Strategy Note /

China fintech: Growth constraints, regulatory hurdles and some names to watch

  • Growth constraints: fintech competition, covid restrictions, slow customer adoption and regulation

  • Regulatory hurdles: deposit insurance, data protection, consumer protection

  • Ant (payments/ super app), East Money (investech), Lufax (lending), WeChat (payments/ super app), Zhong An (insurance)

China fintech: Growth constraints, regulatory hurdles and some names to watch
Rahul Shah
Rahul Shah

Head of Financials Equity Research

Tellimer Research
2 November 2022
Published byTellimer Research

The Chinese fintech ecosystem is the largest and most diversified in the emerging markets world. In this series of reports, we map the progress of China’s fintechs and examine their strategies and plans. As one of the more mature markets, the country’s fintechs can also provide a blueprint for where other EMs may follow.

Our database of over 650 Chinese fintechs within 3,400 emerging market firms helps us position China in a broader EM context. The main growth constraints they face are fintech competition, the long-term effects of Covid-19 and slow customer adoption. Deposit insurance, data protection and consumer protection are the biggest regulatory hurdles they face. We briefly profile some established China fintechs and highlight where our readers can find additional information.

Our Ultimate Guide to China Fintech gives a more comprehensive overview of the sector and can be accessed here.

Key growth constraints: Fintech competition, Covid-19 effects, regulations, slow customer adoption

The top constraints to growth cited by Chinese fintechs are competition from fintechs, the long-term effects of Covid-19, regulation and slow customer adoption. Compared with other emerging markets, funding/capital is less of an issue for Chinese fintechs, but they are more concerned about the long-term effects of Covid-19.

In contrast to our previous survey, the informal sector is now less of a concern for Chinese fintechs. In contrast, competition from fintechs and other financial institutions and the Covid-19 repercussions have become more important business constraints.

Competition from fintechs

Fintech start-ups face many challenges. Incumbents are actively developing digital products, either in-house or in partnership with fintechs. Meanwhile, fintechs themselves are ratcheting up the competition. Chinese firms citing competition from fintechs as a growth constraint include Alipay (payments) and iBoxPay (payments).

Long-term effects of Covid-19

The long-term effects of Covid-19 can be detrimental to the overall growth of the economy and, hence, can negatively impact the fintech sector, although some sub-sectors, like payments, have benefitted from lockdowns. Chinese fintechs citing Covid-19 as a growth constraint include Leapstack (Insurtech) and WeShare (lending).


Fintech operations differ considerably from those of incumbents and rulebooks are being continuously updated as regulators catch up with the pace of innovation. Regulatory oversight also tends to rise as fintech firms grow larger. As a result, fintechs are often subject to considerable regulatory uncertainty, which can act as a barrier to investment and growth. Chinese fintechs that regard regulation as a growth constraint include China UMS (payments) and Tigerobo (fintech software solutions).

Slow customer adoption

Fintechs can provide a wide range of benefits to their users. However, customers may still raise barriers to these organisations. For example, they may be unwilling to share personal information or to funnel a large proportion of their business through an industry newcomer. Chinese fintechs citing slow customer adoption as an issue include Pintech (lending) and Kingstar (investech).

Chinese fintechs' key growth constraints

Fintech regulatory hurdles: Deposit insurance, data and consumer protection

The biggest regulatory hurdles for Chinese fintechs are deposit insurance, data protection, and consumer protection. Relative to fintechs in other emerging markets, deposit insurance is a bigger issue, while KYC/AML laws, disclosure requirements and partnership agreement rules are less severe matters for fintechs in China.

In our previous survey, deposit insurance, capital requirements and client funding account segregation were the main regulatory hurdles for Chinese fintechs. Consumer and data protection laws have become more important regulatory constraints on Chinese fintechs, while credit underwriting guidelines, taxation and clearing/settlement regulations have become less problematic.

Deposit insurance

This challenge is cited more frequently by fintechs that are active in payments and lending. Since digital wallet accounts are one of the most frequently used financial products for low-income customers, they play a key financial inclusion role in emerging markets. This is drawing the attention of local regulators, who are understandably concerned about protecting customers’ balances. Affected Chinese fintechs include Alipay (payments) and Xtransfer (lending).

