You are currently browsing the tag archive for the ‘China’ tag.

> Posted by Sonja Kelly, Director of Research, CFI

Embed from Getty Images

WeBank started piloting facial recognition for KYC (“know your customer”—verifying that a customer is who they say they are) last year—we heard about it when we talked with Jared Shu, a partner with McKinsey, as part of our deep dive about the different ways banks pursue financial inclusion. At that point, the technology was mere possibility, with some question about whether the regulator would allow it. Now, it seems, facial recognition is indeed serving as a form of identity in China. With the help of technology, customers can quite literally authorize a transaction using their face.

Alipay, a mobile payment app launched by Alibaba in 2004 and used by 120 million people in China, is partnering with Face++ (pronounced “face plus plus”) to allow people to use their face as a credential to make payments. The technology is a natural extension of using a fingerprint to verify a person’s identity, and it is far more secure than just comparing a signature on the back of a credit card to a signature on a receipt.

Read the rest of this entry »

> Posted by Elisabeth Rhyne, Managing Director, CFI

Path to Bhutan’s top government offices

Path to Bhutan’s top government offices

In 2014, the Royal Monetary Authority of Bhutan (RMA), the country’s central bank, made a commitment under the Alliance for Financial Inclusion’s Maya Declaration to develop a national financial inclusion strategy. It backed the overall pledge with specific commitments detailing the main pieces of the strategy. Since then, it has diligently put these pieces into place. Over the past three years, the RMA created regulations for microfinance organizations (deposit-taking and non-deposit taking) and agent banking. It set up a mobile payments system, a credit bureau and a collateral registry. This is an impressive set of accomplishments for a country starting from a relatively blank slate in these areas.

But is it enough? I wonder whether these initiatives will spark the provision of financial services that contribute to the inclusive economic growth Bhutan is seeking.

Read the rest of this entry »

> Posted by Kimberly Lei Pang, Digital Learning Specialist, UNICEF

In the story of Ali Baba and the 40 Thieves, the magical word “sesame” was used to open the seal of a cave where Ali Baba found hidden treasure. In China today, the same word is connected to another kind of magic, one that reveals hidden identities of the socially and economically disadvantaged. Sesame Credit (“芝麻信用” in Mandarin) is a product launched by Alibaba that pulls from transaction records on e-commerce platforms to understand a person or company’s creditworthiness. Such innovation in credit scoring is part of the “social credit system” that the Chinese government is building to make up for the longstanding shortage of credit data.

Access to credit, a major indicator of financial inclusion, has gained increasing attention from Chinese policymakers in recent years. For a country experiencing an economic slowdown and widening income gap between the rich and the poor, credit accessibility has the potential to spur growth and level the playing field for the poor. However, despite China’s efforts to improve financial access, a large portion of its population neither uses nor has access to credit. Data from the World Bank’s Global Findex study showed that Chinese people (aged 15+) have relatively high levels of formal bank account ownership (79 percent, 2014) but low levels of credit usage (14 percent, 2014). In fact, China’s formal credit use is the lowest among the five BRICS economies. Aside from the rigidity and costliness of financial institutions, a significant barrier to borrowing is the lack of reliable credit scoring in China. Established just 11 years ago, China’s credit bureau CCRC covers credit profiles for only a quarter of China’s 1.4 billion population and shares that information only with selected banks. Lenders thus often have no access to borrowers’ financial histories and tend to make rather arbitrary decisions on borrowers’ creditworthiness. As a result, many individuals and microenterprises find it difficult to get a loan, as steady employment and collateral assets are commonly required for formal credit.

Read the rest of this entry »

> Posted by Danielle Piskadlo, Director, Investing in Inclusive Finance, CFI

Ant Financial, the Chinese inclusive finance powerhouse founded by Alibaba Group, and Euronet Worldwide, a U.S. giant in the money transfer game, are in a bidding war over MoneyGram. Financially, this makes sense as the global remittance market is estimated at about US$600B and MoneyGram commands a market share of roughly 13 percent of the world’s largest remittance route, from the U.S. to Mexico.

