China’s New Fintech Report Calls for Innovation to Better Service Real Economy

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A new report on the state of China’s fintech sector has called for upcoming innovations to focus on better servicing the real economy.

The “China Fintech Operating Report (2018)” (中国金融科技运行报告(2018)) said that fintech innovations must highlight “servicing the real economy,” as well as support national strategic sectors or weak sectors while satisfying the diversified needs of consumers.

The report was released by the Fintech Research Center of the National Institution for Finance & Development (国家金融与发展实验室金融科技研究中心/ NIFD) in conjunction the China Fintech 50 Forum (金融科技50人论坛/ CFT50).

Yang Tao (杨涛), vice chair of NIFD and CFT50’s chief economist, said that the influence and impact of technology upon human society has never been as strong as it is today, and that the mission of fintech should be to correct the various “distortions” affecting financial development, and achieve “optimised integration of fintech and systems.”

“While [fintech] is a double-edged sword, with effective guidance it can provide completely new paths for resolving existing problems.”

With regard to the development prospects and directions of fintech, report makes the following key points:

i) The principle of risk control must be upheld.

While the integration of finance and information technology will bring even innovations with respect to products, organisations and markets, this will inevitably entail greater risk and uncertainty.

“[We] should avoid excessive pursuit of high risk innovation activities, and favour on more stable innovation.”

ii) The “blue sea” of fintech development in the near future will lie in how to better support risk prevention and financial security.

At the regulatory level this will involve the use of technologies such as big data for prompt control, monitoring and handling of risk.

At the industry level new technologies can be used to achieve information transparency and optimise the comprehensive risk control mechanisms of institutions or platforms.

At the product level, new technologies can be used to support risk control products such as insurance policies or guarantees.

iii) Heavily focus on using fintech to support the development of small and medium-sized institutions.

“In the long-term, amidst constantly intensifying market competition, small and medium-sized institutions must achieve diversified competition, which will entail the use of fintech.”

iv) Truly employ the optimisation and expediting role of technology.

According to the report fintech involves using new technologies to upgrade and improve existing financial systems and infrastructure, providing integrated technological solution plans to financial activities that are based upon open platforms.

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