Strategy Note /

The ultimate guide to China fintech in 2022

  • China’s fintech ecosystem differs from those in other emerging markets in its scale, diversity and bias to blockchain

  • Success factors: innovation, distribution, user-friendliness. Strategy focus: new products/customer segments, efficiency

  • Funding is down on tough global conditions, policy uncertainty. Growth constraints: competition, Covid-19, slow adoption

The ultimate guide to China fintech in 2022
Rahul Shah
Rahul Shah

Head of Financials Equity Research

Rohit Kumar
Rohit Kumar

Global Financials/Thematics

Tellimer Research
6 September 2022
Published byTellimer Research

The Chinese fintech ecosystem is the largest and most diversified in the emerging markets world. In this report, we map the progress of c600 Chinese 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.

One of the key growth areas for China fintechs is blockchain, which is thriving despite the crackdown on cryptocurrency. Other areas seeing significant company formation rates include insurtech and investech. In contrast, payments and digital lending are shrinking as a proportion of the pie; these are more mature sectors where top players hold significant market share, and stricter regulations are making it difficult for new entrants to thrive.

As elsewhere, investment activity has recently slowed. Tougher funding conditions have been amplified by greater policy uncertainty, which has contributed to an absence of the mega VC deals that have previously buoyed the market. Nevertheless, many fundamental indicators are supportive; for example, electronic payments processed through non-bank payment service providers are at record levels.

Our database of close to 3,300 emerging market firms helps us position China in a broader EM context. The fintech sector is more mature in China than elsewhere, and the focus of many firms has shifted from growth to profitability; 40% of surveyed Chinese fintechs are already profitable, with almost half of the remainder expecting to break even soon.

In the next three years, Chinese fintechs are targeting product/service innovation, gross margin and transaction value as key performance indicators. The top values they offer include user-friendly platforms, strong branding and affiliations, and seamless execution.

The main factors Chinese fintechs credit for their success to date include innovative service offerings, extensive distribution networks, and user-friendly platforms. They plan to introduce new products/services, increase operational efficiency and enter new customer segments. Planned innovations focus on artificial intelligence, easier customer onboarding, and machine learning. Their main growth constraints are competition from other fintechs, 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.

In this report, we take a detailed look at the Chinese fintech landscape, including:

  • The current state of the fintech ecosystem

  • Fintech funding trends

  • Electronic payments’ statistics

  • Key industry growth trends

  • Profitability versus EM peers

  • Financial services provider market shares and expected three-year changes

  • The key performance indicators fintechs are targeting

  • The competitive environment

  • Fintechs’ values and success factors

  • Fintechs’ plans and targeted innovations

  • Fintechs’ growth constraints and regulatory hurdles

We also compare our current findings with those from our 2020 industry survey and highlight five Chinese fintechs to watch.

Blockchain captures a sizeable chunk of the Chinese fintech landscape

China rules the blockchain roost in emerging markets, with the sector accounting for a 21% share of the total Chinese fintech population compared with just 13% for emerging markets. This is despite the heavy crackdown on crypto trading and mining.

In contrast, the payments and lending fintech sectors are a smaller proportion of the overall fintech population in China, at 16% and 10%, than in other EMs. We attribute this to the more developed state of the Chinese fintech ecosystem, which has enabled a broader proliferation of business models to evolve.

Mapping China's fintech ecosystem

If we compare our current survey with that carried out in 2020 the biggest growth areas include insurtech and investech. In contrast, payments has dropped from 25% to 16% of the sample and the lending sector’s share has dropped from 13% to 10%.

We think the digital payments sector has matured, with giants like Alipay and WeChat Pay capturing sizeable market share, leaving little room for smaller players. For digital lenders, the regulatory crackdown has been a major theme, impacting profitability and raising capital requirements.

Investment into China's fintech has slowed

Chinese fintechs secured cUS$1.5bn funding in 2021, compared with US$1.3bn in 2020. However, before the pandemic, the funding amount was significantly higher, at US$3.5bn, in 2019 and higher still in 2018.

We think the decline can be attributed to investors' cautious stance on the Chinese fintech landscape amid stricter regulations and greater policy uncertainty.

