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China’s FinTech Prosperity: Lessons for Nigerian Founders

Emmanuel Nnaemeka

Global Times

  Studies have shown that China’s FinTech ecosystem is the fastest growing in the world. According to a study done by Mastercard in 2018, China’s FinTech boom has reached an unprecedented height, marking the Asian giant as the biggest in the world. From FinTech giants like Alipay, Tencent and Ant to smaller startups like Yiri and WeBank, China has had most of its population involved in the process. Like China, Nigeria is blessed with a large population with most people largely found working in the informal sector.
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Moreover, despite China’s advancement in science and technology, it’s a largely agro-based economy, with over 60% of its population involved in the agro sector. Indeed, previous studies have shown that there are various similarities between the Asian giant and the African giant. While FinTech founders in China are taking the bulls by the horns and creating a strong ecosystem, the FinTech industry in Nigeria is still nascent in many ways. While the nation has recorded giant strides in the FinTech industry, there’s still much to be desired. Although the Chinese government is playing a huge role in strengthening the ecosystem, we can’t deny the fact that Chinese founders are leading the way through innovative and practical application of diverse strategies. Therefore, in this article, I point out four lessons Nigerian founders can learn from their Chinese counterparts. The laissez-faire economic system practised by China in recent times has led to innovative new players entering the FinTech ecosystem with new business models, especially models to capture middle-income savers. By introducing the peer-to-peer (P2P) lending model, many middle-income earners have been offered flexible lending opportunities. In the past, Chinese traditional financial institutions neglected the middle-incomers and focused on high-grade industries and blue-chip corporations. However, following the liberalisation of the Chinese economy by the government and industry regulators, newcomer FinTechs focused on the neglected segment of the population – the middle incomers – and began to provide credit facilities to middle-income savers who wanted higher returns and considerable flexibility.
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In reaching out to middle-income savers, Chinese FinTechs have developed increasingly data-driven business patterns. Hence, startups are investing more in creating large data pools and deriving insights from them. They are integrating social networking, e-commerce and finance. Therefore, FinTechs in Nigeria must pin their focus on the middle-income savers using a single framework that generates consumer data while offering other services like e-commerce and social network. One of the most important actions Chinese FinTechs have taken is heavy investment in Artificial Intelligence (AI). AI and its related blockchain have helped several Chinese FinTechs adopt smart banking and financial integration, boosting users’ confidence as well as enhancing efficiency. For instance, in Hangzhou, a mom-and-pop shop known as Weijun Grocery uses Alibaba’s retail management platform to digitize inventory management. Weijun obtains information from the platform on what to stock based on historical sales, a trove of data about neighbouring communities, and instantaneous data such as weather forecasts – for instance, to ensure ice-creams are in stock during a heatwave. Also, with the use of AI, China’s online-only bank, WeBank, deployed an AI-powered dashboard that offered live reading like the banking version of NASA’s mission control! With the aid of AI and blockchain, they slashed annual per-user IT cost to $1 – a tenth of the industry average. On this note, FinTechs in Nigeria must offer financial services whose core operation is AI-powered, even if it means giving users real-time data on stock trading and other financial insights. The sad reality in the Nigerian FinTech ecosystem is that major players aren’t exploring and exploiting social media and entertainment well enough to drive growth. Conversely, in China, users access arrays of services such as ordering a cab, hiring automobiles, ordering meals, shopping online and even paying for movies within one app.
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One example is WeChat. This arrangement bestows upon WeChat relevance in almost all facets of millions of users’ everyday lives. WeChat enables Tencent to integrate financial services in significant manners with instantly applicable use cases. Hence, startups and players must start designing their business models and platforms around human experiences, especially lifestyles, while financial transactions are minimized to the background of services that matter more to users.  One of the most amazing things China’s FinTechs are doing is reaching out and integrating rural areas into the whole ecosystem process. For example, Cuntao has extended e-commerce into rural areas by setting up 30,000 service centres at village convenience stores, enabling villagers with poor internet access to access goods previously unavailable to them. This action, although costly, is very practicable. Many founders rather than covering the length and breadth of the country with VC funding are in a haste to expand outside the country. In Chinese rural areas, centres established by Cuntao receive goods ordered through Alibaba’s eCommerce sites and handle last mile logistics to customers’ homes, in return for a commission. Also, Cuntao has established education centres where rural dwellers are taught the rudiments of e-commerce and online shopping. Featured Image Source: Global Times
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