Financial services and innovation go hand-in-hand
Seeing China as an important market for businesses, Roy Gori, president and chief executive officer of Manulife, recently shared his thoughts with Shanghai Daily on the country's financial and insurance markets, as well as some valuable suggestions for Shanghai's development as an international financial center.
The curtain just came down on the 31th Shanghai International Business Leaders' Advisory Council on October 20, at which Gori made two main points — first, liberalizing the financial sector will help increase capital flows, driving investment into new technologies and promoting innovation; and second, financial services firms are major drivers of technological innovation, and thus Shanghai should ensure an environment that encourages them to innovate.
"As China’s economy evolves away from traditional manufacturing activity and toward more investment in services and advanced technology, enabling corporations and individuals to further drive innovation is crucial for Shanghai’s long-term economic health and prospects," Gori pointed out.
Gori said that Shanghai is doing a tremendous job in turning itself into a fintech hub, but "there's more that can be done."
Thus he made three recommendations, suggesting the city: first, continue to open up the market; second, give adequate capital access for small and medium sized enterprises; and third, really welcome financial services as a platform for innovation.
When it comes to the opening of the financial sector, it should be noted that just in October, the China Securities Regulatory Commission released a time frame for removing limits on foreign stakes in futures, mutual fund and securities companies, which would give foreign companies full ownership rights by 2020.
"We are very excited now, we feel this newest development is a tremendous opportunity for us to leverage the capability we have in WFOE license and bring that more to China," Gori said.
Manulife has already established a joint venture life insurer in partnership with Sinochem Group — Manulife-Sinochem, which was launched in 1996 as the first foreign insurance JV in China. It also has another JV, Manulife TEDA Fund Management Company, which provides traditional retail and institutional asset management in China.
In terms of technology innovation, Gori said encouraging an environment that accelerates innovation will be key to Shanghai’s continued growth and success, and "financial services firms are major drivers of technology innovation."
"Information technology departments and research centers within financial services firms innovate to improve client services and grow revenues while also lowering costs and supporting legacy systems. To survive and thrive in this environment financial services firms are investing in new advancements in AI, blockchain, financial technology, cloud systems, cyber security, and other digitization of various kinds," Gori said.
Financial institutions have invested more than US$27 billion in fintech and digital innovation since 2015, a KPMG report showed. And a study by New York-based law firm Envision IP, showed the financial industry "dominates" the list of top blockchain-related patent holders.
Meanwhile, financial services firms also indirectly support innovation as partners with other organizations, he said.
He thus suggested Shanghai create programs and spaces to encourage foreign financial firms to partner with other innovators in the city or to support R&D in high-technology fields, and also, to reduce obstacles to foreign investment in important information and communications technology services such as big data, AI, and cyber security.
"Further regulatory liberalization will allow Shanghai to become not only the center for innovation in China but establish Shanghai as a global leader in innovation," Gori concluded.