China is well on its way to become the world's first cashless economy, with mobile payments already accounting for four out of every five payments, according to a study by the South China Morning Post.
The figures come from the broadsheet's inaugural China Fintech report, which tracks the latest trends and future trajectory of the world’s largest financial technology ecosystem.
The report states that China’s massive domestic financial market has an estimated 87% of consumers using fintech services, a US$29 trillion mobile payment market in 2019, and the largest global market for online securities trading.
As the country opens its financial system to foreign players and prepares to launch the world’s first national virtual currency, its fintech sector is poised to make a major impact on the global financial market, states the SCMP.
With the People's Bank of China conducting extensive tests of Digital Currency Electronic Payment (DCEP) ahead of a planned launch later this year - and as Ant Group and the all-conquering Alipay brand prepares for the world's largest ever IPO - the report leads with a prediction that China is set to become the first country to abandon the use of cash.
In 2018, annual Chinese mobile payments (business and consumer) hit US$ 41 trillion and now account for more than half the value of all non-cash retail payments in China.
"The shift will be mobile-first," predicts the SCMP, pointing to figures that show mobile payments already accounting for four out of every five transactions.
The report also see massive growth potential for online wealth management, with personable investable assets in China growing at an estimated compound rate of 10% from US$23 trillion in 2019 to US$42 trillion by 2025. Of this, as much as US$10 trillion is expected to be invested via online platforms by 2025.
The country is also set for a boom in InsurTech. Onnline insurance premiums currently account for less than 8% of total market value and the sector has a long way to grow as China overtakes the US to become the world’s biggest insurance market by the mid-2030s.
“The fintech companies of China, which are already pushing boundaries and setting the bar higher than any other company anywhere else, are expected to expand beyond Chinese shores into the broader world,” says SCMP’s business editor Eugene Tang. “The coronavirus pandemic, which has led to paradigm shifts in the way humans earn and pay, will only accelerate the rise of fintech, with increased investor and consumer appetite for online financial services.”