Technology is a friend in home money matters

Tracy Li
China is now becoming a world leader in applying technology to payment systems, wealth management, consumer finance and other related fields
Tracy Li

Shi Xiafang, a 25-year-old office worker in Shanghai, said making payments and handling investments has become much easier because of new technologies.

The greatest attraction of online investment platforms for her is the ability to check yields anytime.

“It is exciting to see your money grow every day,” she said.

Financial technology has been making rapid gains in the past few years.

Compared with markets like the US, China was a latecomer in the sector, but it’s quickly catching up. The prevalence of mobile payments since 2013 underpinned what has emerged as a major market for fintech.

China is now becoming a world leader in applying technology to payment systems, wealth management, consumer finance and other related fields, Xu Dongliang, vice president of Du Xiaoman Financial, told the recent 2019 World Artificial Intelligence Conference in Shanghai.

“Fintech will be a necessity for all financial institutions in the future,” he said.

China will surpass the US in investment and financing applications of technology by 2020, consulting firm KPMG predicts.

Data showed China was host to 615 equity financing events in the fintech sector last year, accounting for over half of the global total and reaped around three quarters of global financing (around 325.6 billion yuan or US$45.3 billion).

To steer the burgeoning sector towards sustainable growth, the Chinese government is unveiling more policies and accelerating regulations.

Last month, the People’s Bank of China, the central bank, released a three-year fintech development plan that aims for a top-down industry design and stronger risk controls. The plan noted that the next three years will be a critical period for development of the industry.

The country’s fintech sector has grown rapidly and needs more guidance, according to Zheng Yudong, CEO of wealth management at Pintec Technology Holdings, a fintech solutions provider.

Du Xiaoman Financial is an arm of Baidu that focuses on fintech applications. It has developed platforms to apply technology in operations such as smart customer acquisition, customer services, risk management and investment advisory.

It has developed intelligent robots to offer customer services in multiple Chinese dialects, with an accuracy rate of over 90 percent. Tests show only one person in 100 will be aware that the voice on the other end of the line belongs to a robot.

In addition to greatly reducing costs, this tech-powered service has achieved better debt collection results than human labor, the company said.

Consumer finance  

A promising area for financial technology in China is consumer finance, a market projected to grow to US$1.6 trillion by the end of 2020.

The State Council, China’s Cabinet, rolled out new measures in late August to encourage financial institutions to be more creative in developing consumer credit products and services to boost domestic consumption, a main engine of economic growth.

The consumer-credit industry is increasingly tied to technology, said Zhao Guoqing, founder and chief executive officer of Mashang Consumer Finance Co. Industry players rely heavily on advanced data to evaluate client creditworthiness.

Consumer credit has long been haunted by the problems of fraud.

To better detect fraud, Mashang has developed a lip-reading technology that can quickly assess if a loan applicant is lying.

The technology requires an applicant to record a 2-second video without showing any actions like blinking their eyes. Its accuracy rate in detecting potential fraud is about 99 percent, according to the company.

Until now, methods such as fingerprinting and face identification have been the primary tools for verifying user identity.

Shanghai Xinyan AI Technology, the fintech partner of Du Xiaoman and Mashang, is levering artificial intelligence, biometric identification and machine-learning technology to help its partners better manage business risks.

The fintech startup has accumulated massive data on individuals whose credit information is not covered by the central bank. It has shared risk-management products with consumer finance companies and small loan providers.

Its early warning system can track credit information on people who have secured a loan and report abnormalities, such as a deteriorating credit status, within seconds. That allows lenders to intercede quickly.

The company said it plans to devote more resources to natural language processing technology, which can derive information from massive amounts of unstructured data and enhance risk-control capabilities.

Fraud, especially organized fraud, will remain the biggest challenge for China’s major fintech players in the coming years, said LexinFintech Holdings, an online consumer-finance platform.

The company has adopted AI-backed technologies to evaluate the possibility of fraud by analyzing connections between customers, based on a wide range of metrics such as shared devices, Wi-Fi networks, and contact lists.

Organized fraud involving more than 50 individuals has been eliminated on Lexin's platform since the beginning of this year, and more than 2,000 cases of fraud were prevented last year alone.

Millennials, or those born in the 1990s, are the financial force of tomorrow, according to the current buzz in finance circles. They are a tech-savvy generation who value innovation and personalization. Engaging this digital group in financial services is a key challenge where financial technology can play a big role.

“Intelligent investment” systems mainly target young people who may shun dealing with investment advisers and who are not willing to pay handsome commissions. Artificial investment advisers can better meet their needs, Huang Xiangqian, chief executive officer of Shanghai Xinyan AI Technology, told Shanghai Daily.

Ping An Puhui, a unit of Ping An Insurance Group that specializes in small business and consumer finance, has just launched the world's first robot to handle loan applications and approvals remotely.

Thanks to technologies like Big Data and artificial intelligence, customers approved for credit lines on the Lexin platform can receive funds within a few minutes of filing applications -- a process that could otherwise take weeks in the traditional financial system.

To ride the tide of fintech development in China, Lexin plans to unveil more business solutions aimed at the younger generation.

Pintec Technology’s Zheng said his company is using traditional as well as “alternative data” systems to better support customer credit profiling.

The so-called alternative data may include users’ travel records, their behavior on social media, or invoices and receipts for small businesses.

The company uses technology to help clients better understand their own financial needs, develop more quality products and offer customized wealth management and investment advice.

While all this brings greater convenience, it also raises alarm bells about consumer privacy and data protection.

Office worker Shi said she is concerned about the potential risks of some technologies, like facial recognition, and will pay closer more attention to user privacy terms before downloading and using applications in the future.

Looking forward, future fintech winners will have their own core technologies

and integrate their technologies more closely with their clients’ businesses, Pintech said.

Xinyan’s Huang said current competition within the industry centers around the application abilities of various technologies, but in the future, market leaders will be those who excel in more theoretical research and technological exploration.

He added that internal controls and external evaluations must be strengthened to ensure that technological innovations adhere to regulations.

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