【正文】 pe 46 Alipay 49 Tenpay 51 Sizing the addressable market 55 Key debates for future 1: Moization 58 Key debates for future 2: Regulatory 60 Key debates for future 3: Fee petition and Mamp。 Katsunori Tanaka。 Robert D. Boroujerdi。 Timothy Moe, CFA。 Hugo ScottGall。 Adam Hotchkiss。 Elsie Cheng, Ronald Keung, CFA。 Anita Yiu and Sef Chin Acronym buster: TPV: Total Payment Value, B2C: Business to Consumer, C2C: Consumer to Consumer, B2B: Business to Business, QR code: Quick Response code, POS: Point of Sale This is the latest report from our Future of Finance series, where we explore how Tech is changing the shape of Finance. See related reports below or visit our GS360 portal for the full coverage: Payment Ecosystems, Aug 4, 2017 The socialization of finance, Mar 13, 20xx Redefining the `Way We Pay? in the Next Decade, Mar 10, 20xx Watch a video summary from the author here August 7, 2017 China: Technology Goldman Sachs Global Investment Research 3 28 China FinTech in numbers THIRDPARTY PAYMENT GROWTH $155bn $ Thirdparty payment value in China grew more than 74X from 20xx to 20xx. About 16% of that is consumption related. 56% is peertopeer transfer. (p. 2229) INTEGRATION MINDSET INTERNET LENDING $4bn $156bn Total inter loan balance outstanding in China grew more than 36X from 20xx to 20xx. But in context it is small pared to China?s gigantic financial system, at only % of total social financing. (p. 13) PRIVATE CAPITAL OWNING INFRASTRUCTURE 95 Alibaba mentioned the word ?ecosystem? 95 times in Private panies (nonstate owned) own 60% of the new centralized clearinghouse for online payments. 60% their 20xx annual report. Similar mentions are observed from other leading FinTech players Ping An, Tencent, JD, Baidu etc. For context, ICBC mentioned the word ?FinTech? or ?Inter? 22 times. (p. 13) The largest shareholders besides the Central Bank and the State Administration of Foreign Exchange are Ant Financial (%) and Tencent (%). This pares to China?s existing basic infrastructure, which are stateowned. (p. 16) INTERNATIONAL EXPANSION PAY WITH YOUR PHONE Chinese consumers can use their favorite thirdparty payment method outside of China at physical retailers in 28 countries and regions. (Alipay: 28。A: We expect fee petition to intensify and expect to see more Mamp。C 16% Ant Financial 33%1 Alibaba Group 12% Tencent 12% Ping An Group Cloud puting Alibaba Cloud 100% Alibaba Group Tencent Cloud 100% Tencent Ping An Cloud 100% Ping An Group Jcloud 100% Baidu Financial Cloud 100% Baidu Publicly listed panies Note: agreement, subject to regulatory approval. 2. By agreement, subject to regulatory approval, after JD Finance’s spinoff deal is pleted. 3. 44% equity and convertible bonds equivalent to 11% stake. All numbers are as of July 2017. Source: Company data, piled by Goldman Sachs Global Investment Research Future of Finance: The Rise of China FinTech August 7, 2017 Goldman Sachs Global Investment Research 10 Sizing the addressable market: Untapped consumer demand Thirdparty payment TAM by 2020E: Consumptionrelate d TPV: US$ Revenue/fee pool: US$11bn Inter lending TAM by 2020E: Consumer credit (excl. mortgages) balance: US$480bn SME loan balance: US$284bn Investing TAM by 2020E: Financial asset under management: US$ n We see underperated markets for underse rved consumers in three core businesses of traditional financial se rvices: payment, lending and investing… Payment: We focus on payment in the rest of this report. Whilst we estimate that the TPV of consumptionrelated thirdparty payment will reach US$ () by 2020E from US$ (Rmb13trn) in 20xx and the annual revenue/fee pool to be US$11bn (), we also highlight the importance of payment services to gain customer account relationships as well as transaction data, which in turn offer payment panies opportunities to tap into consumer lending and investing. Our analysis is based on the following key assumptions. 1) By 2020E, 68% of the retail consumption would be processed by payment panies, from 40% in 20xx. This assumes that China?s digitization of money by 2020 reaches a similar level of US in 20xx. This implies that China would need to acplish in 4 years what took US 14 years (20xx20xx). 2) We see further downward pressure on the take rate in the next few years, given the regulatory tightening, introduction of the new clearing house, and more petition from players in other industries trying to enter the payment space. We are also aware of a couple of caveats of our method. Please find the details in page 56. Lending: We estimate the consumer lending opportunity will be driven by the (still) fast consumption growth as well as the large underserved cohort including rural workers, migrant workers, 37mn college students as well as some of the blue collar workers. We forecast total balance outstanding of consumer credit (excl. mortgages) to grow from US$841bn () in 20xx to US$ (Rmb13trn) in 2020E, among which inter lending (incl. P2P and consumer finance from inter giants) to increase from US$100bn (Rmb691bn) to US$480bn (). China?s consumer credit is significantly underperated at 7% of GDP vs 20% in the US. In particular we see untapped market in 1) subprimeborrower cash and consumption lo