China Central Bank
The headquarters of the People's Bank of China, the central bank, is pictured in Beijing, China, as the country is hit by an outbreak of the new coronavirus, February 3, 2020. (Photo: REUTERS/Jason Lee)

A report claimed that China should allow more access to new-age banking as opposed to sticking with the traditional banking system to improve its economy. An expert claimed that regulators of the country should allow more experimentation such as completely digitizing banking processes using cloud-based services.

Analyst of the Commerical finance team in Primark, Dublin Patrick Meagher claimed that upon analysis of platforms created by Chinese e-commerce companies, China's banking policies should support the complete digitization of its banking systems.  

A report published in Micro Capital claimed that in the last several years, large-scale migration of financial services to digital platforms has occurred in China. The said digital financial services (DFS) were referred to as those underserved in the country's rural areas. It was also manifested that financial access has also been rising significantly in the country.

Meagher then claimed that the Chinese e-commerce company Alibaba has been expanding in several markets in recent weeks and that it has experienced surges in stock value. He then claimed that the financial inclusion of rural areas in Alibaba's services must inspire regulatory changes in the country to continue the positive effect of companies like Alibaba.

He also added that there should be an allowance of more experimentation outside the traditional banking systems in China to support the e-commerce industry growth. He suggested that completely digitizing banking processes with the use of cloud-based services could improve access for these rural citizens to financial services in China.

Meagher also noted that the cashless system expansion would require Chinese companies engaged in this industry to increase the number of their service points to reach a high proportion of cash users in the less-accessible regions of China.

He then warned that there might be potential risks associated with the regulation change including customer data manipulation. The said data manipulation may be accessed by commercial and governmental entities.

In other news, the IT World claimed that investors and business entities who wish to enter the Chinese market would flourish better if they followed the cloud-first method.

The report claimed that companies who wish to compete with existing Chinese players in the market would need to comply with the Great Firewall and navigate through the regulatory and privacy complexities of the country.

It was further explained that establishing a digital presence in the country is more challenging for foreign companies due to regulatory and security concerns.

It was further shown that the Chinese cloud market is dominated by local companies such as Alibaba Cloud and Tencent Cloud. It was revealed that the former held 42 percent of the public cloud market in 2018 alone while the latter held 12 percent.