Li Yang, Chairman of the National Finance and Development Laboratory: The development of financial technology and the transformation of the financial industry

Li Yang, Chairman of the National Finance and Development Laboratory, delivered a video speech entitled "Fintech Development and Financial Industry Transformation".

The following is the full text of the speech:

As a financial researcher, I am very honored to be invited to participate in such a conference. Through this meeting, I would like to share with you a few views on the development of fintech and the transformation of the financial industry, three views:

The first view is about the relationship between the development of the digital economy and the transformation of the traditional financial industry.

We know that the development of the digital economy is a very important task for us at present, or an important aspect and important driving force for the high-quality development of China's economy. Regarding the digital economy, it has two sides, one is the digitization of the traditional economy, and the other is the emergence of a large amount of data to industrialize it. Therefore, the digital economy is defined as a series of economic activities that use digitized knowledge and information as key production factors, modern information networks as important carriers, and the effective use of information and communication technologies as an important driving force for efficiency improvement and economic structural optimization. This passage actually expresses how the development of our economy depends on the development of technology and continues to deepen.

How can such a digital economy develop to promote the continuous optimization and upgrading of the economy? Again, there are two processes, the first is deconstruction and the second is reorganization. The so-called deconstruction is to use digital means and digital means to deconstruct our traditional economic and financial industries and form a new specialized division of labor. The second stage is to do the above work, digitally re-aggregate them in the virtual cyberspace to form a new trading system, industrial chain and value chain, this process is carried out every day in front of us.

Since this is the case, since it is a process of deconstruction and restructuring, all industries will be affected, and our financial industry is actually the industry most affected, so for our financial industry to embrace technology and embrace digitalization is our only way, otherwise it will be a dead end.

The second view is to discuss the several stages of the development of fintech and its main features.

The first stage of financial technology development is the 1.0 era, which should be said that technology has not yet revolutionized the financial industry, but it has promoted the development of the financial industry in some fields, especially in the international field. Another area is that it gives our traditional operations in the financial industry a new way of bearing, everyone should pay attention to what I am talking about is "bearing mode", why should we say this? Because now everyone may hear more about the beginning of the digital currency and electronic era, in the 1.0 era of financial technology development, it is only electronic, just a change of carrier, so this is 1.0.

The 2.0 era has deepened, financial services have begun to digitize, office electronic, automated, self-service, so we say that the 2.0 era should be the financial industry into the self-help era. Some of the most obvious manifestations of the self-service era, such as ATMs, CDMs, passbooks, bill printers, non-cash kiosks, night vaults, etc., have happened that could not have been imagined in the past.

Then on this basis, we have entered the 3.0 era, and we are currently in the second half of the 3.0 era, and a very significant feature of the 3.0 era is Internet finance. As we all know, Internet finance began more than a decade ago in China, and its development process is also tortuous and complex, with its very good aspects, but it does bring some new risks. In the 3.0 era, it should be said that one of the most revolutionary changes is that non-financial institutions use the Internet and communication technology to enter the financial field, it will not say that I call finance, but it will provide services, the earliest financial institutions to provide financial services is payment clearing, on the basis of payment and clearing formed some capital pools, the formation of some similar securities of some products, it will fully penetrate the traditional financial industry.

It is precisely because of this that we can also see that the process is happening in front of our eyes, and there are many technology companies that should be said to be triumphant in the financial field. It is also for various reasons that our regulatory authorities have not understood the current process of revolutionization, so there have been some problems, such as the problem of digital protection, the protection of privacy, the abuse of digital property rights, and the problem of impacting traditional financial norms from the perspective of the financial industry. Information sharing, now the sharing of the scope has been very wide, so in this era should be the financial industry into the self-help era, from the 90s of the last century the Internet into the popularity of mobile terminals, so online banking, SMS banking, mobile banking, WeChat banking, etc. emerge in an endless stream, we see that in this process in fact began to appear financial generalization.

The fourth stage is the 4.0 era, and the financial industry has been fully affected by the impact of financial technology and has been transformed. Some of the main elements of modern financial technology, such as big data, cloud computing, artificial intelligence, etc., have entered the financial industry, and big data + AI risk control and credit information, big data + intelligent investment have become the mainstream of financial development. Now it should be said that Internet finance is everywhere and available everywhere, and the financial industry has entered the era of intelligent investment.

This is the second point I want to share with you, which is about the stage of the development of fintech.

The third and final view.

Since financial technology is so important, financial technology has promoted the reform of the financial industry, when it comes to the 3rd and 4th stages, everyone can already hear that the traditional financial industry can not do that, so financial technology will become a major technical force leading the development of our traditional finance, and we must let it standardize development. I used the word BASIC to summarize the five elements of fintech, and our generalization is mainly to say to everyone, what fintech can do, what it can't do, what it should do, what it shouldn't do, what it has done and what it will do in the future, we look at it one by one.

B is the blockchain, and what I want to emphasize here is that the blockchain is now being talked about everywhere, and maybe it will be used everywhere, but for our financial industry, the development of blockchain is to obtain a trust mechanism. Traditionally, at least two stages have passed, and in the primitive stage, our trust is that people's trust depends on people's relationships, on relatives, classmates and friends, which is not very reliable, and the scope is very small. In the industrial era, it relied on large enterprises, and then on specialized information collection, analysis, and processing agencies, even institutions like China Mobile, but it was also unreliable, it also had problems of scope, there were also problems of fraud, and we know that at the beginning of this century, there was an ugly incident of information fraud on Wall Street. To solve this problem, our financial industry is a trust economy, to solve this problem is the introduction of blockchain, blockchain is to reconstruct the trust mechanism, eliminate those artificial influences, so that you can not change, so that you have records, on this basis to improve information, sharing efficiency, this is B.

Then there's artificial intelligence, which has three elements: data, algorithms, and computing power. We all know that data China should be said to be OK, but there is a problem of data islands because of the division of departments. Algorithms, basically a scientific level of things, China's scientific development is some problems, so the algorithm is actually not advanced, computing power should be said to be OK, in short, in terms of artificial intelligence we still have a lot to catch up.

Security technology, the use of biometrics, encryption technology, etc. to improve the efficiency of risk control. Everyone must be keenly aware that there was a time when biometric technology was used everywhere without regulation and good control, or even flooded. For the issue of privacy, there is not much consideration for the issue of security, and the relevant departments are actually supervising during this time, so that it has entered the track of security science development.

The fourth element is interconnection, and we use the word interconnection to summarize two aspects, one is mobile Internet, and the other is The Internet of Things. The common development of mobile Internet and The Internet of Things, and after the coordinated development, there will be some unexpected situations, and we are not yet able to fully estimate its prospects, that is, the Internet of Everything, and on this basis, everyone finances. At that time, finance will not be the patent of a few people, not the patent of a small number of institutions, it will become a process in which everyone is participating, which we do financial research is highly concerned, whether finance is eliminated, or what kind of form it will develop into, we need to pay attention to this.

Finally, big data and cloud computing, we must have big data, and we must carry out cloud computing on this basis in order to reduce the cost of information processing and improve the efficiency of information processing.

In short, these are several elements of the healthy growth of financial technology, which must be correct, standardized, scientific, and people-oriented. I believe that on such a basis, our entire financial industry, our entire economy, will have a great leap forward. We lead the digital economy and financial technology, and we will certainly create great achievements in the next hundred years that match the 5,000-year history of the Chinese nation.