Industry experts and financial-technology service providers called for the upgrade of homegrown financial-technology capabilities to further elevate the financial sector and boost the digitalisation of other industry sectors.
The insurance industry is likely to be a forerunner in terms of digital transformation. The operation efficiency and sophistication level of service in the insurance sector should be further enhanced despite initial progress in the realm, as digitalisation is becoming a prerequisite for all insurance service providers. There is also a basic demand to leverage financial-technology measures to counter potential cybersecurity risks, as large amounts of data are leveraged for daily operations and business decisions.
The digitalisation of financial services would help resolve financial imbalances and further serve underfinanced groups. The digitalisation of financial services offers tailor-made solutions for small and micro businesses and helps mitigate risks for commercial lenders.
Fintech solutions should focus more on small and micro businesses at the grassroots level. Fintech service players serve a positive role to help avoid the mismatch of financial resources, and they should stick to serving the grassroots financial and consumption market in the long run.
– Zhang Jun, dean of the Fudan University School of Economics
Technologies have already helped expand wealth management products’ customer base and enhanced its risk-control schemes. China’s asset management industry was valued at 12.1 trillion yuan (US$1.89 trillion) in 2020, but the sector still lags behind in terms of predictive algorithms to mitigate risks. Further efforts in smart data technologies are needed to meet risk control and regulatory compliance requirements.
Moreover, China plans to build pioneering fintech hubs nationwide, focusing on the research and development of blockchain technology and digital currency to boost investment in financial infrastructure. 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. Other cities that China aims to develop as global fintech hubs are Shanghai, Shenzhen in Guangdong province, and Hangzhou in Zhejiang province.
The People’s Bank of China (PBOC), China’s central bank, 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 (AI) 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. The fast progress will give the PBOC a leading position among its global peers in officially launching a digital currency. 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.