Data protection

One of the key competitive advantages fintechs can leverage is collecting and utilising customer information. Data protection regulations play a key role in determining the extent to which these companies can collect and use such consumer data, and the processes they must build to protect it, which could be an additional cost burden. Chinese fintechs citing data protection regulations as a hurdle to their growth include WeBank (digital banking) and G-Banker (investech).

Consumer protection

Fintechs collect and utilise customer data to gain a competitive advantage. Regulators are actively focusing to protect consumers, both in terms of their finances and increasingly also their personal data, which limits the extent to which fintechs can benefit. Chinese fintechs citing consumer protection regulations as a hurdle to their growth include Du Xiaoman Financial (lending) and Changsheng (fintech software solutions).

Chinese fintechs' regulatory hurdles

Five Chinese fintechs to watch

We highlight below some established names from across the fintech product spectrum

Ant Group (Payments/lending/investech)

Ant Group holds a clear leadership position in Chinese digital finance. The firm brings together over 1bn consumers, over 80mn merchants and over 2,000 financial institutions; in the year to June 2020, the firm oversaw RMB118tn (cUSD17tn) digital payments transactions. Ant Group is the market leader across a broad range of digital financial services products:

  • Payments – largest payments platform by user base

  • CreditTech – largest online consumer and SMB credit platform by outstanding credit

  • InvestmentTech – largest investment platform by assets under management

  • InsurTech – largest online insurance services platform, by premiums generated

  • Innovation – largest number of blockchain patents

WeChat Pay (Payments)

WeChat is an instant messaging, social media and mobile payment application developed by Tencent. It is a Chinese super app incorporating a wide range of functions including video games, WeRun (a health app), language translation, news reading and much more. WeChat Pay is a digital wallet service within the one-stop application that allows users to link bank accounts to pay bills, order goods and services, transfer to other users, and pay in stores. It is the main competitor to Alipay and one of the market leaders in online payments. In 2021, WeChat pay had 900mn active users and was the second-most popular payments platform after Alipay. It had 3.5mn mini-programs (third-party services), which generated a transaction value of RMB2.7trn (US$17.42trn).

ZhongAn (Insurtech)

Zhong An Online P&C Insurance was founded in 2013 as China’s first online-only insurance company, with a completely branchless business model. It was listed on Hong Kong Stock Exchange in 2017. The company provides insurance in five main areas, namely health (38% of revenues), digital lifestyle (36%), consumer finance (22%) and automobiles (5%). In 2021, the company served over 500mn customers, with RMB20.37bn gross written premiums and RMB1,165mn net profit. The firm is the largest online Property & Casualty insurer in China and the ninth-largest P&C insurer overall.

Lufax (Personal financial services)

Lufax, founded in 2011 by Ping An Group and headquartered in Shanghai, is a personal financial service provider that targets small business owners and affluent individuals in China. Lufax was listed on the New York Stock Exchange in October 2020. Once the largest P2P lending provider in China, the company has stripped the business down and transformed itself into a capital-light platform. Retail credit facilitation fees accounted for 58% of 2021 revenues (versus 76% in 2020), while wealth management fees were 3.6% of the total (versus 3.4% in 2020).

East Money (Investech)

Founded in 2005, East Money Information is a Shanghai-based company engaged in online investment services. Its platform,, is a one-stop solution for investments and provides services to over 100mn users. East Money's products include investment information, advisory, financial data, securities trading, online mutual fund sales, stock exchange community and online wealth management. The business is growing strongly; revenues have increased by around 75% in both 2020 and 2021 while net income growth has been even higher. The net margin is an impressive 63%, up from 43% in 2019.

Related reading

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5 top-performing listed fintechs of 2021

Blockchain goes beyond crypto: Real-world applications in emerging markets

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The cost of acquiring and servicing emerging market fintech customers

Why China’s app ecosystem and usage patterns are unlike anywhere else

The ultimate guide to digital payments: The largest EM fintech sub-sector

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The author thanks Rohit Kumar, Rabail Adwani and Gaurav Kumar for their assistance with this report.