The Rise of AI In China &

Its Application In Finance

May 29th, 2018
Xinlei Wang
Agenda
The Rise of AI in China
Ø Landscape at a glance
Ø Key reasons for growth
Ø Key technology in AI
Ø Key application areas
Ø Barriers & Challenges
AI’s applications in finance
Ø Top Chinese FinTech Companies to watch
Ø AI’s role in shaping the business
Some Interesting Cases
The Rise of AI in China
Worldwide, China has become the 2nd largest country for AI,
right next to the USA

• Take up 23.3% of the entire AI industry

• Total AI startups amount to more than 2000, with 592 being

successfully funded by far, among which 7 made to the Global AI 100
list.

• Market size exceeded US 4 billion by 2017, estimated to break US $6

billion in 2018, will reach US $9.1 billion in 2020

• Total investment in AI reached RMB 58.2 billion with 353 funding

events in 2017, account for 33.18% of entire global investment in AI

• Revenue grew by 51.1%, estimated to reach RMB 2 billion in 2018

 Key Reasons for Growth

• Endless stream of government policy support: made to

government’s Next-generation AI Development Plan in
July 2017, aiming at building an industry worth at least 1
trillion RMB by 2030

• Key technology breakthrough: 22% of the AI patents

granted worldwide are from China; China is the No.1 in
cloud computing, with total market size of RMB 316.75
billion by 2016, accounting for 23.5% of the global market;
big data market size reached RMB 16.89 billion, with
49.1% annual growth rate; voice recognition reached
RMB 5.93 billion and visual recognition reached RMB 2.2
billion.

• BAT accelerating the market: Baidu invested US $1.5

billon in EV industry, with total 100 projects.
Key Technology focuses In AI
Key Applications For AI
 The AI Bubble and Industry Challenges
• After the booming in 2016 – 2017, the industry has entered the stage for
maturing in 2018: 50 AI enterprises from the United States and China
claimed bankruptcy by the end of 2017; some Chinese industry experts
estimated that 95% of the AI startups in China will follow the fate in the next
2-3 years

• One of the key reasons causing the AI bubble is that many startup companies
have invested heavily in the technology development without thinking of its
actual application in real life user’s scenarios, therefore, failed to meet profit
deadlines

• Wearable device is one of the verticals facing the most challenge to survive
due to the difficulty in supply chain management

• Though it claims to be able to save labor cost, service robot is another high-
risk sector due to product similarity and its general inefficiency in delivering
quality service. Experts estimate that 90% of the service robot startups will
likely fail in the near future.

• Similar scenarios are seen in the failure of consumer-drones due to the safety
issue and air regulations in China. By March 2017, 33% of consumer-drone
startups have quit the market.

• There is an increasing talent gap in the fast growing AI industry. The current
gap has reached 5 million.
AI For Financial Services
“China is fast becoming one of the leading fintech markets globally and an important innovation center in the
fintech sector. The companies shortlisted (as leading 50) were distinguished by their innovative business
practices as well as their ability to develop technology-driven solutions for some of the biggest issues facing the
financial services sector.”

- Arthur Wang, Head of China banking at KPMG China.

“Financial services providers are making efforts to adopt AI for mundane task automation, consistent customer
services, deep-dive behaviour analysis, as well as efficient fraud finding. ”

- Paul Sim, Deloitte AP BlockChain Lab Leader

KPMG’s top 50 Chinese fintech companies are mostly tackling big
data, integrated financial services and consumer finance.
Leading Fintech At A Glance (KPMG)
Baidu Finance Services Group (Baidu Finance), the financial services arm of Baidu Corporation providing a variety of different
services including consumer finance, wealth and fund management, e-wallet payment, and financial asset transaction
platform services. The company also offers Internet banking and Internet insurance services through its joint ventures.

Baifendian Group, a company providing a number of services by harnessing big data technology. Its core products include big
data operating systems, which fall under the technology product line; tag management systems, under the management
product line; and analytics and marketing services, under the applications product line. Baifendian assists mostly Internet
companies, financial services institutions and other business entities in building big data platforms and harnessing SaaS
technologies.

