Fintech Must Become the Biggest Driver of Chinese Financial Inclusion: China’s Banking Regulator


A senior official from China’s banking regulator has called for the greater use of fintech to drive financial inclusion in the Chinese economy.

Wang Chaodi (王朝弟), chief inspector of the China Banking and Insurance Regulatory Commission (CBIRC) said that the authority would continued to urge banking and insurance institutions to accelerate the use of fintech and vigorously develop financial inclusion, so that the broadest mass of the people can fairly share in the fruits of financial reform and development.

“It is necessary to promote the deep integration of fintech with financial inclusion, so that the ‘key variable’ of fintech can truly become the largest growth factor for the high-quality development of financial inclusion.”

Wang made the remarks on 25 February, at the Pearl Bay Financial Summit (2023) (明珠湾金融峰会(2023)) held by the China Financial 40 Forum.

“In recent years, the China Banking and Insurance Regulatory Commission has strengthened regulatory guidance and fintech planning.

“At present, fintech has comprehensively increased the comprehensive empowering capabilities of financial inclusion, and the popularization of digital payments, and in particular mobile payments, has enabled China to achieve full coverage of basic financial services in urban and rural areas.

“China’s adult account ownership rate and bank off-counter transaction rates are already over 90%, while China ranks first in the word in terms of mobile payments penetration and scope.

“Banking institutions use big data to carry out intelligent risk control, and provide technical support to nearly 30 million small and micro enterprises, while digital insurance significantly expands insurance coverage and achieves online conversion. China has successfully embarked on the path of financial inclusion with Chinese characteristics, and has achieved internationally recognized achievements.”

Wang nonetheless highlighted a trio of problems that faced by efforts to use fintech to drive Chinese financial inclusion, including:

  1. Uneven regional development. “Fintech foundations, talent and technological applications are better in the eastern coastal regions than in the central and western regions, the cities are better than rural areas, and large institutions are better than small and medium-sized institutions. Economically and socially underdeveloped areas are often areas with a shortage of fintech talent, insufficient fintech support, and insufficient supply of financial resources.
  2. System standards that remain inadequate. “The relevant requirements and standards for fintech to serve the development of inclusive finance are scattered throughout different laws, regulations and policies in various fields. Most of them focus on solving a single problem or clarifying a single technical standard, with a lack of systemic norms.”
  3. Technological risk is an increasing concern. “Ethical issues such as the digital gap and algorithmic discrimination have triggered ongoing social concern. Risks such as data abuse, privacy leaks, and network fraud not only damage the rights and interests of consumers, but also affect industry fairness and financial security.”

Wang also outlined key emphasis and goals for CBIRC in future with regard to the development of fintech, including:

  1. Adhering to a people-oriented fintech principle. “Guiding banking and insurance institutions to adhere to the people-centered development concept, return to the original purpose of finance, firmly establish the concept of responsible finance, vigorously promote digital and intelligent transformation, strengthen the synergy and linkages of banks, securities, and insurance, and increase the key areas and weak links of inclusive finance. Better satisfy the financial needs of the majority of ‘long-tail customers,’ make full use of modern information technology, establish multiple online and offline contact point, strengthen scenario integration and ecosystem integration, and promote the establishment of a financial inclusion service mechanism with sustainable business, affordable costs, and controllable risks.
  2. Laying a solid foundation for fintech development. “Increasing the development of infrastructure such as data storage centers, big data platforms, intelligent computing centers, and deep learning platforms; focusing on underlying key core technologies, strengthening the research and development of cutting-edge technologies, promoting China’s fintech to take the lead in the new round of technological revolution and industrial transformation, and seizing the initiative. Standardizing the collection and usage of data, accelerating the establishment of systems in terms of data rights confirmation, circulation, transaction, income distribution and governance, increasing the protection of intellectual property rights, and severely cracking down on infringements, theft, and illegal usage.
  3. Strengthening the prudential supervision of fintech. Zhaodi believes that the essence of financial technology is finance, and that China must adhere to the basic principles of licensed financial operations and franchise operations, as well as adhere to the principle of the regulation of all types of financial activities in accordance with the law. “We should not use the banner of innovation to engage in disorderly expansion and evade regulation…we must continue to enrich regulatory methods and means, and raise the ability to to engage in thorough regulation.[We must] uphold both regulation and development, promote and accelerate the improvement of fintech laws and regulations, standardize the use of artificial intelligence in finance, and urge banking and insurance institutions to optimize assessment and incentive mechanisms to ensure that financial inclusion for agriculture, small and micro businesses and new urban residents will further expand coverage, increase financial products, improve service levels, and reduce operating costs.
  4. Place greater emphasis on data security. “Security is no small matter. Financial data security relates to national financial security, economic security and national security, and is an important part of national security. Banking and insurance institutions should build more effective protection mechanisms, respect the right to privacy of customers, prevent data leakages and abuse, and effectively protect thepersonal information security of customers. It is necessary to strengthen data information security management, establish data security strategies, conduct data risk assessments, use encryption and power control technologies, comprehensively strengthen financial data information protection, and maintain national security and financial stability.”