Fintech driving Shanghai's global finance leadership
Shanghai is one of the top five financial centers in the world, an influential survey has found.
In its latest gauge of the competitiveness of world financial centers, Y/Zen Group, a UK-based compiler of global financial market reports, has ranked Shanghai fifth, after New York, London, Hong Kong and Singapore.
The reason Shanghai has found itself on par with traditional financial powerhouses such as London, said Y/Zen Director Mark Yeandle at the Lujiazui Forum, has to do with the boom in fintech services in China.
He added that if Shanghai is to become the world's fintech center, it’ll have to tick all the four following boxes: a favorable financial policy environment, draw top tech talent from all over the world, access to funding, and offer a sound technological infrastructure.
Shanghai scored high in the fourth category, largely because of the rise of a host of fintech titans.
Fintech is the key driver behind fundamental changes that are blurring the boundaries between finance and technology, reinventing some industries in the process.
Insurance is one of the many industries being transformed by new technologies such as big data and artificial intelligence.
Miao Jianmin, chairman of the People’s Insurance Company (Group) of China Limited, said fintech is already widely applied in the insurance industry thanks to supportive state policies and the rapid growth of underlying technologies like facial recognition.
Younger people are the most receptive to new forms of Internet-based insurance products. Miao cited figures showing sales of insurance products marketed via online channels surged 18 times over the past five years.
About 220 million people have bought insurance policies online, with first-time buyers aged 28 on average.
Miao believes that applications of technology such as big data will soon lead to more targeted marketing and effective pricing while tech is expected to help accelerate procedures related to damage assessment.
Certainly, when it comes to the leaders of the digital economy in China, mobile payment is the first to spring to mind.
A series of policy adjustments, combined with well-laid foundations such as the high- and low-value payment system, set the stage for brisk growth of mobile payment between 2010 and 2015, said Wen Xinxiang, director-general of the Payment and Settlement Department at the People’s Bank of China.
E-wallets such as Alipay and WeChat Pay dominate China’s third-party payment market, constituting an alternative to traditional banking institutions.
Chinese access to financial services has considerably broadened, as evidenced by the penetration of bank cards and point of sale terminals.
“There are about 600 POS devices for every 10,000 residents, and citizens on average have seven cards,” Wen said.
But he admitted that as the third-party payment market is near saturation point, what’s needed is higher-quality growth.
In the coming era of 5G, this could mean faster, smarter and more convenient transactions as well as stronger consumer protection.
As the world economy is turned on its head by digital technology, Gyorgy Matolcsy, governor of the Magyar Nemzeti Bank, Hungary's central bank, said the future of capital and currency is likely to be entirely different.
Just as the dollar spelled the demise of the gold standard in 1971, we may one day also see the dollar replaced by a new currency built solely on information technology, such as some commonly accepted form of cryptocurrency, said Matolcsy.
He also echoed the views of many that data or electricity will be the new crude, spurring man to actively wean themselves off dependency on oil.
“AI or big data will be the fuel or natural resource that drive the growth of industry tomorrow,” he said.