JD.com’s fintech vehicle has outlined five major trends it sees affecting the Chinese fintech sector in future.
He Haifeng (何海锋), a researcher with JD Data Science (formerly JD Finance), said to The Economic Observer that China’s fintech sector will continue to be a “policy market,” with regulatory policy playing an especially important role for the industry.
He sees five key trends defining the sector in future, including:
- The trend of strict regulation remaining unchanged, and regulatory innovation also ascending the agenda. “Centralised storage and administration of deposits in the payments sector, administrative inspections in the P2P online lending sector, prudential innovation of online insurance, and high-pressure strikes against virtual currencies will all continue as well as further strengthen,” said He.
- Risk prevention will remain the “priority of priorities” in 2019, following concerted efforts to tackle online financial risk in 2018.
- The establishment of regulatory systems will continue, including adjustments to regulatory systems based on feedback. 2019 will see the implementation of various regulatory standards including the “Internet Insurance Operations Administrative Measures” (互联网保险业务管理办法) and the “China insurance Service Standard System Regulatory System Framework” (中国保险服务标准体系监管制度框架). He Haifeng said that adjustments to these systems will be a more urgent matter than their actual launch.
- The creation of financial infrastructure will accelerate with reference “state capitalism” model. He points out that 2018 saw the creation of foundations for future fintech development with the launch of NetsUnion Clearing Corporation (网联) and CredLink (信联), which employed a “state capitalist” model of official guidance and market participation. The development of financial infrastructure remains an extremely important task for 2019, with the Chinese government looking to its experiences with NetsUnion and CredLink to decide how the state capitalist model will be applied in future.
- Fintech will no longer just be a “tool,” but will serve as a “carrier of greater value,” with He pointing in particular to issues in relation to the collection of user data by apps and online platforms.
In addition to the continuation of strict regulation, He Haifeng expects authorities to focus on regulatory innovation as a means of maintaining the vitality of the Chinese fintech sector.
Regulatory innovation will encompass the three areas of i) regulatory concepts and methods; ii) regulatory frameworks and iii) regulatory capacity.