s WeChat, there are so many areas that they’re expanding into, like recognition and policy, where there’s still a lot of room to run for these various kinds of business engineerings to take over a much larger share of the financial system than they do now.
So even really considering the domestic sell, it’s huge and it’s just going to get larger. Then, the big question mark is expanding abroad and whether these companies can become indeed global monetary technology whales. Today , nobody except Chinese people outside of China utilizes Alipay or WeChat Pay to pay for anything. So that’s a big unexplored place that I think is going to come into a lot of geopolitical risks.
So on globalization, who do these companies need to globalize? China has 1.3 billion people — isn’t that enough of a market to stay focused on?
Well, I don’t think anything’s ever enough for conglomerates this ambitious. And if you think about it, if you have this really unique experience and data, that has a lot of applicability to other countries. So at the very least, it would be kind of a deadweight loss not to have that technology and knowledge applied to building out digital business mixtures in other countries.
Prior to the pandemic, Chinese beings were going abroad in large numbers. So if you want to keep serving even the domestic market you have to have your payment approaches consented abroad.
Plus, if you want to facilitate and originate with China’s e-commerce businesses and other kinds of international trade, then having systems of sellers abroad and being able to use Alipay, for example, is something that could be really important to future raise. The domestic market is huge, but eventually you do run into diminishing returns if everyone previously has your app and they’re once borrowing and investing.