Expert Opinions｜New Plan Promotes Fintech Accumulation

On December 31, 2021, the People's Bank of China issued the “Fintech Development Plan (2022 to 2025)” (hereinafter referred to as the “Plan”), which clarifies the vision, principles and key tasks of fintech development until 2025. In recent years, the People's Bank of China, together with various parties, has introduced a series of basic regulatory rules, and taken multiple measures to guide the financial industry to use digital technology to empower, effectively avoid Internet financial risks, and promote the orderly development of fintech standards. The “Plan” is the general program for the development of fintech in China for the next four years. Under the guidance of the “Plan”, China's fintech will comprehensively move from a “pillar and pillar” to a new stage of “building momentum” to achieve leaps and bounds in improving the overall level and core competitiveness of fintech.

Dong Ximiao, part-time researcher at the Institute of Finance, Fudan University

In August 2019, the People's Bank of China issued the “FinTech (FinTech) Development Plan (2019-2021)”. The publication and implementation of this leading document gradually subsided the chaos and noise of the market in the past, and strongly promoted the healthy and orderly development of fintech. The sudden COVID-19 pandemic in 2020 became a “litmus test” for the level of development of fintech. Relying on the advantages of fintech accumulated in the early stages, some financial institutions and technology companies have innovated online “contactless” financial services, and at the same time used remote online office to reduce offline contact and ensure that the level of basic financial services does not decline, effectively supporting the prevention and control of the epidemic and economic recovery. In the past two years, financial management departments have strengthened financial infrastructure construction through fintech application pilot projects, digital transformation partnership initiatives, fintech empowerment rural revitalization demonstration projects, and comprehensive financial data application pilots, promoted pilot fintech innovation supervision, and created a fair and reasonable competitive environment. The introduction of laws, regulations and departmental regulations such as the “Data Security Law”, “Personal Information Protection Law”, and “Measures for the Administration of Credit Reporting Services” has laid the institutional foundation for the steady and far-reaching development of fintech. Financial institutions and technology companies are working together with the fundamental purpose of empowering the real economy, speeding up system architecture upgrades and product service innovation, improving the availability and inclusiveness of financial services, and further maintaining integrity, innovation and compliance development in fintech. Overall, since 2019, China's fintech development has shown four characteristics: first, the level of sustainable development of fintech has continued to improve, and integrity and innovation have become the consensus of the fintech industry, and the “technology for good” concept is being implemented; second, the application of technology is safer and more controllable, the technical architecture is being transformed from a centralized to distributed architecture, and the adaptability, security and stability of technology products are constantly being enhanced; third, the benefits of financial inclusion have been remarkable, and the integration of finance and technology has accelerated; 4. Government, industry, academia, and research have made concerted efforts to establish a mutually beneficial and win-win multi-party cooperation mechanism and broaden the boundaries of the financial service ecosystem. It should be said that China's overall competitiveness in fintech is already in a leading position in the world, on the same level as the US and the UK. Fintech is technology-driven financial innovation, and technology is often a “double-edged sword.” Over the past period, although China's fintech development has achieved remarkable results, there are still some shortcomings and problems. From the perspective of data security, some institutions have problems such as illegal acquisition of user data and information leakage, and data security, privacy protection, and consumer rights protection need to be strengthened urgently; from the perspective of financial risk, technology changes the mechanism of financial operation, making financial risk more hidden, complex, and spillover, making risk prevention and control more difficult; from the perspective of technological innovation, current fintech innovation is mainly at the application level and obvious homogenization, and there is still insufficient attention and investment in basic software and hardware research and development involving the underlying layers; from the perspective of technological ethics, digital technology is developing rapidly while creating a “digital divide” and “algorithm discrimination”, will Some older people and other vulnerable groups are excluded. On the basis of reviewing the development of fintech during the 13th Five-Year Plan period, the People's Bank of China reviewed the current situation and prepared and issued the “Plan” in a timely manner. The last round of planning clarified the basic definition of fintech and affirmed the positive significance of fintech. The main goal was to establish and improve the “four pillars” top-level design of fintech. After nearly three years of hard work, the above goals have been basically achieved, and fintech is becoming an important engine driving financial transformation. Therefore, this round of the “Plan” focuses on solving problems such as unbalanced development of fintech, improving the fintech governance system, improving digital infrastructure, promoting further deep integration and sustainable development of finance and technology, and better meeting the new requirements and tasks put forward in the digital economy era. As the second round of fintech development plans prepared by the People's Bank of China, the “Plan” has a total of four chapters to comprehensively deploy China's fintech development during the “14th Five-Year Plan” period. The system is complete and rich in content.First, put forward the development vision, guiding ideology, basic principles, and development goals of fintech.The “Plan” proposes to strive to achieve leapfrog improvement in China's overall level and core competitiveness by 2025, fully releasing the value of data elements, advancing digital transformation with high quality, improving the fintech governance system, deepening the application of key core technologies, more advanced digital infrastructure, and comprehensively strengthening financial service capabilities characterized by “numbers, wisdom, green and fair”, which strongly supports innovation-driven development, digital economy, rural revitalization, and carbon neutrality.Second, clarify the eight key tasks for fintech development.The eight key tasks are the main part of the “Plan”, with a total of 28 articles. They have clear goals in terms of governance systems, data elements, infrastructure, core technology, incentives, smart re-engineering, prudential supervision, and development foundations, and are highly pertinent and feasible. For example, in terms of the governance system, financial enterprises are required to establish enterprise-level coordination bodies, clarify