Fintech development in China provides inspiration for the world
Editor's note: Lin Yang is a senior manager from a leading commercial bank in China, whose work and research experiences cover financial technology (fintech), personal banking, digital banking, consumer financing, inclusive financing, and so on. The article reflects the author's personal opinions and not necessarily the views of CGTN.
In recent years, Chinese financial institutions and technology companies have fully embraced new technologies such as artificial intelligence (AI), big data, and blockchain. This has continually expanded the scope and depth of China's financial services, and helped promote the rapid development of the real economy and green economy. These practices could provide valuable inspiration for the global financial industry.
Improving people's well-being
The areas of personal financial services, image recognition, speech synthesis, virtual reality and augmented reality are among the latest technologies adopted by financial institutions, allowing for barrier-free services for vulnerable groups. With the help of these technologies, financial institutions have successfully reduced the digital divide and created a more inclusive and friendly financial service system. Various services have become more accessible to vulnerable groups, such as the rural and older population.
In addition, China has accelerated the digital transformation of public services across different industries by promoting the integrated management of water, electricity, gas and other public utility payments. Customers can pay different bills altogether with just a click on their cell phones. This allows hundreds of millions of rural residents to enjoy higher-quality and more convenient services.
The convenience brought by fintech was most felt during the COVID-19 period. Financial institutions have actively adjusted their service models to provide online and contactless services. Customers can conduct money transfers, service inquiries, insurance purchases and wealth management on their mobile apps or online banks without having to pay a visit to the bank or insurance company. These service models have not only ensured the health and safety of customers but also the continuity and convenience of financial services.
'Precision drip irrigation' to SMEs
In terms of the small and medium-sized enterprise (SME) financing, Chinese financial institutions have taken full advantage of the multi-dimensional and massive data resources to quickly identify their financing needs. Through optimizing online banking processes and credit evaluation models for small and micro companies, private enterprises and self-employed businesses, Chinese institutions have successfully freed up financing collateral, while ensuring the transparency and fair value of assets. Through providing more credit support to the SMEs, these measures have promoted the development of private enterprises.
Fintech has also facilitated financing for agricultural businesses. Financial institutions employ big data to quickly identify rural financing needs, and improve risk control models and risk pricing mechanisms by analyzing data related to agricultural supply chains. By reducing financing costs and ensuring precise credit granting, these innovative service models have effectively promoted the modernization of agricultural industries.
In terms of risk management, Chinese financial institutions have adopted blockchain and big data technologies to effectively integrate logistics, capital flows and information flows in the supply chain. By strengthening the verification of trade background authenticity, they have achieved effective credit transmission of core enterprises along the industrial chain. This innovative risk management model has broken the reliance of the traditional financing model on real estate collateral for credit approval.
Additionally, through comprehensive monitoring and analysis based on Internet of Things (IoT) technology, financial institutions can accurately grasp information such as the storage status of pledged assets, changes in market value and core transactions, enabling direct management of economic activities within the supply chain.
Boosting the development of green and low-carbon economy
Chinese financial institutions have also actively explored the use of fintech in the area of green finance, in collaboration with technology companies, to construct a green financial system. Through innovation, digital and green financing are playing an important role in achieving the goals of "carbon peak" and "carbon neutrality."
By adopting technologies such as neural networks and machine learning to construct corporate green rating models, financial institutions can improve their access to companies' environmental and climate information, and accuracy in assessing these kinds of information, enhancing their ability to identify green projects and assets.
To facilitate green development, IoT and big data technologies have also been used to collect and analyze green information, strengthening dynamic monitoring and precise calculations of the performance of green investment, environmental benefits and asset data to guide more capital toward green sectors.
Improving people's well-being, boosting the SME economy, providing inclusive finance to reduce poverty and achieving sustainable development—these are the subjects on the agenda of most of the economies around the world.
Through proactive application of new technologies and innovative service models, the development of fintech in China has successfully expanded the scope of financial services, upgraded service levels, enhanced service capabilities and market competitiveness for financial institutions. China's practices and experiences will serve as a leading example for the global financial industry.