Financial technology, or fintech​, is taking off in a huge way, particularly in China, where Alibaba Group Holding Ltd. (BABA) and Tencent are poised to control half if not more of the fintech market.

That’s according to new research from JPMorgan, which according to Barron’s, said the fintech market in China could grow 44% a year, reaching $67 billion in revenue by 2020. Of that, JPMorgan analyst Katherine Lei says Alibaba and Tencent combined could control 50% to 60% of the market, which means they get $326 billion to $391 million added to their current market capitalizations. That, noted Barron’s, is with an assumption the two stocks trade at 25 times their 2020 earnings forecasts. Put it another way: Alibaba and Tencent stocks could increase another 65% to 78% thanks to fintech, Barron’s noted.

Digital Wallets Go Deep

According to JPMorgan, what will drive a large part of the fintech market in China is online payments, with the Wall Street firm saying online payment companies in China may see their revenues increase 42% each year to 2020. Alibaba is already a player in digital payments with its AliPay app. Tencent has its TenPay app. Combined the two have 90% of the market. Alipay, the Alibaba e-wallet service has 450 million registered users. (See also: Alibaba's Jack Ma Coins "TechFin" for Alipay.) 

The other driver of the fintech market in China is online lending to consumers, which JPMorgan said will also grow through 2020. While Alibaba doesn’t have an online consumer lending platform, analyst Lei said it wouldn’t be too hard for it to launch one. “As the risk assessment and loan pricing require sophisticated analysis of user behavior data, we believe large ecommerce players inherently have an advantage in this field given their transaction data,” wrote Lei. “We note major e-commerce companies in China such as Alibaba (Ant Financial), JD  and Vipshop (VIPS) are actively incubating their consumer loan initiatives, not only to tap into the opportunity in this fast-growing market but also to boost transaction value on their e-commerce platforms. In addition, Tencent through its JV ‘WeBank’ also entered into this market in the recent past.” Ant Financial is the financial arm of Alibaba.

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