Quo Vadis?: A Comparison of the Fintech Revolution in China and the West

57 Pages Posted: 2 Nov 2018

See all articles by Bonnie Buchanan

Bonnie Buchanan

Surrey Business School, University of Surrey

Cathy Cao

Seattle University

Date Written: October 10, 2018


This research compares the evolution of Fintech in China with three Western markets (US, UK and Sweden). The countries chosen represent very different legal (common versus civil law) and cultural frameworks.

Four key factors are driving Fintech innovation in the global financial services industry:

1. Consumer behavior and expectations in regard to financial services have changed.

2. Artificial intelligence (AI), cloud computing and big data have created an affordable infrastructure.

3. New currencies (esp. the promise of digital currencies) and credit systems have impacted investment and banking.

4. Due to mobile phone and other improved access methods, the barriers to entry in the financial services industry are being reduced.

China and the West are at different stages of Fintech maturity. China has moved well beyond the tipping point and now represents the largest single Fintech market in the world. China is a market that has historically been underserved by the traditional banking sector and this is reflected in quite different Fintech models. The Chinese Fintech unicorns focus on customer oriented business models, or known as business to customer (B2C). This is different compared to Europe (including Sweden), which focuses on business to business (B2B) models.

China’s Fintech success derives not just from a technological advantage and unprecedented innovation, but also from integrating finance and real-life needs. Since most Chinese consumers have access to financial services through mobile phones and there are no legacy systems, FinTech has a huge advantage over brick and mortar locations. Fintech has also grown faster in China relative to the West in three particular areas: P2P lending; mobile payments and artificial intelligence. This paper links differences in the Chinese and Western Fintech sectors to variations in legal, political and cultural regimes.

Keywords: Fintech, P2P, Lending, Banks, Cryptocurrency, China, US, EU, Sweden

JEL Classification: E21, E42

Suggested Citation

Buchanan, Bonnie and Cao, Cathy, Quo Vadis?: A Comparison of the Fintech Revolution in China and the West (October 10, 2018). SWIFT Institute Working Paper No. 2017-002, Available at SSRN: https://ssrn.com/abstract=3264146

Bonnie Buchanan (Contact Author)

Surrey Business School, University of Surrey ( email )

Guildford, Surrey GU2 5XH
United Kingdom

Cathy Cao

Seattle University ( email )

900 Broadway
Seattle, WA 98122
United States

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