Chinese Bankers Flag Greater Regional Coordination and Fintech Adoption Following PBOC Monetary Policy Report

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China’s banking sector say it will heed calls from the Chinese central bank for greater regional coordination and fintech adoption made in its most recent monetary policy execution report.

The “2021 Q2 China Monetary Policy Execution Report” (2021年第二季度中国货币政策执行报告) released by the People’s Bank of China (PBOC) on 9 August called for “the effective implementation of re-lending policy in provinces where lending growth is slow, to help in achieving coordinated regional growth.”

The Report also called for “strengthening the application of fintech and continually raising the ability to service micro, small and medium-sized businesses,” as well as “driving financial institutions to optimise internal resource allocation.”

Members of the Chinese banking sector have since flagged the adoption of measures to support the latest raft of prescriptions from PBOC.

“For the banking sector, it is necessary to make full use of re-lending policy to unleash low-cost funds, and expand support for coordinated regional development,” said Lou Feipeng (员娄飞), researcher with big six state-owned lender Postal Savings Bank of China (PSBC), to PBOC’s official news outlet.

“Banks must also effectively perform work to survey local sectors and clients, and support the development of high-quality sectors and high-quality enterprises.”

Lou also pointed to the key role that fintech will play in advancing China’s push for greater financial inclusion.

“The banking sector can employ fintech to cater to the financial services needs of micro-and-small enterprises in areas such as payments and settlement and investment and wealth management,” Lou said.

“They can use the development of online loan products to provide financial services to micro-and-small enterprises.”

Wen Bin (温彬), chief researcher with China Minsheng Bank, also flagged efforts to coordinate with central government policy.

“Macro-policy must effectively perform cross-cyclical adjustment and policy dovetailing,” Wen said. “It must continue to expand the vigour of structural support for key areas and weak linkages such as the manufacturing sector, micro, small and medium-sized enterprises; tech innovation, financial inclusion and green finance.”

Zeng Gang (曾刚), deputy-chair of the National Institution for Finance & Development (NIFD), anticipates changes in the way that Chinese banks make use of fintech in response to shifting policy emphases.

“For some time banks have used fintech to obtain large volumes of customers, and create operating platforms for industry supply chains,” Zeng said.

“In future, the banking sector will focus on the unique demands of micro, small and medium-sized enterprises, make use of fintech to establish entirely new service models and scenarios, and thus achieve the targets of more accurate client portraits, more accurate risk prevention and control, and more efficient and cheap funds.”

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