When two large companies compete to acquire another large company you might hear about it on CNN Money and promptly move on to other thoughts. But this particular news struck me because it touches on three of the (many) insights about the future of financial inclusion that I took away from attending this year’s Harvard Business School – Accion Program on Strategic Leadership in Inclusive Finance just last month.

Big players will increasingly drive the financial inclusion sector moving forward while, in the past, only small companies served the financial needs of the low end market. Microfinance has shown the poor to be a commercially viable customer segment, and as competition heats up, many big financial players are looking for ways to better tap into the commercial potential of new clients at the base of the pyramid. These big players have the deep pockets to innovate, experiment, and take the risks required to figure out how best to serve the billions of people still financially excluded. In addition to Alibaba’s Ant Financial, China’s WeChat, the social messaging app which connects over 800 million people, now allows for money transfers.

Read the rest of this entry »

> Posted by Center Staff

Embed from Getty Images

A schoolboy looks at an electric light bulb powered by M-KOPA solar technology, as it illuminates his home in Ndela village, Machakos, Kenya.

2016 was the hottest year on Earth since records began in 1880. For those of us who work in financial inclusion but are fearful about our lack of progress in combating climate change, the following is a spot of good news: at the recent World Economic Forum Annual Meeting in Davos, Ant Financial and the United Nations Environment Program launched the Green Digital Finance Alliance.

Read the rest of this entry »

> Posted by Jeffrey Riecke, Communications Specialist, CFI

Embed from Getty Images

Does a speeding ticket help predict whether you will pay back a loan? While this might seem like a stretch, it may not be as farfetched as it sounds, at least in China.

China’s government is piloting a new ‘social credit’ scoring system that takes into account a diversity of financial and nonfinancial factors and behaviors. The financial ones are familiar – being delinquent on payments for insurance or social security. The nonfinancial ones are potentially troubling, and include, to name a few, traffic violations, jaywalking, dodging metro fares, violating the country’s family planning rules, criticizing the ruling party, and neglecting your elderly parents.

The social credit system may be used to affect financial opportunities, like securing loans, as well as non-financial ones, like job offers, your child’s admission to schools, faster treatment at government offices, access to luxury hotels, and being able to buy transit tickets.

Read the rest of this entry »

> Posted by Tim Tsang, Positive Planet China

A need for formal credit in China

(click to enlarge)

Between 2011 and 2014, 180 million adults (aged 15+) became new bank account holders in China. Yet in 2014, only 9.6 percent of Chinese adults, or less than 110 million, actually accessed credit from a financial institution, which includes credit unions, microfinance institutions, and cooperatives as well as banks. The incongruity across such statistics highlights both the progress made and the challenges remaining on China’s path to a more financially inclusive economy.

The need for reform is as important as ever with China’s growing credit industry. During its economic slowdown, China has looked to spur growth through consumer spending and should continue to see consumer lending steadily grow. The rigidity and costliness of China’s financial institutions, however, have hindered addressing consumers’ growing credit demand, leaving a discernable credit gap. Instead, in a big way consumers have resorted to informal and nontraditional sources of loans. This largely holds true for both urban and rural borrowers, with roughly a third of Chinese adults borrowing in 2014.

Among China’s informal lenders, family or friends are still the most common for financing individual loans, but “shadow banking” institutions, most notably P2P and online lending companies, have cropped up in recent years to try to capture this untapped market. As less regulated institutions, these shadow banks almost uniformly offer higher-risk, high-interest loans, rather than provide a sustainable and transparent alternative to banks.

Read the rest of this entry »

> Posted by Tyler Aveni, Positive Planet Co-Country Director (China)

Through the support of Diageo’s Plan W initiative, Positive Planet’s three-year women’s empowerment project Banking on Women has provided financial education to more than 8,000 women across Huimin Dongfang Microcredit Company‘s client network in Ningxia Autonomous Region, China. The project’s curriculum, which is based in the core financial concepts of savings, risk protection, and digital finance, is intended to empower women in the household and community through increased financial decision-making power. With the project more than two-thirds completed, Positive Planet has just published a case study that explores the project team’s experience in working to build the financial capability of rural Chinese women.

