The Rise of Chinese Fintech: Lessons for the United States

The Rise of Chinese Fintech: Lessons for the United States

/ Asset Management

Richman Center for Business, Law & Public Policy Columbia Business School & Columbia Law School

John Mahoney Managing Director Co-Chairman, Financial Institutions Group Goldman, Sachs & Co.

February 25, 2019

China in Context

China

Population (mm) 1,383

India

1,307

Indonesia

264

Japan

127

Philippines

105

Vietnam

96

India

Thailand

69

South Korea

51

Malaysia 32

Australia 25

Taiwan 24

Cambodia 16

Hong Kong 7

Singapore 6

New Zealand 5

Developed

China

Source: Euromonitor Note: As of 2017

China

South Korea

Japan

APAC

Vietnam Thailand

Hong Kong

Cambodia

Malaysia Singapore

Taiwan Philippines

Population

GDP per Capita Number of Smartphones

4.1 bn $6.3K 2.2 bn

Indonesia

1.4 bn

0.3 bn

$8.7K

$59.8K

940 mm 248 mm

Emerging

Australia

New Zealand 1

Disparate State of Development

GDP Growth (%)

9

Cambodia

Vietnam

8

Philippines

7

China

6 India

5

Malaysia

Indonesia

4

Thailand 3

2

1

0

0

10,000

Source: Euromonitor Note: As of 2017

50 GDP (US$ tn)

40

30

20

10

0 22001177

China US

22002277

2035

China GDP in 2035:

US$40tn

Taiwan South Korea

Hong Kong

Singapore

New Zealand

Australia

Japan U.S.

=US$2tn GDP

U.S. GDP in 2035:

US$38tn

20,000 Developed

30,000

40,000

GDP per Capita (USD) China

50,000

60,000

...

17100,0,00000

Emerging

2

Opportunity for Technology Driven Financial Services

300% 250%

= 100 mm population

Japan

Hong Kong

Credit Card Penetration (%)

200% 150%

U.S.

South Korea

Taiwan

Singapore

100%

Australia

50% 0%

India

Vietnam

China

Philippines

Thailand

Malaysia

Indonesia

Mobile / Digital Models Attack Under-Served Markets

(50)% 0%

20%

Source: Euromonitor, WCIS Note: As of 2017

40% Developed

60%

80%

100%

Smartphone Penetration (%)

China

120% Emerging

140%

160%

3

Major Demographic Shifts

Rise of the Middle Class

Urbanization

From Manufacturing Towards Consumption

Source: CIRC, Wind, Swiss Re

Disposable Income per Household (USD k) 12.1

6.1

2010

Urban Population (%) 48.3%

2017 57.3%

2010 Tertiary Industry as % of Total GDP (%)

44.1% 2010

2017 51.6%

2017

15.4 2020 60.5% 2020

4

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