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FinTechs belonging to this category provide identification services, which are required for most banking services.
Introduction
Attitude of the country towards identification services
Although banks and other financial institutions still rely on traditional identification methods during the offline services, intelligent identification methods such as fingerprint recognition and face recognition are becoming more and more popular for online services. Currently, with the digitalisation in the financial industry, intelligent identification is widely used in customer identification (KYC), account opening and payment settlement for online services.
Legal affairs
Obligations and requirements to provide identification services
Currently, FinTechs being engaged in online identification technology should be a company incorporated in China and obtain a business license with the proper business scope. Beyond that, there are no special requirements or obligations.
Separately, some of the KYC service providers might also be involved in the developing of software, application of cloud computing. If so, they shall apply for the license of SAAS, ICP, and other internet service-related licenses accordingly.
Additional comments regarding the legal situation for identification services or what FinTech’s must be aware of in this business area
With the increased application of biometric technologies such as face recognition in the identification, China has issued a series of laws and regulations in relation to the protection of personal information. Therefore, FinTechs in this area shall be cautious about their acquisition, use, and protection of personal information in order to maintain compliance.
Separately, many FinTechs in this area are actually engaged in producing the encryption products before entering into this area. Manufacturing or selling encryption products are subject to the license issued by the encryption authority in China. If the identification services are provided through specific encryption products, such producers of encryption products shall obtain an encryption license. However, if the services are provided online to the banks, no specific license is required, except for the business license.
Economic conditions
Market size for identification services and biggest companies in this business area
China's face recognition market size has reached RMB9.58 billion (equivalent to approximately USD1.5 billion or EUR1.36 billion) in 2019, with a compound annual growth rate of 166.9% during the period from 2016 to 2019, which shows the huge market size of China's overall identification services.
In China, the well-known identification companies include Beijing Sensetime Technology Development Co., Ltd., Beijing Kuangshi Technology Co., Ltd., Aliyun Computing Co., Ltd., Baidu Cloud Computing Technology (Beijing) Co., Ltd. etc.
Additional comments regarding the economic situation for identification services or what FinTech’s must be aware of in this business area
Intelligent identification is becoming more and more widely used in financial scenarios, and at the same time, the state has strengthened the supervision of personal information and issued the personal information protection law in Year 2021, so FinTechs providing identification services must pay attention to their own compliance operations in the rising financial demand.