As written here before, China’s rural women stand to greatly benefit by being introduced to financial concepts and related services. However, China’s government has yet to establish a national strategy for financial education that clearly looks beyond urban residents’ financial capability needs. (Current efforts mostly cover security precautions for traditional banking, anti-fraud measures, counterfeit currency awareness, and illegal investment prevention.) Serving rural residents and their unique set of circumstances and needs will require a greatly expanded financial capability-building offering. For such an expansion to work well, it will need to include programming that looks at the rural population separately. Further, implementation for rural programming should lean on the experience and opinions of diverse local groups and township government offices. Unique cultures, language dialects, and market distinctions across China’s many regions make one-size-fits-all financial educational content less effective. Central planning and support play a crucial role, but resource design must allow for calculated flexibility per the local settings.

Read the rest of this entry »

> Posted by Julia Arnold, Financial Inclusion Consultant and Sarah Willis, MetLife Foundation

MetLife Foundation’s goal is to improve financial inclusion across its footprint, which includes economically and geographically diverse markets. Ensuring that low- and moderate-income families in these markets can acquire and successfully use the products and services they need to build a better, more secure life is complex and therefore requires innovative solutions that reach different consumers in different ways.

In China, our newest approach to improving the financial health of everyday consumers is through harnessing the power of social entrepreneurs. As part of a broader global push to strengthen ventures and organizations working in the area of financial inclusion, we’ve teamed up with Verb to run a series of competitions, called Inclusion Plus. Beginning on May 19, 2016 we will invite social enterprises (nonprofit and for-profit alike) throughout China that are focused on increasing access and use of financial services among low- to moderate-income people to enter their products, services, or programs for the chance to win grant capital and mentoring from MetLife advisors.

Opening a competition in China meant we needed to better understand the local financial inclusion landscape. We know that the rapid economic growth in China over the past 20 years has been the envy of the world. More surprisingly, however, is that between 2011 and 2014 China made significant strides toward financial inclusion adding around 180 million adult account holders, bringing the number of adult account holders to 79 percent of the population. According to the 2014 Global Findex, these account holders include marginalized groups such as women and poorer rural households, though the bulk of China’s unbanked population resides in rural areas, and over half of whom are women. As such, the Foundation’s focus for the Inclusion Plus competition is on ensuring the unbanked or underserved populations, such as low-wage workers, smallholder farmers, small business owners, and migrant workers have access to affordable and convenient financial services and products which focus on day-to-day financial well-being.

Read the rest of this entry »

> Posted by Susy Cheston, Senior Advisor, CFI

The news is out. Ezubo is a Ponzi scheme. The lending company, a P2P platform in China, has bilked 900,000 private investors out of a stunning US$7.6 billion. Ezubo is China’s largest ever online scam—but it is not alone. It is one of 2,612 P2P sites that bring lenders and borrowers together in China’s $2.6 trillion wealth management industry. Of those, the China Banking Regulatory Commission (CBRC) says that more than 1,000 are “problematic.” We expressed concerns about this very P2P lending market in China in our FI2020 Progress Report released four months ago.

But first, how could this happen with Ezubo? Ezubo had been in the vanguard of the hot e-finance market, and was named “online credit financial brand of the year” by China’s National Business Daily in 2015. It was lauded on Chinese state television and received implicit endorsement from high government officials. It engaged in cross-border trading with Myanmar—something that would not seem possible without government oversight. China is supposed to be in a big campaign to root out corruption. Yet it seems there are just two possibilities: Chinese regulators either knew about the scam and kept silent, or they missed it altogether. Could Ezubo have duped or paid off every one of the local, provincial, and national authorities who had oversight?

That’s why people who were suddenly stripped of their wealth not only feel duped by Ezubo, they also feel duped by the government. After all, this is only the latest allegation of fraud against a market that has been enthusiastically championed by the government and only loosely regulated.

Read the rest of this entry »

Enter your email

Join 2,167 other followers

Visit the CFI Website

Twitter Updates

Archives

Founding Sponsor


Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.

Note

The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.