Technology improves efficiency, lowers losses from risks
With China stepping up efforts to regulate Internet finance, the sector will experience a period of financial innovation and regulated growth, experts said Thursday.
Due to the lack of regulation, risks have emerged in recent years as the sector expanded dramatically in China, Hu Bin, deputy director at the Institute of Finance and Banking of the Chinese Academy of Social Sciences, told the on-going Boao Forum held in South China's Hainan Province.
The authorities need to change their regulatory philosophy by enhancing exchanges and interactions with the market, he said.
"An early warning system is also needed to automatically detect and prevent financial risks."
At the initial stage, China's peer-to-peer (P2P) platforms grew swiftly in an unregulated environment, but risks in this sector have peaked and the industry needs internal controls, according to Hu. Now, many P2P lenders are seeking to transform their operations, becoming online platforms that help users manage money, Hu said.
"Selling financial products via the Internet is not a problem itself, but the potential risk is that this strategy lowers the access threshold for private equity products, which requires regulation," he said.
Indeed, after industry regulations were enacted in 2016, the prospects for China's Internet finance sector improved and the market still has great scope for growth in the coming years, Zhang Shishi, CEO of New Finance Group and Co-founder of P2P platform Renrendai, told the Global Times on Thursday.
"The market has become more active as an increasing number of private firms are entering the sector," he said.
Given the outlook for tougher regulations, domestic online lenders should strive for better data management to enhance their competitiveness, Zhang said.
Technology has had a strong impact on the financial sector by improving its operational efficiency and lower the losses caused by risks, experts said.
With the improved development of the Internet, China has become home to one of the world's fastest-growing financial technology (FinTech) sectors.
Fintech improves operational efficiency via using technology such as big data, cloud computing and artificial intelligence, and this will bring qualitative changes to finance, Ma Weihua, former chairman of China Merchants Bank, told a session at the Boao Forum.
Internet finance aims to expand channels and Fintech is the revolution of technology. Fintech can meet the need for traditional financial services based on data, experts said.
But they also warned that potential risks in the Fintech sector should not be neglected, such as information security.
"We should not be overconfident because many technologies need time for verification. The development of Fintech sector should advance step by step," noted Gregory Gibb, CEO of Shanghai Lujiazui International Financial Asset Exchange Co.