Dianrong.com, an Internet finance company headquartered in Shanghai providing market oriented borrowing and lending
solutions for domestic and overseas financial services institutions including banks. Dianrong.com utilizes information
provided by third party data and credit consulting companies to select assets based on a risk weighting system. The
company has also developed several other products including its e-wallet and its transaction processing system as well as
clearing and settlement services.

ChinaPnR, a company providing a range of services including financial account management, payment and settlement
services, operating risk control services and data management for financial services institutions, small and micro businesses
and individual investors. ChinaPnR has obtained the relevant payment business, fund payment and fund sales licenses from
the regulatory authorities. It has several subsidiaries including ChinaPnR Data, ChinaPnR Finance, ChinaPnR Technology and
ChinaPnR Capital and has made investments in a number of financial services companies includingEasier Life, Bund Wealth
and the Chengdu Financial Asset Trading Centre.
Leading Fintech At A Glance (KPMG)
JD Finance Group, which is engaged in seven lines of business: supply chain finance, consumer finance, crowdfunding, wealth
management, payment services, insurance and securities services. JD Finance’s services include JingBaobei, its microloan
platform, Baitiao, its crowdfunding platform, Jintiao and Xiaobai, which provides wealth management services.

Tiger Brokers, which specializes in services for the global equity markets. Tiger Brokers uses a variety of Internet technologies,
which are designed to improve efficiencies in the financial services sector and to facilitate investment in the global securities
markets including real-time quotations for assets traded in the global financial markets along with regular updates regarding
Chinese business news. It provides investment services for a variety of different investors and has developed relationships
with a number of brokerage firms globally as well as major financial services organizations in China.

Shanghai Lujiazui International Financial Asset Exchange Co., Ltd. (Lufax), an Internet-based wealth management platform
owned by Ping An Group. Lu.com aims to provide one of the most comprehensive wealth management platforms globally. Its
services include providing risk management expertise, financial assets trading information and related consulting services for
enterprises, financial services institutions and other qualified investors.

Hangzhou Xinyoulingxi Internet Finance Co., Ltd. (Lingxi Finance), an insurtech company founded in 2012. It provides many
insurers and fund companies with online and offline insurance services as well as general e-commerce services. Lingxi
Finance has developed two products: Weixiaobao, an insurance platform providing car owners with a number of value-added
services such as price quotations, online insurance services and automobile aftermarket services, as well as technical
supports for insurers and financial services for insurance agents and car owners; and Xiaofeixia, an online-to-offline based
insurance services tool providing technical support services for insurers and financial services for insurance agents and car
owners.
Leading Fintech At A Glance (KPMG)
Ant Financial, Alipay’s parent company and Alibaba’s financial services affiliate valued at over US$70 billion. One of China’s top
fintech ventures, Ant Financial has set up a number of subsidiaries including Yu’E Bao, Zhao Cai Bao, Ant Fortune, Aliloan, Ant
Check Later, Sesame Credit, Ant Financial Cloud and Antdasq. Sesame Credit uses cloud computing and machine learning to
process and evaluate user’s data, subject to their approval. Ant Check Later is a consumer credit platform, which provides users
with access to different amounts of credit depending on their profile.

Qudian Group, which operates two main business platforms: a consumer finance platform and a micro credit lending platform.
The company has a large number of registered users and offers credit to young and middle aged consumers. The group has
established several formal partnerships with companies engaged in financial services, e-commence, digital services, FMGG and
other sectors. Founded in 2014, Qudian Group aims at broadening the scope of financing available to consumers in China who
do not use credit cards.

Ucredit, a financial services group that utilizes Internet technology to provide a range of services including personal wealth
management, personal loans and other forms of credit. The company has developed three major brands: Renrendai, which
provides credit and other consumer finance services to individual borrowers; Wealth Evolution, a platform that allows users to
purchase and trade wealth management products; and Black Card, a mobile application for high net worth individuals.

