Hangzhou leads the country in the booming financial technology sector with just 13 companies investing a total of US$23.88 billion.
This compares with Beijing, which has the most fintech companies — 58 with a total investment of US$21.19 billion, according to the Global Fintech Hub Report by Zhejiang University’s Academy of Internet Finance and the Center for Alternative Finance at Cambridge.
“Hangzhou is the hub for the private sector, for creativity, innovation and entrepreneurship,” Ben Shenglin, dean of the Academy of Internet Finance, told the Money 20/20 conference in Hangzhou last month. “We had an early start in fintech. Alipay started here in 2003 so we have a very strong digital economy.”
About 91.5 percent of residents in the city use mobile payments such as Alipay or WeChat.
Tracey Davies, president and managing director of the conference, said at the opening that organizers had invited 300 speakers with attendees coming from more than 40 countries. And they were very excited to be in Hangzhou as “it is a very important global fintech hub.”
The Fintech Hub report looked at more than 70 cities around the world, focusing on companies worth more than US$50 million.
Four of the seven “global fintech hubs” — Beijing, San Francisco, New York, London, Shanghai, Hangzhou and Shenzhen — are in China.
Zhou Jiangyong, Party secretary of Hangzhou, said in his opening speech that the city plans to be a hub of the country’s digital economy and a global leader in fintech.
In 2017, the added value of the city’s financial industry reached 105.5 billion yuan (US$15.2 billion) while total online sales are expected to exceed 1 trillion yuan contributing to over half the city’s annual growth.
Hangzhou is home to Ant Financial, a unit of Alibaba and the world’s largest fintech company by value after raising US$10 billion in May.
The company is investing heavily in leading technologies such as blockchain, big data and artificial intelligence.
In June, the company announced in Hong Kong its first cross-border payment service powered by blockchain. IPRdaily, which reports on intellectual property rights issues, said that Alibaba filed 49 blockchain-related patent applications worldwide in 2017 — more than all other companies in the world.
“Blockchain is more suitable for businesses that have already gone online and been fully digitalized,” said Li Wei, CEO of Hyperchain, a blockchain service company established 2016 in Hangzhou.
“Blockchain technology can make them ‘run’ faster.”
Hyperchain has so far built an extensive collaboration with banks, securities companies and stock exchanges in China. In January 2017, the nation’s first blockchain-powered digital draft payment platform was born in Hangzhou out of a collaboration between the local Zheshang Bank and Hyperchain.
The digital platform improves efficiency and blockchain technology guards against fraud.
The two companies have extended their partnership and range in the past two years by applying the technology to accounts receivable and issuance of securities.
Hangzhou’s government support and strong talent base create many entrepreneurial opportunities in the city.
One company at the conference was 19-month-old iPampas, founded by three former Alibaba executives with more than 10 years’ experience as senior technological specialists in big data, cloud computing and artificial intelligence.
The founders are using their expertise to help financial institutions such as wealth management firms and private equity funds to evaluate their clients more efficiently and accurately, and thus reduce risks in legal or regulatory-related issues. The company raised “tens of millions of yuan” in a pre-A round financing in April.
“I think Hangzhou has taken a first-mover advantage in the fintech industry. People are positive toward embracing new technologies. Also companies like Ant Financial attract professionals from all over the country, and offer smaller companies like us a steady supply of tech people,” Wang Dingqian, vice president of the company, told Shanghai Daily.