Fintech comes with challenges for regulation

Shanghai Forum participants were told at the weekend that when fintech changes the financial industry landscape and creates many new players, regulatory technology must be able to contain risks in a highly important sector of the national economy.

Fintech has made financial services more efficient, targeted and sometimes less costly, experts said at a “Regulatory Technology: Building an ecosystem that enhances regulatory capacity and stimulates entrepreneurial vitality” roundtable held by the China Insurance and Social Security Research Center under the Fudan Development Institute.

One example cited was where big data could help car insurance company differentiate risks of accidents based on driver behavior before deciding how much to charge for coverage.

“But at the same time, new financial technology may create discrimination or unfairness, or it may hurt the existing financial system, such are some questions for the regulators to consider,” said Du Jianhui, an official with the Shanghai Financial Regulatory Bureau.

Also, if everything is calculated by machines and the process is not transparent or comprehensible, regulation will be hard to implement, said Jia Jingwei, Swiss Re’s China CEO.

“By the time technology moves beyond people’s comprehension, it will be similar to a dark box — nobody knows how it works and nobody will be held accountable for problems,” Jia said.

Xu Xian, director of Fudan University's insurance and risk management department, said the development of regulatory technology should catch up with the speed of fintech.

“But it is also important to keep a balance to let innovation thrive,” said Meryem Duygun, president of International Finance and Banking Society and a professor at University of Nottinghamshire.

Zhu Jinyuan, party secretary of China Insurance Newspaper, and Yu Jiantuo, assistant secretary general of the China Development Research Foundation, made welcome remarks at the event, which was also part of centennial celebrations for Fudan's insurance courses.