Sept. 25 (NBD) – Following in the footsteps of global financial titans like Goldman Sachs, China's securities firms are harnessing the power of financial technology (fintech).

Chinese Investment bank China International Capital Corporation Limited (CICC) (03908.HK) announced late Tuesday that it inked an agreement with Tencent Digital (Shenzhen) Ltd., an indirect wholly-owned subsidiary of Tencent Holdings Limited (00700.HK), to establish a technological JV.

The JV has a registered capital of 500 million yuan (70.7 million U.S. dollars), with CICC holding 51 percent stakes and Tencent Digital 49 percent, according to the announcement.

Photo/Shetuwang

The fintech JV will provide technological platform development and digitalized operational support services to help CICC accelerate the transformation and scalable development of its wealth management business.

In the future, the new entity may extend its services to other financial institutions, said the announcement.

According to Hong Jinping, an analyst from Huachuang Securities, partnering with Tencent could improve CICC's efficiency in wealth management through the combination of the tech giant's extensive customer base and the broker's target user portrait.

National Business Daily (NBD) noticed that CICC and Tencent's tie-up can be traced back to 2017, when Tencent indirectly bought a 4.95-percent stake in CICC at about 2.9 billion Hong Kong dollars (370 million U.S. dollars), becoming the third largest shareholder of the securities firm. Since then, CICC has maintained a strategic cooperation relationship with the tech titan in the financial services sector. 

The fintech industry is boasting huge potential. A report released in May 2018 indicated China's fintech market had reached 30 billion yuan and is expected to stand at 110 billion yuan.

NBD found a number of securities firms made fintech a focus of future development in their financial reports for the first half of 2019, and GF Securities, Guotai Junan Securities and Huatai Securities have being made efforts to enhance smartization and digitalization.

A development plan released by China's central bank in late August this year said that China will be devoted to driving the fintech development between 2019 and 2021, providing a shot in the arm for the cooperation between securities companies and Internet firms.

Email: lansuying@nbd.com.cn