Financial technology, or fintech, should be given full play to energize the real economy and rein in potential risks, according to officials, executives and experts attending the 4th World Internet Conference in Wuzhen, Zhejiang province.
Serving the real economy is the “direction and operating guide” of the financial industry, said Liu Guoqiang, assistant governor of the People’s Bank of China, the central bank.
Profits from the financial industry could falter, burst into bubbles and even collapse, if the sector fails to provide services that are high-quality, efficient and cost-effective to businesses, he told a fintech panel during the three-day conference that ended on Tuesday.
Li Dongrong, president of the National Internet Finance Association of China shared similar views.
“Without the real economy, finance could only enter into a self-cycle that features over-expansion and irrational prosperity that could eventually lead to the financial crisis,” he said.
Liu emphasized the role digital information technology can play in promoting inclusive finance through cost reduction and revamp of traditional models of the financial services.
“Through digital means, farmers and residents in far-flung areas can receive financial services that were once unattainable to them, such as getting remittances and small loans,” Liu noted.
Technologies are empowering the under-banked and socially vulnerable groups, by giving them equal access to benefits and opportunities, said Lucy Peng, chairwoman of Ant Financial Services Group, a Chinese fintech giant.
Peng is leading an initiative to help lift women out of poverty by, for example, offering a slew of financial services they can leverage to start their own businesses.
Ant’s services use big data analysis to pinpoint needs and automatically evaluate risks before giving out loans. Bad loan ratio of its Jiebei online small loan service stands below 1 percent, which is significantly lower than the 30 to 50 percent industry average, she said.
Search engine Baidu Inc stepped into the online finance arena by offering loans to credible businesses who advertise on its site, and adopted artificial intelligence into client sorting and assessment, said Zhu Guang, the company’s senior vice-president.