Investment activity in China fintech

China’s digital payments volumes are on an upward trajectory

The value of digital payments transactions in China has increased by 29% CAGR over the past five years, reaching RMB355tn in 2021 (US$55tn). The volume of transactions has risen even faster (44% five-year CAGR), hitting 1,028bn transactions in 2021. However, growth slowed in Q1 22, with pandemic-related lockdowns exacerbating a broader macro slowdown; transaction volume rose 5% yoy, while transaction value actually fell yoy, by 2%.

Mobile wallet market share is dominated by two firms, Alipay and WeChat Pay. However, the rollout of e-CNY, a digitalised version of the Chinese legal currency Renminbi, could potentially dent the strong market position of these payment giants, with advantages in security, privacy and fees.

China's non-bank online payments statistics

Chinese fintechs have posted strong profit growth but customer acquisition lags

Our detailed study of 215 fintechs across 14 emerging markets enables us to draw out key differences at the sector and market levels. Chinese fintechs are, in general, experiencing slower user growth than their EM peers, which makes sense due to the fintech sector’s more advanced state of maturity. For China fintechs, the strategic focus has seemingly already shifted from activity growth towards operational efficiency and user base monetisation, which is also evidenced by their superior growth in operating profit.

Meanwhile, average revenue per user and operating margins are increasing, whereas ARPUs in other emerging markets are witnessing a compression. From this perspective, China fintechs may be better aligned with the investment goals of more traditional investors than fintechs in other markets.

Fintech growth in China and emerging markets

40% of Chinese fintechs are profitable; this figure should double within a year

Approximately 40% of the surveyed Chinese fintechs claim to be already profitable, which is a lower proportion than in most other emerging markets and below the 90% figure shown in our 2020 China fintech survey. This likely reflects the headwinds created by the more challenging regulatory environment in which these firms now operate, together with the strict zero Covid-19 approach taken by the authorities.

However, almost half of the fintechs in China expect to move into profit within the next year, much sooner than their emerging market peers. Despite making significant economic strides over the past few decades, China still represents one of the world’s biggest financial inclusion opportunities – over 130mn adults are still unbanked. Another factor in the expected bounce-back in profitability is that firms are optimising their business models for the new regulatory climate. Moreover, there is anticipation that the disruption caused by Covid-19 protocols may lessen.

Fintech profitability in China and emerging markets

Chinese fintechs are expected to gain market share in savings/fixed accounts and payments

We asked 900 consumers in 14 emerging markets about the types of providers meeting their current financial services needs, and those they expect to use in three years. This data allows us to estimate the current market share of the different industry players and likely future shifts.

Currently, fintechs have a 36% market share in China (versus 37% in 2020), against a global emerging markets average of 31%. Over the next three years, Chinese fintechs expect to gain 5% more market share, broadly in line with the average emerging markets increase of 6%. The improvement will come primarily from better financial inclusion and consumers’ lower reliance on incumbents.

Note that the survey responses are unweighted; we think traditional financial institutions would have a much higher share if our survey were value-weighted.

Financial services provider market shares in China

Over the next three years, Chinese fintechs are expected to post market share gains across all products except current accounts and general insurance. The largest increases are projected for savings/fixed accounts, mobile payments, card payments and domestic money transfers. The mobile payments data is somewhat surprising, given the existing leadership of fintechs in this area; for example, in other EMs, consumers expect fintech payments market share to remain stable.

The data suggest that further digital wallet adoption in China could open up more opportunities for cross-selling and up-selling; this may be an approach payments fintechs in other EMs will also adopt. Other products where Chinese fintechs are already leading include current accounts, card payments and general insurance. Our survey indicates that Chinese fintechs may also, over the coming years, build leadership positions in savings/fixed accounts and domestic money transfers.

Fintechs' market share in China

Targeted KPIs: Product/service innovation, gross margin, transaction value

According to Chinese fintechs, they are targeting product/service innovation, gross margins and transaction values as key performance indicators. The focus on these top three KPIs is in line with what we see in other emerging markets. However, Chinese fintechs are more concerned about brand strength than their EM peers.

