China has made continuous efforts on improving the financial regulatory system in the face of new challenges posed by financial technology. The Governor of the People’s Bank of China (PBOC) urged disconnecting improper links between financial information and business information to prevent monopoly in the closed-loop of data, network and financial activities.
In recent years, China has seen continuous innovation in fintech, lowering costs and enhancing the efficiency of financial services in the country. For instance, supported by large technology firms, the penetration rate of China’s mobile payment services has reached 86%. Moreover, the digitalisation of credit services helps to better meet the financing needs of small and micro-companies.
However, the development of fintech has also brought new challenges, including conducting financial business without licenses, launching unfair competition by abusing market dominance and the excessive collection of consumer data.
In the next stage, China will continue strengthening the supervision of payments. Measures should be taken, including advancing the regulation of financial holding companies, as well as exploring more convenient data transactions and more reasonable data use, on the basis of ensuring privacy and data security.
China will also maintain an innovative and prudent approach in embracing new challenges in fintech. As the off-counter transaction rate of Chinese banks has exceeded 90% and financial services are highly dependent on the internet, cybersecurity needs to be highlighted. Fintech has developed rapidly in China and the digital transformation of financial institutions accelerated with more products and tools, improving the efficiency of financial services. China has also learned lessons in handling challenges brought about by fintech.
Moreover, to boost investment in financial infrastructure, China built pioneering fintech hubs nationwide, focusing on the research and development of blockchain technology and digital currency. According to a report issued at the forum, Beijing ranks top among eight cities around the world, thanks to its huge consumer market, advanced technology application and fast development of the fintech ecosystem.
PBOC has published a three-year fintech development plan. So far, some results have been achieved and major projects are proceeding as scheduled. Issuing the central bank digital currency was included in that blueprint, which also involves developing fintech services based on blockchain, big data, artificial intelligence and financial security technology. The three-year plan aims to promote China’s fintech industry to an international leading level.
The basic technology framework of the digital currency designed by the central bank, has almost been completed, with sophisticated top-level design, and trials are ongoing in some application scenarios. Regulations on fintech technology development will focus on protecting personal privacy, expanding fintech services to benefit more individuals, and streamlining regulations.
As reported by OpenGov Asia, China has urged a digital transformation in the financial industry in response to the increasing uncertainty from the COVID-19 pandemic. The volatility has also created unprecedented opportunities for digitalisation across the world, and the financial industry continues to explore openings to embrace technology and uncover new areas of growth.
Chinese fintech strategies combined with current digital transformation trends will likely produce the following footprints:
- Fintech industries will be more online, open, and intelligent: Industries will convert more traditional services from offline to online and build an omnichannel strategy by tapping into emerging channels. They will apply artificial intelligence (AI) applications to online businesses with matching needs from both retail and corporate customers. They will create more data streams and use cases to strengthen client relations.
- New technologies and applications will be introduced to improve operational efficiency with emphasis on data factors: Industries will focus on the introduction of smart operations, smart risk management, and smart customer relationship management (CRM) with the integration of low-code SaaS applications. They deploy blockchain applications to build and expand a trusted financial service environment, piloting applications such as traceability, authentic right, trusted execution environment, and multi-stakeholder transactions.
