Digital Ventures has discussed various technology development and innovation in China. Today, we will explore a topic which relates to our daily lives. We will introduce a major mechanism in China’s “financial service” that goes beyond a daily routine as it has seamlessly integrated with “social media”. We wish to take you on a tour of financial services on social media in China.
China social media landscape: An overview of online media in China
Before we explore the financial sector, let us first take a look at China’s social media landscape. How big is it and what are the unique features? This will help us understand its prevalence and uniqueness.
- The largest number of internet users in the world. By the end of 2017, CNNIC reported that China housed 771.98 million internet users. This accounts for more than half of the country’s population and is the world’s largest group.
- All social media platforms are operated by Chinese companies. China doesn’t allow foreign social media service providers such as Facebook, Twitter, and YouTube to operate in China. As a result, all giant social media platforms are developed by Chinese firms.
- There are 5 giants in the market. We know that the digital service in China has 3 main players, Alibaba, Tencent, and Baidu. For the social media platform, aside from the 3, there are 2 more noteworthy players. Sina is the developer of a trending microblog and ByteDance is the social platform developer of a trending application called Tiktok.
Factors contributing to the digital financial service development in China
The scale of China’s digital financial service is rather large. However, aside from the convenience, there are other factors attracting users to these online services.
- Difficult access to bank services. A factor that drives China’s digital financial service is not only its readiness in terms of infrastructure, rather it is because the access to the bank’s traditional financial services is more difficult than online services. As a result, users seek alternatives and turn to services where they have easier access such as digital financial services.
- Seamless integration with social media resulting in total solutions. IT firms not only offer a service platform but combine social media features with traditional financial services. This resulted in convenient transactions like never before. Moreover, they analyze social media data and use it for financial services such as microloans to purchase products on the platform. When coupled with the great number of internet users, online financial services were quickly adopted by users.
Financial service from social media
Tech development has brought about a variety of financial services. However, there are 3 main applications when it comes to services on social media. They stem from connectivity and data analysis on the network.
- Peer-to-peer transaction. Social media has the ability to connect all users. Therefore, service providers optimize this connectivity to create “peer-to-peer” transactions. They allow users on the social media platform to transfer money.
- Microlending. Many Chinese users don’t have access to credit cards and although they have the ability to pay by installments, they can’t purchase high-value products and services. As a result, Chinese e-commerce service providers initiated lending services on the e-commerce platform by using credit scores from social media data. As a result, social media data becomes significant data as they are the borrower’s risk assessment information.
- Payment gateway and e-wallet. Although this service doesn’t directly stem from social media, they contribute to P2P transactions and microloans as they allow money on the platform to actually be used. For instance, payment via the platform can calculate each person’s share and make the payment via P2P transaction. Also, it allows access to microloans with offline stores via payment on the platform.
Social media platforms that extend to financial services in China.
As mentioned earlier, new forms of financial services have integrated the features and data from social media. Examples of the platform offering these services are listed below:
- WeChat is an application by Tencent which began as a messaging platform and has evolved to become a super app for “everything”, including a payment gateway. WeChat’s financial service is widely popular in China with the peer-to-peer transaction as their highlighted feature.
- Taobao is a C2C marketplace by Alibaba which drives sales via the social media mechanism. Aside from integrating a convenient and secure payment gateway for sales and trade, today, they have a microlending service which evaluates credit scores from social media usage on the platform.
Social media not only connects people in terms of data but is joining people and a variety of financial services in a broader aspect. We have more stories about finance and social media in China. Follow the Digital Ventures blog for more updates.
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