The first quarter of 2019, India recorded $285.6 million raised for FinTechs start-ups, while in China, it has reported shrinking 87.6 percent year-over-year to $192.1 million during the same period, says a new report from data provider CB Insights.  In this period, India overtook China to become Asia’s top fundraising hub for financial technology. In terms of the number of deals, both countries clocked in 29 FinTechs deals. This is interesting form another perspective because just three quarters ago, China saw its height of 76 deals. It would seem there is a drastic cool down in investor sentiment in the country.

This drop in the BFSI tech-funding environment in China has happened immediately after tightening of regulation around online lending, CB Insights has observed. This process has been rolling over the past few years, as China has been enforcing a number of measures to control financial risks. This has been due to its weaker and online lending industry. Peer-to-peer lending has been the top target in a continuous line of government crackdowns.

Since this kind of lending is about access to a loan for individuals who find it difficult to get loans otherwise, the lack of maturity of the credit system has created a much higher risk for fraud.  As regulations increasingly became tighter, a large number of peer-to-peer lending sites shut down, and according to estimates by Shanghai-based research firm Yingcai, the end of this year will see only about 300 such sites, with controlled activities.

Ironically, the huge number of its unbanked and underbanked consumers and enterprises also drives the rise in India’s FinTech numbers and growth of the entire lending space. This is driving start-ups to wedge in smaller spaces, and very successfully so. The increased finding is a driving factor of this hectic activity and the result of the growth of this market.

Another interesting trend in China is that of crowdfunding for serious diseases, CB insights observed in its report. This is another step clearly trying to fill a gap in the deficient traditional lending industry. Despite the national public scheme that covers most Chinese people, some medical bills can be financially crippling.

Therefore, this is a fast-growing initiative, dominated by two camps, very interestingly, from competing brands. Shuidihuzhu, (which means water drop mutual help in Chinese), is one player and it is majorly funded by Tencent.  The app uses Tencent’s billion-user WeChat messenger to sign up members and there are claims that it has attracted 78.8 million users, with payouts amounting to almost 440 million Yuan ($65.34 million) with more than 3,100 families as beneficiaries so far. The competitor- Xiang Hu Bao (mutual protection in Chinese), is run by Alibaba’s affiliate e-wallet Alipay. Since its launch in September 2018, it claims to have acquired over 50 million users. In December 2018, it had over 1 billion annual users worldwide and now the goal is to acquire 300 million users by 2021, by reaching out to low-income groups who cannot afford the premiums.