Ant Group among fintech firms to clean up online banking services as regulation tightens

By Wang Cong Source: Global Times Published: 2020/12/18 22:03:39

Photo taken on Oct. 26, 2020 shows Ant Group logo on the buildings of Hangzhou headquarters in Hangzhou, east China's Zhejiang Province. (VCG)

Chinese financial technology (fintech) firms are scrambling to shut down certain online banking services that could potentially be targeted by tighter regulations as part of Chinese regulators' recent campaign to crack down on illegal activities in the online financial sector and address potential risks.

Fintech giant Ant Group confirmed on Friday that it has "proactively" taken down some online deposit services from its platforms in accordance with regulatory requirements for the internet deposit industry, according to a statement carried by various media outlets.

However, existing clients are still able to view the services on their mobile phones and their businesses would not be impacted, according to the statement. 

Other online banking services providers, including JD Finance and Du Xiaoman Financial, still have listings for internet deposit services on their platforms; however, the number of such services has reportedly dropped significantly.

JD Finance, the fintech arm of the e-commerce giant only has 36 deposit services compared to 91 in November, while the number of deposit services offered by Du Xiaoman, operated by search engine giant Baidu, dropped to 21 from 38 in November, according to financial news website on Friday.

The swift action by the fintech firms followed increasing signs from top regulatory officials in recent days to tighten regulations for the online deposit industry, as part of the country's broad push to root out financial risks.

The most recent indication for possible tightening regulations for the sector came after a senior official from the People's Bank of China (PBC) criticized the businesses as "illegal financial activities" that are operating without a license, and called for regulations.

Speaking at an online financial forum on Tuesday, Sun Tianqi, head of the financial stability bureau at the PBC, said that many local banks have used the platforms to attract depositors nationwide with high returns and low requirements to ease liquidity stress, but such operations are "illegal financial activities," like driving without a license.

Sun called for regulations and requirements for internet deposits and other financial activities on the internet, and rolled out regulations and laws targeting high-risk actions by banks to attract deposits.

That also followed recent signals from top officials in tightening regulations in the financial sector, particularly the online financial sector, as part of a push to root out financial risks. At a meeting of the Political Bureau of the Communist Party of China Central Committee on December 11, top leaders called for "strengthened antitrust efforts and the prevention of disorderly expansion of capital," according to the Xinhua News Agency.

Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, said that the tightening of regulations came at a critical time as the online financial sector has "overthrown" the traditional banks and poses certain risks, albeit its innovative services.

"Innovation is certainly important. However, at some point, regulation must catch up to ensure market security and fairness," Dong told the Global Times on Friday, adding that the move is not aimed at any particular firm or industry, but to ensure China's financial security.

Posted in: ECONOMY

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