Tech­nol­ogy can ex­pand ac­cess to fi­nance

China Daily (USA) - - ECONOMY - By WANG YANFEI in Hangzhou wangyan­fei@chi­

At a time when tech­nol­o­gy­driven mi­cro­fi­nance ser­vices have be­come a key strat­egy to achieve fi­nan­cial in­clu­sion, more ef­forts to im­prove the fi­nan­cial in­fra­struc­ture are needed, ex­perts say.

“Pro­vid­ing mi­cro­fi­nance ser­vices us­ing dig­i­tal tech­nol­ogy is quite ef­fec­tive in pro­mot­ing fi­nan­cial in­clu­sion when many still have no ba­sic ac­cess to fi­nan­cial ser­vices,” said Yi Gang, vice-gover­nor of China’s cen­tral bank, the Peo­ple’s Bank of China, at a high­level fo­rum held in Bei­jing last month.

Ac­cord­ing to a re­search by the World Bank, 2 bil­lion work­ing-age adults world­wide, around 38 per­cent of the global pop­u­la­tion, have no bank accounts and are ex­cluded from the main­stream fi­nan­cial sys­tem.

The fast devel­op­ment of tech­nol­ogy-driven fi­nan­cial ser­vices in re­cent years sig­nif­i­cantly in­creased the op­por­tu­ni­ties for peo­ple to have ac­cess to fi­nan­cial ser­vices, ac­cord­ing to Yi, but the “lack of over­sight and in­fra­struc­ture in the emerg­ing dig­i­tal in­dus­try has be­come one of the key chal­lenges block­ing fi­nan­cial ser­vices from reach­ing peo­ple”.

Yi said that the gov­ern­ment reg­u­la­tory bod­ies need to en­hance their su­per­vi­sion of credit is­suance by on­line fi­nan­cial in­sti­tu­tions in or­der to re­duce the risks.

Pol­i­cy­mak­ers across re­gions have raised con­cerns about the risks associated with on­line fi­nance providers.

Data from Wang­daizhi­jia, a third party re­search in­sti­tu­tion, shows that by the end of July, a to­tal of 1,879 on­line fi­nan­cial in­sti­tu­tions, 45 per­cent of the to­tal in China, had been shut down be­cause of var­i­ous op­er­a­tional prob­lems.

To bet­ter ad­dress the chal­lenges of tech­nol­ogy-driven mi­cro­fi­nance ser­vices, China will sub­mit a set of prin­ci­ples to be re­viewed dur­ing the G20 Sum­mit to be held in Hangzhou, cap­i­tal of East China’s Zhe­jiang prov­ince, on Sun­day and Mon­day.

With a to­tal of 66 rules and prin­ci­ples, the top-level de­sign, once ap­proved by the G20 mem­bers, will help build a more ef­fec­tive sys­tem to sup­port fi­nan­cial in­clu­sion, ac­cord­ing to Jim Brom­ley, chief fi­nan­cial of­fi­cer with the Bill & Melinda Gates Foun­da­tion.

Brom­ley also said that a clear def­i­ni­tion of the dig­i­tal fi­nan­cial mar­ket is needed and it should be made as invit­ing to new busi­nesses and cus­tomers as pos­si­ble.

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