There is a quiet revolution being held in China, and at it’s head is none other than the co-founder of Alibaba, Jack Ma. This revolution takes aims at the traditional banks and financial institutions of the nation in an effort to resolve the age-old issue of credit bottlenecks with regards to lending to small businesses. Many have recognised that this is an issue that is holding back the world’s second largest economy, but little has been done thus far to resolve the issue.

With the rise of fintech in China, Ma’s four-year-old MYbank has lent 2 trillion yuan ($290 billion) to nearly 16 million small companies. The borrowing process is quick and efficient, taking under five minutes and involves zero human bankers.

The fintech boom in China has turned the nation into an e-payment juggernaut. Fintech is also leading the charge with regards to changing how banks interact with companies that drive most of the nation’s economic growth.

As Mybank and its peers crunch the raw data from payment systems, social media, and the like, banks are slowly growing more comfortable with smaller borrowers who they previously shunned in favour of the state-owned giant mega-corporations.

For China’s US$13 trillion economy, which expanded at its weakest pace since at least 1992 last quarter, the implications are immense. Non-state firms, mostly small businesses, account for about 60 per cent of growth, employ 80 per cent of workers, and have been disproportionately squeezed by a more than two-year government crackdown on shadow lenders.

“Small and medium enterprises are really the boiler room of the economy,” said Keith Pogson, a senior partner in charge of banking and capital markets at Ernst & Young LLP in Hong Kong. “It used to be a segment that banks thought was too difficult and too risky. But now they run their model and work out what the risks are so they feel more comfortable.”

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