Fintech giants curb online deposit products
Regulatory change to put industry on healthier track: analysts
China’s world- leading financial technology ( fintech) sector will be on a firmer footing after a certain period of tightening, Chinese analysts said on Sunday, after a fourth major provider of online finance took voluntary actions to curb its offerings over the weekend.
JD Digit, a product of Chinese e- commerce giant JD. com Inc ( JD), announced on Sunday that the JD Finance App has stopped updates on new deposit products and halted future purchases of related financial products.
JD said that it will follow policy requirements and guidance to improve its services.
The move followed similar actions by other fintech platforms, as the winds of policy have shifted in China. Fintech giant Ant Group, Baidu and Tencent all reportedly removed some online deposit services from their platforms, in line with new regulatory requirements for internet deposit industry.
Former finance minister Lou Jiwei said on Sunday that if a single digital financial platform takes too big a market share, it may eventually lead to a large number of bad loans.
Speaking during the annual China Wealth Management 50 Forum, Lou revealed that a single financial platform, which he didn’t identify, has cooperated with several Chinese banks and made trillions of yuan in loans.
Lou suggested putting the sector’s eggs into more baskets, like limiting the number of banks cooperating with a single financial platform, and asking several platforms to cooperate with the same number of banks, to prevent a single platform from taking on ballooning risks.
“We should try to avoid making financial platforms into ‘ too- big- to- fail’ beasts, and prevent a monopoly with a winner taking all of the market,” he said.
As the annual tone- setting Central Economic Work Conference concluded on Friday, Lou also stressed that financial innovation must be carried out under the premise of ample prudent administration.
Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Sunday that this large- scale halt of certain offerings by fintech firms is for the purpose of standardization.
Xi said that most online financial products are inconsistent with current financial regulations, and some of them even take place in “gray areas” to earn profits.
Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, said it is imperative to review previous transactions because some financial products may have flaws with regard to regulations and policies.
“I believe that these financial platforms will re- open after this reorganization,” said Dong on Sunday, noting that small online financial companies will follow major companies like Ant Group, JD and Baidu to “clean up” their products.
More top Chinese officials have begun to emphasize the issue of online deposit services, with Sun Tianqi, head of the financial stability bureau at the central bank, the country’s central bank, pointing to some operations as “illegal financial activities fueling risk.”