Fintech to facilitate inclusive financial system establishment in China, say experts
Financial Technology (Fintech) could help build an inclusive financial system which allows any group in society to enjoy more convenient financial services by lowering the threshold and costs of obtaining financing, said Wang Zhongmin, a former vice chairman of the National Council for the Social Society Fund, recently at the Hangzhou Bay Forum.
Fintech has advantages in facilitating operational efficiency, advancing customer experience and boosting products and services updating, and innovations, which are in line with the ultimate goal of traditional financial institutions, said Ao Yifan, a vice president of the Bank of Hangzhou.
Traditional banks usually focus their services on the top 20 percent of customers including large and medium-sized enterprises as well as high-net-worth individuals. While inclusive financing propped up by Fintech could offer services for those whose credit status is hard to measure, like low-income individuals and small enterprises, said Liu Yang, dean of the Blockchain and Industrial Finance Research Institute at the China Electronic Commerce Association. “Leveraged by tremendous customer data, Chinese Fintech companies have an edge over their Western counterparts in innovation applications.”
Urs Bolt, a WealthTech and RegTech expert from Switzerland, told the China Fortune Media Group that China has a large market scale while Switzerland has superior technologies especially in the area of wealth management and regulatory technology; the two countries could work together on Fintech innovations. China could improve its regulatory technologies. For example, implemented in an appropriate way, Blockchain technologies could support the exchange of personal data for client onboarding incl. know-your-client (KYC) and anti-money-laundering (AML) checks.
He said that there could be little chance that Fintech companies would take over the traditional bank sector as banks hold customers’ accounts and bear the financial and credit risks.
“It is notable that banks are not leading technology innovations in China. However, Fintech companies are influencing banks to become more tech-oriented.” Urs said banks are supposed to cooperate with tech companies. They need tech applications to become more customer-oriented.
He said China’s traditional financial systems need further improvement in regulatory oversight for peer lending and investment product suitability as well as managing personal data with regard to KYC (know your client). He added that China could use Blockchain technologies to decentralize its financial regulations and supervision by allowing private companies to test the ground in so-called regulatory sandboxes.
Read about Urs BOLT: China and Switzerland have great potential in financial technology cooperation on the Chinese language on the following link.