China and India FinTech Osmosis?

India and China both are among the largest and most populated countries in the world. COVID-19 had adverse effects on both countries and changed many things, especially in the financial sector. Every industry suffered, but fintech companies expanded their business in both nations. Online shopping, cashless transactions, etc., gained popularity, and all this was made possible by modern fintech firms.

All big companies worldwide, irrespective of the industry, want to expand into the Chinese and Indian markets because of ample growth and profit opportunities. Fintech offers many flexible and convenient services to users and is really helpful to boost a country’s financial services. As the industry is still growing, it will surely see long-term growth and offer ample employment opportunities. 

India and China are always in the news based on political and geographical issues, but one thing is undeniable, both countries are perfect for fintech osmosis. The fintech movement here has the potential to reach or even exceed the western fintech industry. It can help create a single payment solution for a Billion Indians. Traditional and digital transactions can be amped up using NFC, QR codes, face recognition, and other safe technologies. 

Fintech development in India and China is growing, and there are multiple uncertainties and questions surrounding it. However, one thing is clear, international and western fintech firms cannot ignore India and China. It is the right time for them to join the fintech osmosis taking place here. 

India has overtaken China in Fintech Investment

China is a wealthy country with many global firms and industries. Even the fintech industry has a great hold in the Chinese market, but India has overtaken China in this category as of late. Reports show that in 2020’s first quarter, China had a fintech investment of $270 million, but India’s fintech investment exceeded this and reached around $330 million. 

In the first quarter, India closed 37 fintech deals while China was just able to close out 26. Numbers and data showed that the nature of investment also differed a lot between India and China. Most investments were made in cross-sector startups in India, while fintech investment in India was mostly made in the digital payment and money lending sectors. 

Just over the COVID period, India saw a 60% increase in fintech investments and overtook China to become Asia’s most lucrative destination. 

Indian fintech operates under the banking framework

Chinese fintech flourished a lot as companies addressed various customer needs, something banks and financial institutions were ignoring. Ant Financial launched a market mutual fund that soon became one of the biggest in the world. The company became the biggest consumer loan provider in China near the end of 2020. However, Chinese regulators stopped the company from being listed on the stock market and brought it under regulated banking. 

This move slowed down the amount of fintech investment and new startups in China, leading to low profitability. However, in India, the Reserve Bank and private banks were quick to partner with fintech companies and offered better services to consumers.

RBI encourages these companies to help out low-income people, the agriculture industry, and SMEs in particular. Fintech is regulated by banks, and this is why India has overtaken China in this industry. 

Fintech in the payment sector

Over 650 million users in India use smartphones now and have access to the internet. If we study some statistics, in the finance sector, PayTM, Google Pay and Phone Pe were the three most downloaded applications. This is a prime example of fintech taking over India. Even in China, AliPay is widely used along with some other applications. Most people have ditched cash payments, especially after COVID, and prefer using these apps to make payments. 

Almost all private banks have their own apps now or partner with other payment apps. This makes payments easier, and online transactions go through without any issues. The security is also ramped up, and there is a low threat of fraud. International payment providers like PayPound need to jump on this opportunity and extend their operations in this region. 

Banking and fintech collaborations

There is competition between private banks and fintech companies in both India and China. This has led to the collaboration of banks and fintech firms instead of operating independently. This partnership has led to the emergence of new services and technology for consumers to use. 

Most private sector banks tie up with fintech firms to ramp up security and provide more payment options to consumers. Technologies like AI-driven customer support, QR code scanners, biometric authorization, chargeback management, etc., are provided by fintech companies to banks and other financial institutions. Everyone, including the banks, fintech companies, and consumers, can reap benefits from this. 

Regulations by the authorities

In China, there are many sudden regulatory changes and shocks in the fintech industry, and they have introduced a low-capital business model for fintech companies. Investors are somewhat disappointed by this, but it is not the case in the Indian market.

In India, fintech companies are a part of the nationwide banking system and fall under their regulatory guidelines. Therefore, investors do not need to worry about sudden rule changes or shocks like in China. This results in more investment because no investor likes his profit to be reduced because of some government rules and regulations. 


India and China are leaders in many industries, and the fintech sector is also rising day by day in both nations. China already has a massive economy, and it can reach the next level. On the other hand, India is the biggest market for fintech in Asia and a great place for foreign firms to invest in. 

Fintech helps financial institutions, banks, and consumers in a variety of things. It provides nice technology to verify consumers and make sure transactions go through securely. A lot of Indians use payment apps for sending and receiving money, and this is where Fintech has done the most work. Even international financial services like PayPound need to enter the Indian and Chinese market as soon as possible. The scope for growth is huge, and there is a great chance to create something special in the Asian fintech market.

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