Source: Sina Finance-Ruijian Economy
Shang Fulin: The innovative application of digital technology in the financial field should always take risk prevention and control as the bottom line
The 20th China International Finance Forum was held on December 14-15, 2023 in Hongkou District, Shanghai. Shang Fulin, director of the Economic Committee of the 13th National Committee of the Chinese People's Political Consultative Conference, former chairman of the China Banking Regulatory Commission and former chairman of the China Securities Regulatory Commission, attended and delivered a speech.
In his speech, Shang Fulin emphasized that the innovative application of digital technology in the financial field should always take risk prevention and control as the bottom line.
He pointed out that preventing and defusing financial risks, especially preventing the occurrence of systemic financial risks, is the fundamental task of financial work. With the in-depth development of the digital economy and the iterative progress of technology, financial risk prevention and control is also facing new challenges.
"We must be soberly aware that technology has not changed the risk attributes of financial business, and due to the characteristics of technology, it has accelerated the spread of risks and expanded the scope of their impact. He said.
First, we should pay attention to new challenges such as data security and privacy protection. In the era of digital economy, with the increase of financial data and the diversification of transaction modes, data security and privacy protection issues have become more and more prominent. The financial sector is highly sensitive to data and is a key area for cyber attacks and information leakage, which puts forward higher requirements for risk prevention and control. In addition, there are new issues including the digital divide and data ethics, which require financial institutions to further strengthen data governance and compliance management to ensure user data security and privacy.
The second is to pay attention to scientific and technological risks and system security. Digital technology is more dependent on the system, and technological risks such as system failures and cyber attacks have a greater negative impact on the sound operation of finance. It is necessary to pay more attention to cyber security, continuously strengthen the construction of digital technology talent team, properly respond to unexpected technological risks, ensure business continuity, and ensure the stable operation of financial services.
Third, we will continue to improve the regulatory compliance framework. Financial standards cannot be accommodated to technical means, especially those that cannot be reduced by blindly pursuing technological convenience. In the past few years, the policy and institutional environment has been continuously improved, and the problems of using data, algorithms, and technology to implement monopolistic behaviors and harm market competition in the past have been rectified, and a relatively complete management system has been formed. The Central Financial Work Conference emphasized that all financial activities should be brought under supervision in accordance with the law to eliminate regulatory gaps and blind spots. Fintech innovation should also follow the underlying logic and basic laws of financial business, and should be carried out within the framework of regulatory compliance. For regulators, it is also necessary to better rely on and give full play to the positive role of digital technology, and use artificial intelligence, big data analysis and other technologies to help identify and monitor financial risks more accurately and effectively, and improve the level of regulatory technology.
The following is a transcript of the speech:
Ladies and gentlemen:
Good morning, and it is my great pleasure to join the 20th China International Finance Forum and discuss with you the prospects of the financial industry in the era of digital economy. Finance is the lifeblood of the national economy. Since the 18th National Congress of the Communist Party of China, China's digital economy has developed rapidly, digital technology has profoundly changed people's lifestyles and economic and social patterns, and digital finance has achieved remarkable results. The just-concluded Central Financial Work Conference emphasized that finance should provide high-quality services for economic and social development, and also pointed out that there is still a certain gap between the quality and efficiency of financial services for the real economy and the requirements for achieving high-quality development. The conference listed the promotion of the development of digital finance as one of the five major articles, pointing out the direction for the next step. I would like to take this opportunity to share my views on financial support for high-quality economic development with the help of digital technology, which can be summarized into three aspects: "technology-driven, service-entity, safe and controllable":
First, the development and advancement of digital technology is the driving force for the improvement and innovation of financial services
From a global perspective, the digital economy has become a key force in reorganizing global factor resources, reshaping the global economic structure, and changing the global competition pattern.
First, in terms of total volume, according to the China Academy of Information and Communications Technology, the scale of China's digital economy will reach 50.2 trillion yuan by the end of 2022, accounting for 41.5% of GDP. From 2012 to 2022, the production efficiency of China's digital economy continued to improve, with year-on-year growth significantly higher than that of GDP growth in the same period for 11 consecutive years, which has become an important support for the improvement of overall economic efficiency. At present, China has the world's largest Internet user base and mobile payment market, with 1.07 billion Chinese Internet users.
Second, in terms of technical reserves, digital infrastructure has developed by leaps and bounds, with an Internet penetration rate of 75.6%. Blockchain, artificial intelligence, big data analysis and other technical means are becoming more and more mature, making financial transactions more efficient and convenient, and providing a broad application space for financial institutions. The huge volume of the digital economy provides a huge user base and data support for the iterative progress of digital technology, provides a rich soil for innovation and development, and provides good technical tools and means for financial support for industrial upgrading and progress.
