ANALYZING CHINA’S FINTECH

INDUSTRY FROM THE

PERSPECTIVE OF ACTOR–
NETWORK THEORY

YONGWOON SHIM, DONG-

HEE SHIN
 WHAT IS FINTECH?
Portmanteau that combines the words “financial” and “technology.”

Rapid development of information and communications technology is

transforming the entire industry landscape, heralding a new era of
convergence services.

China is experiencing an unprecedented level of convergence between

finance and technology.

China has long been regarded as one of the countries whose financial
system was underdeveloped and suffering from a poor institutional
system.
 fintech companies are
rapid growth of Internet- expanding their business
INTRODUCTIO based services has had a scope beyond online
payment systems into
profound impact on the
N traditional financial sector. advanced financial services,
from money market funds
(MMFs) to lending services,
online funds, and Internet-
based private banking
few studies have been “how can technology and services.
conducted to analyze the policy be mobilized to
fintech market and form an actor network for
policies in the Chinese promoting the fintech
context. industry in China?” China regarded as
one of the
countries whose
financial system
traditional Chinese financial
was
China has become home system has been gradually
underdeveloped
to some of the largest transforming into a cutting-
and suffering from
fintech companies in the edge system. to replace offline
a poor
world and has a strong financial systems
institutional
presence of fintech system
startups.
 THEORETICAL FRAMEWORK
1.1 Actor–network Perspective (ANT)
 ANT is designed to understand the processes of technological innovation. It aims to integrate technology into social
processes through an interpretative actor– network lens (Latour, 1987; McBride, 2003)

 ANT aims to explain how heterogeneous actors come together to form networks. Therefore, “actors” in ANT are not just
humans but non human such as individuals, groups, texts, and technical artifacts. ANT involved with the development of a
new technology consists of all the non-human and human actor that influence action and decision-making in the
development process.

 ANT provides a very powerful tool to better reveal the complexities and dynamics of a technology driven industry.

 ANT describes a process in which heterogeneous elements are woven together and assembled into reality (Young,
Borland, & Coghill, 2010). Therefore actors are not structured into any system, but act as a coordinated network
 1.2 GENERAL REVIEW OF THE FINTECH INDUSTRY
Fintech Industry
• Fintech is an emerging financial services sector that
includes third-party payment, MMF, insurance
products, risk management, authentication, and peer-
to-peer (P2P) lending (Barberis, 2014).
• Internet-based technology developing rapidly and
dynamically, offline industry is integrating more and
more with online technologies. The financial sector has
been relying on technology to bring new services to
market for some time now.
• Development of fintech is due to the convergence of
offline financial services with mobile, social network
services (SNS), big data, and cloud technology.
China’s financial market and payment system
• With regard to e-commerce, China’s e-commerce industry
is supervised by five government departments: Each
department focuses on its own area to promote the growth
of e-commerce
• Third-party payment (TPP) is the core enabler of e-
commerce development. TPP Refers to payment service
providers that are independent from merchants and banks.
Chinese customers prefer cash payment, which has made
China’s e-commerce unique.
• Third-party payments providers, often called payment
service providers (PSPs), provide an easy and secure way
for consumers and businesses to send and receive
payments in a cost-saving fashion
 1.3 ANALYSIS

o Two focal actors has been identified, though it would be common that there is one
focal actor in an actor network.

o The first focal actor is TPP companies. Alibaba and Tencent in China are the
representative actors. In particular, Alibaba, which started as an e-commerce
company, is now one of the biggest fintech companies in the world.

o Another focal actor is traditional bank payment companies.

o Union Pay is a representative actor because it is the only card payment company in
China before the appearance of TPP companies and a competing actor against TPP
companies. (important actors in this analysis )

o The Chinese central government is a crucial actor, as the government plays a crucial
role in the development of the fintech industry. Consumers (or users) are also
important actors in that they play a very significant role for any acceptance and
usage of any technology. And also fintech itself that is non-human actor critical in
the overall translation process.
 FINANCE MEETS TECHNOLOGY:
TECHNOLOGY AS AN ACTOR

Eg: Alibaba provided a technological verification system through which third

parties guarantee the transaction process between sellers and buyers.
POLICY IMPLICATION
CONCLUSION
GROUP OPINION
 REFERENCES
• Shim, Y., & Shin, D. H. (2016). Analyzing China’s fintech industry from
the perspective of actor–network theory. Telecommunications Policy,
40(2-3), 168-181.
• Lee, T. H., & Kim, H. W. (2015, August). An exploratory study on
fintech industry in Korea: crowdfunding case. In 2nd International
conference on innovative engineering technologies (ICIET’2015).
Bangkok.