Fin-tech sector requires tighter regulations

Source:Global Times Published: 2019/12/22 22:38:39

Two people chat outside the headquarters of the China Banking and Insurance Regulatory Commission on April 8. Photo: IC

Tighter standards are urged to ensure data security and user privacy in the application of artificial intelligence (AI) technologies in the finance area, a former top official at China's stock market regulator said in a report on Sunday.

AI applications in the financial area represent the combination of the two sectors and signal the trend and core competitive edge in fin-tech development, according to the report released by Xiao Gang, former head of the China Securities Regulatory Commission and senior research fellow at China Finance 40 Forum.

However, related standards and testing platforms need to be established to balance the tradeoff between data sharing and privacy infringement, said the report.

"AI technologies have a wide range of applications in the financial area, especially in data collection and analysis for risk aversion," Zhang Yu, a senior analyst from the Beijing-based consultancy iResearch told the Global Times. "A massive amount of data needs to be shared to make AI learning possible, so there is also a high risk of privacy breaches without tight regulations in place."

Fin-tech businesses have grown exponentially in China in recent years. Transactions of Chinese fin-tech companies reached $25.5 billion in 2018, up nine folds compared with 2017 and accounting for 46 percent of the global fin-tech market, according to a report by the consulting company Accenture. 

The rise of the fin-tech sector is powered by the sharing of big data, Zhang said, and the government has to make specific regulatory plans for its healthy development, especially in its application in the financial area, where the consequences of data abuse can be especially dire. 

In August, a development plan for the fin-tech sector was issued by the Chinese central bank, which noted that the basic framework for the sector is expected to be formed by 2020, with mature risk aversion mechanisms and regulatory systems. 

Posted in: MARKETS,BIZ FOCUS

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