While many banked people already use mobile banking in China, the country also has the potential to emerge as an important success story for branchless banking and financial inclusion and potentially a new paradigm.
Last year, peer-to-peer (P2P) lending in China surpassed the US$100 billion threshold and confirmed China as the world’s largest P2P lending market, leaving North America a distant second. This tremendous growth was driven by a mix of circumstances.
Advances in digital technologies and the increased availability of data can be used to support low-income customers to do more than make payments. These advances can help them to make financial decisions and develop strategies to manage their finances.
Financial services providers for low-income customers typically believe that their business case is based on expanding the number of accounts or the number of transactions made by these customers. This is only part of the equation to business success.
Customers are turning to formal channels that use digital and mobile technologies for remittances because these are often able to offer services at lower costs. As more customers turn to formal services, remittances will have an even stronger developmental impact, notably in countries where protracted humanitarian crises affect large numbers of people.
This paper aims to be a first step in providing a picture of the extent and nature of financial inclusion in the People's Republic of China and the size and characteristics of the unbanked and underbanked market.
It is time for DFIs to adopt an alternative approach to financial inclusion that prioritizes needed market changes. A shift to a market systems approach addresses this need and requires that DFIs carefully analyze each market to determine the key gaps, underlying causes, critical actors, and theory of change for bringing about sustainable market development.
Participants learn how to format financial statements for decision making, adjust for inflation and subsidies, measure portfolio quality, asset/liability management, efficiency and productivity and profitability and to choose strategies to reach sustainability.