Chinese policymakers are advised to continually keep a close eye on digital finance risks through developing regulatory frameworks and supervisory approaches, according to a report jointly issued by the country's central bank, the People's Bank of China, and the World Bank Group, on Sunday.
It also acknowledged that China has been a leader in the global fintech revolution, "with new technology-driven providers transforming how Chinese consumers make payments, borrow, save, insure themselves against risk, and invest".
The report, Toward Universal Financial Inclusion in China: Models, Challenges, and Global Lessons, applauded that "China has achieved remarkable success in financial inclusion over the last 15 years" after examining the country's approach and benchmarking the financial inclusion progress against peer economies.
Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs, including transactions, payments, savings, credit and insurance.
"China's rate of account ownership – a basic metric of financial inclusion – has increased significantly and is now on par with that of other G20 countries," while having the world's largest agent banking network, a press release on the website of the World Bank said on Sunday.
The ongoing fintech revolution in the world's second largest economy is motivating traditional financial service providers to actively pursue digitally-enabled business models to integrate financial services into existing e-commerce or social media platforms, which has actively broadened finance inclusion achievement, the report's conclusion showed.
"China's experience provides valuable lessons to authorities in other countries who are fashioning their own pathways toward sustainable and long-term financial inclusion," it said.
The report also warned the country's authority to address financial consumer protection risks given the limited digital and financial literacy of many consumers.
Risk of digital finance is also elevated, which is especially related to data privacy and fraud, forming new challenges to achieving sustainable and long-term financial inclusion.
"The country will need to shift toward more market-based, commercially sustainable approaches to financial inclusion," the report suggested.
