Shanghai, China, Dec 8 (efe-epa).- China will adopt a prudent approach towards new problems in the financial technology or fintech sector to strike a balance between innovation and risk control, according to the Communist Party secretary of the People’s Bank of China on Tuesday.
Guo Shuqing, addressing the Singapore Fintech Festival over video, advocated a “positive and prudent” approach in the face of the rise of these companies, which have grabbed attention following the last-minute suspension of what was going to be the largest IPO in history, that of Ant Group, operator of Alipay and subsidiary of e-commerce giant Alibaba.
Guo, who is also the chairman of the China Banking and Insurance Regulatory Commission, underlined the need to contain cybersecurity risks – more than 90 percent of banking transactions are carried out virtually in the Asian country – and to clarify the companies rights’ over user data, because, in his view, they often sell it to third parties.
Guo also called for more “fair” competition in the sector, considering that major firms “tend to hinder fair competition and seek excess profits.”
In this regard, Guo said that regulators should monitor whether big tech firms were blocking newcomers into the market, collecting data improperly, refusing to disclose information that should be made public or engaged in conduct that was deceiving or misleading users and consumers.
He also gave an example of these alleged deceptive behaviors by fintech platforms, claiming they encouraged users without resources, such as students, to apply for credit they could not subsequently pay.
“When default occurred, they pursued coercive loan collection, which caused many social problems,” he said.
However, Guo also lauded the fintech sector for making funding more “efficient and inclusive”, especially in providing aid in the face of the Covid-19 pandemic.
In recent months, Chinese regulators have repeatedly revealed their reservations over the rise of fintech firms, which form an unregulated sector that clashed head-on with Beijing’s intentions to control risks in the financial sector, which was heavily criticized by Ant’s main shareholder and China’s wealthiest man, Jack Ma.
However, it was not until a few days before the company’s IPO, scheduled for Nov. 5, and shortly after Ma’s criticism, that the authorities published a draft of the new regulations that would increase restrictions in the sector.
After that, Beijing has made it clear that its strategy for the sector will include special monitoring methods to avoid risks and monopolistic situations, according to an article by Guo published last week by the central bank.
In the article, Guo described financial innovation as a “double-edged sword” and accused some virtual lending platforms of operating in violation of regulations under the banner of innovation, causing enormous financial and social risks. EFE-EPA