the division of relevant responsibilities between the board of directors, supervisors, and senior management, formulate comprehensive digital transformation strategies; strengthen the construction of scientific and technological ethics; and speed up the introduction of fintech ethics system rules. In terms of data elements, relevant agencies are required to deeply understand the important value of data elements, clarify data working mechanisms, goals, tasks and paths, strengthen data capacity building; strictly implement data security protection laws and regulations, do a good job of data security protection, and avoid excessive data collection and misuse. In terms of infrastructure, emphasis is placed on building green and highly usable data centers, setting up secure and ubiquitous financial networks, and laying out advanced and efficient computing power systems. In terms of core technology, it is required to focus on the frontiers and main bottlenecks of fintech applications, and strengthen forward-looking and strategic research on financial applications of key software and hardware technologies. In addition, the “Plan” also emphasizes improving the incentive mechanism, opening up career development channels for fintech talents, and doing a good job in cultivating fintech talents.Finally, determine five safeguard measures for fintech development.These safeguard measures lay the foundation and support for the implementation of key tasks by putting forward requirements in terms of pilot demonstrations, support guarantees, monitoring and evaluation, environment creation, and organizational coordination. The “Plan” calls for vigorously promoting the spirit of scientists, craftsmanship, and entrepreneurship, and stimulating the enthusiasm and vitality of fintech practitioners to advocate science and focus on innovation. Overall, compared with the previous round of planning, this round of the “Plan” fully conforms to the development trend of the digital economy. The key tasks are more clear, the direction of implementation is more clear, and the safeguard measures are stronger. The “Fourteenth Five-Year Plan for National Economic and Social Development of the People's Republic of China and the Outline of the Long-term Objectives for 2035” requires the steady development of fintech and the acceleration of the digital transformation of financial institutions. According to the “14th Five-Year Plan” plan, the “Plan” carries out top-level design and overall planning for China's development of fintech at the macro level. It is significant and far-reaching. It will further push fintech into a new era of high-quality development, give full play to the enabling role of fintech, accelerate the transformation and development of the financial industry itself, and enhance the effectiveness of financial services in the real economy. “Xiongguan Wandao is really like iron, but now we are stepping beyond the beginning.” In the next step, it is recommended that financial management departments further improve the relevant supporting rules, improve the fintech standard system, promote the better implementation of the “Plan”, guide the active and steady development of fintech; balance the relationship between financial innovation and prudential supervision, improve efficiency and risk prevention, make full use of regulatory technology, strengthen functional supervision and behavioral supervision, and further enhance the effectiveness of fintech supervision. In regional financial reforms, explore the establishment of fintech innovation pilot zones, and select a number of regions with good basic conditions and strong competitive vitality to carry out comprehensive fintech innovation pilot projects to promote the in-depth development of fintech in a way. Innovate and launch digital financial products for the elderly and other groups, making better use of the inclusive service value of fintech, and playing a more prominent role in serving small and micro enterprises and individual businesses and overall rural revitalization.Fintech is a key variable that determines the development of the financial industry.Financial institutions should earnestly implement the top-level design and specific requirements of the Plan, promote the in-depth application of digital technology, accelerate digital transformation, and cultivate their own core competitiveness. First, we attach great importance to the enabling role of fintech. We must not only formulate digital transformation strategies, but also start from our own resource endowments, focus on development direction and business priorities, and seek optimization and breakthroughs from the two dimensions of quantity and quality; the second is to break the institutional barriers that constrain fintech development, build a cross-departmental and cross-level technology and business collaborative organization, improve the agility of organizations and employees, and form an open and inclusive digital culture; the third is to strengthen the collaboration and integration of online and offline channels, and improve the efficiency of product and service innovation iterations. Stimulate new momentum and vitality in digital management. In particular, it is necessary to fully tap the potential of fintech, strengthen financial support for technological innovation, especially “specialized and new” enterprises, and achieve “two-way empowerment” of finance and technology.The development of fintech has brought huge opportunities to the financial industry, but it may also exacerbate the “Matthew effect.”Small and medium-sized financial institutions are in urgent need of developing fintech, but they are facing real challenges in terms of technology, data, and talent. If they want to hand over satisfactory answers in the fintech exam, small and medium-sized financial institutions should continue to work hard in four areas. The first is to clarify direction and goals, and maintain strategic strength. Based on one's own strategic positioning and core customer base needs, fintech investment priorities and implementation paths should be clarified; indicators such as technology investment share and digital talent share should be determined, and a long-term mechanism for fintech development should be established. The second is to give full play to the characteristics of institutional mechanisms to achieve agile transformation. On the basis of few organizational levels and short decision-making chains, we use tools such as user stories, signboard management, and iterative development to quickly respond to market and customer needs using models such as minimising viable products (MVP). The third is to promote strengths and avoid shortcomings, and expand local business advantages through technological empowerment. Based on multiple resources such as the local government side, wholesale side, and retail side, it stimulates the potential of many offline outlets and many employees, and gains comparative advantages in fields such as serving the upstream and downstream of large and medium-sized enterprises and comprehensive rural revitalization. Fourth, make good use of external forces to deepen cooperation with external agencies. On the one hand, explore the establishment of fintech development alliances for small and medium-sized financial institutions to promote joint research and sharing of systems and technologies; on the other hand, make up for shortcomings and enhance endogenous capabilities through cooperation with external non-financial institutions.

42K Views