SINGAPORE/HONG KONG: China has overtaken the US and UK to become the world's leading centre of FinTech, thanks in part to the innovative approach taken by the country's top e-commerce players, a new report has revealed.

DBS Bank and EY, the professional services firm, said the unprecedented levels of FinTech adoption in China is being fuelled by unmet consumer needs, ready access to capital, as well as favourable government policies and regulations.

China's lead is also being facilitated by the sheer size of the market opportunities present in the financial services sector and, with GDP of £10.9tr in 2015, the country has a vast consumer base with new spending power, yet it has been under-served by the traditional banking system.

"The speed at which China's FinTech landscape has developed is truly remarkable," said Neal Cross, Chief Innovation Officer at DBS. "It's gotten this far because China's landscape has operated in a sandbox-like environment conducive for FinTech to thrive – a strong domestic market, coupled with a constant push for innovation and experimentation driven by leading giants, unhindered by international influence."

He added that leading Chinese FinTech companies have only recently begun to take centre stage at a global level, but this will be an ongoing trend in the years ahead.

"We can expect China's FinTech ecosystem to have a wide-ranging impact on global FinTech development," he said.

James Lloyd, the FinTech leader at EY Asia-Pacific, agreed that Chinese FinTech development is mostly characterised by the scale of unmet needs in the country.

"In addition, new providers are typically not constrained by the legacy infrastructure or regulations present in more developed markets," he added.

"China's unique mix of rapid urbanisation, massive (and underserved) market, e-commerce growth, explosion in online and mobile phone penetration, and customer adoption willingness have created a fertile ground for innovation in commerce, banking and financial services more broadly."

To give some idea of the scale of the trend in China, DBS and EY revealed that 40% of Chinese consumers use new payments methods compared with just 4% in Singapore.

In addition, more than a third (35%) use FinTech to access insurance products compared with 1%-2% in many Southeast Asian markets. There are also significantly higher rates of FinTech participation in wealth management and lending.

Data sourced from DBS, EY; additional content by Warc staff