Third, from the perspective of technological influence, the scale of investment in digital technology and the speed of innovation iteration are significantly different and significantly improved compared with traditional innovation methods. The impact of technology on the industry is not limited to the improvement of simple technical means, but the innovation and progress from products to services, from means to concepts, throughout the whole process of operation and management. Because of this, in recent years, financial institutions have continued to increase investment in science and technology, the pace of technology-driven fintech innovation has accelerated, and the integration of traditional finance and technology has accelerated. In 2022, six large state-owned banks will all invest more than 10 billion yuan in financial technology. Among them, Industrial and Commercial Bank of China has the most, with an investment of 26.224 billion yuan in science and technology.
Second, digital technology to help financial development should keep the original intention of serving entities to improve people's livelihood
The era of digital economy has brought not only technological innovation to the financial industry, but also profound changes in business models. At the same time, we should always keep in mind that no matter how technology changes, finance must adhere to the people-centered value orientation, adhere to the fundamental purpose of financial services for the real economy, and maintain the "temperature" of financial services. The Central Financial Work Conference stressed that finance should provide high-quality services for economic and social development, and continuously meet the growing financial needs of economic and social development and the people.
The first is to focus on improving efficiency and convenience. Digital technology has made financial services more efficient and convenient. According to data from the China Internet Network Information Center and the Payment and Clearing Association of China, there are more than 900 million online payment users, and mobile payment has been widely accepted by the public, with nearly ninety percent of mobile payment users being long-term stable users. The application of Internet finance, mobile payment, blockchain and other technologies has made financial services no longer limited by time and space, greatly improved the efficiency and convenience of financial services, and enhanced the support of financial institutions to serve the real economy, which not only reduced the threshold and cost of business handling for small and medium-sized enterprise customers, but also improved the efficiency of financial transactions and financial services.
The second is to focus on meeting diverse needs. The application of digital technology has given birth to a series of innovations in financial products and services, giving birth to new models and new formats of financial services. New business models such as robo-advisory, blockchain finance, and supply chain finance have more technical advantages in differentiated and customized financial services, making financial services more innovative, convenient, and close to people's livelihood. For example, blockchain technology is used to ensure secure, transparent, traceable and tamper-proof transactions, artificial intelligence technology is used to develop robo-advisory and risk management tools, and big data analysis is relied on to provide financial institutions with more comprehensive and accurate customer portraits.
Third, the innovative application of digital technology in the financial sector should always be based on risk prevention and control
Preventing and defusing financial risks, especially preventing the occurrence of systemic financial risks, is the fundamental task of financial work. With the in-depth development of the digital economy and the iterative progress of technology, financial risk prevention and control is also facing new challenges. We must be soberly aware that technology has not changed the risk attributes of financial business, and due to the characteristics of technology, it has accelerated the spread of risks and expanded the scope of their impact.
First, we should pay attention to new challenges such as data security and privacy protection. In the era of digital economy, with the increase of financial data and the diversification of transaction modes, data security and privacy protection issues have become more and more prominent. The financial sector is highly sensitive to data and is a key area for cyber attacks and information leakage, which puts forward higher requirements for risk prevention and control. In addition, there are new issues including the digital divide and data ethics, which require financial institutions to further strengthen data governance and compliance management to ensure user data security and privacy.
The second is to pay attention to scientific and technological risks and system security. Digital technology is more dependent on the system, and technological risks such as system failures and cyber attacks have a greater negative impact on the sound operation of finance. It is necessary to pay more attention to cyber security, continuously strengthen the construction of digital technology talent team, properly respond to unexpected technological risks, ensure business continuity, and ensure the stable operation of financial services.
Third, we will continue to improve the regulatory compliance framework. Financial standards cannot be accommodated to technical means, especially those that cannot be reduced by blindly pursuing technological convenience. In the past few years, the policy and institutional environment has been continuously improved, and the problems of using data, algorithms, and technology to implement monopolistic behaviors and harm market competition in the past have been rectified, and a relatively complete management system has been formed. The Central Financial Work Conference emphasized that all financial activities should be brought under supervision in accordance with the law to eliminate regulatory gaps and blind spots. Fintech innovation should also follow the underlying logic and basic laws of financial business, and should be carried out within the framework of regulatory compliance. For regulators, it is also necessary to better rely on and give full play to the positive role of digital technology, and use artificial intelligence, big data analysis and other technologies to help identify and monitor financial risks more accurately and effectively, and improve the level of regulatory technology.
Finally, digital technology has transcended the limitations of time and space, making the financial market more closely linked, and financial innovation, especially cross-market and cross-regional financial innovation, is not only an opportunity for the development of the industry, but also a common challenge for the international community. In the era of digital economy, high-quality financial development needs to strengthen international communication, coordination and cooperation. We look forward to working together to maintain the stability and healthy development of the international financial market and create a better future for high-quality financial development. I wish this forum a complete success, thank you!
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