Mobile pay new 'gene' of finance

Mobile payment is the "gene" of new finance and, combined with a fresh generation of financial demands, is set to generate an increasing number of "financing species," said an expert at a forum in Beijing on Tuesday.

Financial innovations have driven the industry in the past; but recent advances in technology are set to shake the industry with radical new ideas, according to Huang Zhen, law professor at the Central University of Finance and Economics.

In his remarks to the 2014 Mobile Internet Development Conference, Huang said the financial company with able to spearhead mobile payment technology will win the mobile Internet market.

The combined volume of mobile payment transactions surged 800.3 percent to 1.30 trillion yuan ($209.21 billion) in 2013, according to statistics from EnfoDesk Analysys International, an online research firm.

Alipay, the online payment arm of e-commerce giant Alibaba Group, overshadowed its peers by taking a lion's share of 69.6 percent of the market, according to EnfoDesk.

The rise of mobile payment is a result of the spillover effect of Internet penetration, according to Huang, who is also the co-founder of Internet Finance Club 1000.

More than 500 million Chinese were using mobile devices, primarily smartphones, to connect to the Internet in 2013, according to the China Internet Network Information Center. At the same time, the penetration rate of mobile Internet users rose to a record 81 percent.

Innovation is the most important form of financial reform, Huang said. China is actively touting "reform," but it should encourage innovations instead of just paying lip services, he said.

The People's bank of China, the central bank, called a halt to the virtual credit card and QR code payments earlier this year.

Meanwhile, some Chinese banks are reluctant to cooperate with Alipay, as its popular online fund, Yu'ebao, attracted more than 400 billion yuan in just eight months since its launch on June 13 last year.

"Some people said that Yu'ebao was not an innovative product, but just a mixture of functions. But look at Apple Inc's iPhone. It's also a composition of functions," Huang said. "It's no easy job to build a subversive innovation from scratch, so we should encourage micro-innovation or a combination of innovations."

Yu'ebao now has more than 100 million users, according to China Securities Journal. But its seven-day annualized returns fell to 4.71 percent as of June 12, far below its climax of 6.76 percent on Jan 2 this year.

Analysts attribute the decline to dwindling interbank lending rates, as well as the mushrooming of online wealth management products offered by other tech giants.

"Internet financing is thriving despite controversies. No matter whether you are optimistic about it or not, it will grow vibrantly and robustly," Huang said.

"You will never be the champion if you are sitting on a spectator's seat," said Huang.