In our previous survey, customer satisfaction and relations with regulators were the most targeted KPIs. The focus on enhancing customer loyalty, plus top- and bottom-line growth, has lessened since this time. Meanwhile, the spotlight on product and service innovation has intensified.

Product and service innovation

Product and service innovation enables fintechs to reach their customers more cheaply and effectively. It also helps fintechs to be more relevant to their customers, for example by offering them greater convenience and/or a better user experience. Chinese fintechs citing product/service innovation as a KPI include Changsheng (fintech software solutions) and Neo (blockchain).

Gross margin

Once a certain level of scale is achieved, fintechs can typically then focus more on generating financial returns for their investors. A higher gross margin allows companies to lift investment in branding, marketing and product development. Chinese fintechs targeting to expand gross margin include Pintech (lending) and Qingsongchou (blockchain).

Transaction value

This is one of the most frequently targeted KPIs cited by Chinese fintechs and is also one of the main metrics used by investors to assess operators, particularly in the payments segment. Firms actively targeting transaction value growth include China UMS (payments) and BitOcean (blockchain).

Chinese fintechs' most targeted KPIs

The competitive landscape for Chinese fintechs

Chinese fintechs regard telecommunications companies and traditional financial services firms as their strongest competitors, followed by other fintechs. Meanwhile, informal channels are not much of a concern for them.

In contrast, elsewhere in EM it is other fintechs that are considered the biggest competitive threat. In our previous China survey, other fintechs were regarded as the biggest competitors and telecommunication firms were not even in the race. This shift suggests China fintechs are now much more focused on the mainstream than before.

Chinese fintechs' main competitors

Chinese fintechs’ customer-value proposition: User-friendliness, brand, seamless

The key values delivered by Chinese fintechs are user-friendly platforms, strong branding/affiliations and seamless execution. Relative to fintechs in other emerging markets, those in China are more focused on delivering personalised services, while less importance is assigned to fast approvals and unique offerings.

In our previous survey, product quality, customer responsiveness and security were the top values provided by fintechs. In comparison with that survey, Chinese fintechs now give less importance to convenience, security and customer responsiveness, and are more focused on branding, fast approvals and transparent pricing.

User-friendly platform

Customers increasingly demand an easy-to-use, seamless interface. Chinese fintechs citing this as a key customer-value proposition include Yeahka (payments) and Xtransfer (lending).

Company brand and affiliation

A strong company brand helps to build customer trust and loyalty, increasing the opportunities for cross-selling and up-selling. Chinese fintechs citing company branding as a key value include ChinaPNR (payments) and (blockchain).

Seamless execution

Users increasingly demand that fintech platforms should operate without any delays or interruptions. Chinese fintechs that cite seamless execution as their key value include iBoxPay (payments) and VituTech (blockchain).

China fintechs' key values

Key success factors for Chinese fintechs: Innovation, distribution network, user-friendliness

The factors China fintechs credit most for their success include innovative service offerings, extensive distribution networks and user-friendly platforms. In contrast to fintechs in other emerging markets, those in China are more likely to cite distribution networks and strong shareholders as success factors, and less likely to mention seamless execution, funding access and operational efficiency.

In our previous survey, Chinese fintechs cited innovative service offerings, funding access and competitive product prices as their top success factors. While the importance attached to funding access has declined significantly, extensive distribution networks, strong management and well-connected/financially strong shareholders have gained relevance.

Innovative service offerings

Innovation is a key pillar for fintech success. It can, for example, allow fintechs to improve their service offerings and, hence, enhance the consumer experience. Chinese firms that are striving to innovate include Leapstack (insurtech) and Kingstar (investech).

Extensive distribution network

Fintechs benefit from an extensive distribution network if they have developed significant partnerships across different markets and have built a broad agent network. Chinese firms that attribute an extensive distribution network as a success factor include ZhongAn Insurance (insurtech) and WeBank (digital banking).

User-friendly platform

Firms need to create an easy-to-use, seamless interface. Chinese fintechs citing this as a success factor include Alipay (payments) and Clustar AI (fintech software solutions).

