Ladies and gentlemen, dear friends,
It is a great pleasure to attend the Singapore FinTech Fesitval 2020. I would like to share the latest FinTech developments in China and some of our observations.
First, updates on FinTech developments in China.
Over recent years, FinTech has been developing rapidly and robustly in China. Financial institutions made continued efforts to promote digital transformation. Financial products and tools became more diversified, and financial services more efficient and inclusive.
With wide coverage of e-payment, in particular mobile payment, basic financial services are now available across the whole country. Even in the most remote areas, every adult has his or her own bank account. China now ranks high in terms of the coverage and volume of mobile payments. This enables real time processing of deposit, withdrawal and remittance. Online shopping is booming, providing more convenience to daily life.
Digital credit has fundamentally improved the financial services for micro and small enterprises, the self-employed and farmers. Banks use big data for smart risk management, which reduced reliance on collateral and made loans more accessible. By the end of October this year, micro and small firms with banking credit have reached 27 million, loans for these firms and the self-employed grew by over 30% year on year, and loans to farmers grew by 14.3%.
Digitalisation remarkably expanded insurance’s coverage. In China, basic pension has covered 1 billion people, and basic medical insurance has covered more than 1.3 billion, with cross-province fee settlement achieved. By video and remote authentication, key parts of the insurance business have been moved online. In the first half of this year, internet life insurance premium grew by 12.2% year on year, internet property insurance companies’ premium grew by 44.2%.
Financial digitalisation has made huge contribution to poverty alleviation. With multiple digital tools, financial institutions can well target their funding support to poor households. By the end of September this year, small loans for poverty alleviation totaled 504 billion yuan, benefiting 12 million households. Financial institutions also set up online platforms to connect producers with consumers. Through online marketing, credit reference, guarantee and payments, those platforms help poor households sell their agricultural products to everywhere.
FinTech also strongly supports our fight against Covid-19. Since its outbreak, financial institutions rapidly optimized their mobile Apps and other on-line services. They provided safe and convenient ‘at home’ financial products, to make sure basic financial services remain available. Many institutions offered online fast tracks, which greatly enhanced service efficiency and effectiveness, and supported rapid economic recovery.
Second, the experience and lessons of FinTech.
The developments of our laws, rules and regulations on FinTech were just like “feeling the stones while crossing the river”. We met someproblems, learned lessons and gained experience. Here I would like to mention four cases.
The first case is the P2P. It was originally supposed to be just an information intermediary. However in practice, many P2P platforms engaged in lending and wealth management. For the past 14 years, the total number of P2P was over 10 thousand in China. At the peak, there were over 5000 companies operating at the same time. The annual trading volume were about 3 trillion yuan. The NPLs and losses were very high. By mid-November, all the operating P2P platforms have been closed down.
The second case is the third-party payment platforms. In the past, some third-party payment companies provided investment service for customers’ online shopping reserve funds. The yield was much higher than banking deposits, and money could be redeemed anytime. Therefore, it greatly rattled the banking deposits and asset management business. Such investment was very much like money market mutual fund (MMMF) products, but was unregulated to the same extent. Thus, it might violate laws, rules and even potentially engage in money laundering. Now, those payment companies have been asked to deposit the reserve funds with the central bank, and the related investment has been put under supervision.
The third case is the internet financial companies. Some of them tended to induce overspending through various scenarios and over-marketing of loans or overdraft….