“2015 will see revolutionary change in the financial industry in China,” stated Zennon Kapron, Managing Director of the financial research firm KapronASIA, at Inside Bitcoins Singapore. What he did not see, however, was a compelling place for Bitcoin.
“Crypto is a solution looking for a problem,” he added. “Current Bitcoin models don’t fix much in China.” In support of that idea, he pointed out that many of the drivers for Bitcoin adoption are not present in China. For example, merchant fees are already very low, security is largely not a priority for Chinese users, and real time domestic payment solutions already exist via banks and third-party platforms.
“It’s not that China is anti-Becton; they are anti-risk,” says Kapron.
Where does Kapron see opportunity in China? Fintech. “China is the perfect setting for financial innovation,” he said. “The confluence of slowing economy, reforming financial industry and fast moving technology providers is creating a perfect rice bowl for financial innovation.”
Zennon Kapron at Inside Bitcoins Singapore
Kapron pointed out that the PRC government seems realize that reform is necessary. That fact, coupled with an increasingly sophisticated millennials market that demands more control over their finances, has lead the government to back fintech innovation, though admittedly, that backing is often passive rather than active. One exception Kapron highlighted: The government has permitted the rise of private banks. “There will be 5 approved private banks by the end of 2015,” he stated. “WeBank, backed by Tencent, will completely change the game and make it much more competitive for traditional banking institutions.”
Mobile payments were the other key factor cited by Capron during his presentation in Singapore on Thursday. “The increasingly online mobile user base is enabling a massive shift to online payments and finances.” Kapron was very bullish on another Tencent initiative, WeChat. WeChat is a mobile and desktop app with widespread adoption in the PRC. WeChat includes a large number of financial service-related apps and links, including the ability to perform common tasks like payment transfers, taxi booking, ticket purchases as well as more advanced wealth-management and investment functions.
Kapron also pointed to AliPay, the new payment platform from China giant Alibaba. The success of systems like WeChat and AliPay was a key factor in Kapron’s view that the needs often addressed by Bitcoin and other cryptocurrencies were already the subject of effective solutions in the PRC.
Kapron also stated that the China domestic market was likely to continue to remain opaque to Western firms and predicted that it was far more likely that China firms would expand into the West, rather than Western firms moving into China.
This article was written by Ric Shreves, co-founder of Coin Academy reporting for AllCoinsNews.com from Inside Bitcoins Singapore.