Chinese fintechs' key success factors

Future plans: New products and customer segments, operational efficiency

The top strategic priorities of Chinese fintechs are introducing new products/services, increasing operational efficiency and entering new customer segments. Relative to other emerging markets, Chinese fintechs are less focused on exploring new markets, which may reflect the large size of the domestic revenue pool. However, they are more likely to leverage strategic partnerships than fintechs in other emerging markets.

In contrast to our previous survey, the strategic priorities of Chinese fintechs have shifted from enhancing management expertise and increasing technological investment to introducing new products/services and entering new customer segments. In addition, Chinese fintechs no longer prioritise moving to new markets.

Introducing new products and services

Fintechs tend to expand their service offerings to new products when they achieve a certain scale in their primary offering. For example, payments fintechs often look to expand into lending or investments; this can help to lift their share of wallets and boost financial returns.

Chinese fintechs that plan to launch new products include Suning Finance (lending) and Bitmain (blockchain).

Boosting operational efficiency

Operational efficiency allows companies to boost their bottom lines and also facilitates competitive pricing, thereby growing the addressable market. Chinese fintechs targeting better operating efficiency include Lufax (lending) and Du Xiaoman Financial (lending).

Entering new customer segments

China’s large population is extremely diverse in terms of geography, age and income. Therefore, it makes sense for fintechs to modify their existing offerings to appeal to a broader range of customer segments.

Firms planning to enter new customer segments include Tigerobo (fintech software solutions) and G-banker (investech).

Chinese fintechs' strategic priorities

Targeted fintech innovations: AI, easier customer onboarding, machine learning

The top three areas where Chinese fintechs are targeting innovation efforts include artificial intelligence, customer onboarding and machine learning. In contrast to other emerging markets, Chinese fintechs are less keen on developing chatbots/virtual assistants, using technology to reduce defaults and cloud technology. However, they are more focused on machine learning and augmented reality than other EM fintechs.

In our previous survey, chatbots/virtual assistants, blockchain technology and easier customer onboarding topped the targeted innovation areas for Chinese fintechs. Cloud technology is also now less of a focus than in the previous survey. These changes may help investors in other less mature EM fintech markets track where future development efforts could be directed.

Artificial intelligence for predictive analysis

Artificial intelligence can be utilised by fintechs in many ways, for example, predictive analysis to assess future outcomes and boost risk management. Other potential uses include improving operating efficiency or enhancing customer engagement levels.

Chinese fintechs targeting greater use of AI include WeShare (lending) and Ways (fintech software solutions).

Technology to ease customer onboarding

Partly for regulatory reasons, customer onboarding has traditionally tended to be a lengthy process. Any complexities or difficulties in customer onboarding can lead to bad first impressions, resulting in lower business volume and less customer loyalty. For these reasons, Chinese fintechs such as Ontology (blockchain) and Yeahka (payments) are working to improve the process.

Machine learning

Machine learning, a subfield of AI, enables firms to learn from and improve data analysis. For example, through access to traditional and non-traditional datasets, machine learning can enable lending firms to more effectively evaluate the creditworthiness of financially excluded individuals. Machine learning can help to prevent fraudulent activities or to enrich the user experience via virtual assistants that become smarter over time.

Machine learning models can also help in wealth management, by monitoring data in real-time to predict movements in equity prices. Chinese fintechs wishing to innovate in this area include Xtransfer (lending) and BitOcean (blockchain).

Chinese fintechs' targeted innovations

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 long-term effects of Covid-19, 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 Covid-19 lockdowns.

Chinese fintechs citing Covid-19 as a growth constraint include Leapstack (Insurtech) and WeShare (lending)


Fintech operations differ considerably from those of incumbents; the 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 market fintechs, 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 to fintechs.

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

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 translator, 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 RMB2.7tn (US$17.42tn).

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 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 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, a stock exchange community and online wealth management.

The business is growing strongly; revenues increased by c75% in both 2020 and 2021 while net income growth was even higher. The net margin is an impressive 63%, up from 43% in 2019.


The authors would like to thank Rabail Adwani and Gaurav Kumar for their assistance with this report.