Hangzhou Wacai Internet Finance Services Co., Ltd. (Wacai), which provides personal bookkeeping services, particularly for
those that have traditionally been excluded from mainstream financial services. Some of Wacai’s products include Wacai
Bookkeeping and Financial Management, the company’s flagship financial management platform; Wacai Bao, a financial
management services platform; Wacai Money Manager, a personal wealth management platform; Wacai Credit Card Manager,
a tool that allows users to manage their credit cards; Wacai Gushen; and Wacai Community, a popular mobile application that
allows users to exchange ideas in different fields including personal finance and education.
Leading Fintech At A Glance (KPMG)

WeBank, a licensed digital bank that operates Credit Particles, the WeBank mobile application, and WeCar
Credit. WeBank has applied several innovative technologies such as face recognition, voice recognition and
robotics in its everyday business activities. In 2016, the company launched the Financial Blockchain
Cooperation Alliance (Shenzhen), which carries out research on the application of blockchain in the financial
services sector. WeBank has also launched We Zhong Financial Management, a mobile application for rural
banking, as well as another application for the interbank market.

Zhongan Online Property Insurance Co., Ltd. (Zhongan Insurance), an Internet insurance
company founded in 2013 by Jack Ma, Pony Ma and Ma Mingzhe. Zhongan Insurance applies
mobile Internet, cloud computing, big data and other new technologies for a variety of different
purposes including product design, automatic claims settlement, market positioning analysis,
risk control and back-end claims services. Its services help users search for insurance products
for a variety of purposes including travel, shopping, medical treatment and investment.
 Key Findings on AI Applications in Financial Services

• Big Data and deep machine learning throughout consumers journey to

help establish more meaningful, detailed consumer profiles

• Data based Robo-Adviser can make more precise predictions on

purchase capacity and purchase intent so as to make more targeted
recommendations for financial products

• More accurate prediction based on one’s online financial record and

personal credits to help lower risks in personal loans

• Semantic-based customer service robots not only help reduce labor

costs but also enhance customer satisfactions over time

• Finger and face recognition to make finance transactions safer and faster

• Blockchain to help decentralize, making cross-border transactions faster,

easier, more direct and transparent, and at lower cost

• Data analysis to better detect financial frauds

Some Interesting Cases
 Hundsun’s CRM chatbot “Think” and Interact Like Humans

By integrating Trio.AI’s semantic modules into

the online transaction system of Hundsun,
the financial software firm and Alibaba
affiliate, Trio.Ai customized an intelligent
chatbot for Hundsun’s customer service.
With data being collected during chatbot-
human interaction, a more precise customer
profile is built, and the communication
becomes much more effective. From reactive
response to proactive recommendation, the
customer service chatbot helps Hundsun
save CRM labor cost by 80%
Ant Finance Uses Advanced Algorithm to Avoid Risks

Based on the data collected across its ecosystem,

Ant Finance is able to build an advanced
algorithm technology that can be used to
establish one’s online profile around his
financial credits and successfully detect
potential frauds.
In 2017, it launched “wealth number”, an AI
based platform can help better understand
customers, optimize financial plans, and make
highly successful product recommendations.
Within the first month, it’s attracted 7 fintech
companies and 3 traditional banks (SPD, Citic,
Industrial Bank) to use its service.
The customer service chatbot helps ant finance
save labor cost for 100 million RMB per year.
 Credit Wallet: Using AI to simplify and accelerate the process
of making personal loans
Credit Wallet, a pilot product developed by Chinese Fintech QuantGroup, acts as an
intermediary between individuals and financial service providers of small, short-
term personal loans.

• By collaborating with major e-commerce channels and online payment outlets

such as Taobao and WeChat Pay, Credit Wallet, with the user’s permission,
creates a financial profile based on data obtained from one’s online purchasing
records, behaviors and credit history. Through its built-in big data based AI
algorithms the application estimates the likelihood and the ability of the user to
repay loans.
• Credit Wallet also helps borrowers get loans at lower interest rates based on
one’s spending history, personal credit and the size of the loan. the interest rate
can be as low as 0.78%, which is much lower than the 7%-10% rate banks charge.
• Within only 2 years, the number of monthly transactions on Credit Wallet has
reached RMB 1 billion, and the number of users has grown from in the thousands
to over 10 million.
• By far it’s established partnership with 15 key industrial leaders including tencent,
zhima credit, Qishang Bank, Dianrong.com, etc.
Thank You