Global market intelligence firm International Data Corporation (IDC) predicted that 80 percent of China's banks would purchase integrated financial technology (fintech) solutions from the cloud market by 2024. The said move may result in the complete digitization of China's banking system.
According to Xinhua.net, China has adopted a new generation of information technology methods such as artificial intelligence (AI), big data, cloud computing, mobile internet usage, and the Internet of Things (IoT). The IDC then suggested that China's adoption of these methods may result in total financial digital transformation in the country.
China's technological sector was reported to have spent about 220.8 billion yuan on the expansion of these methods for 2020 alone. The report further discussed that 20 percent of Chinese bank transactions may be pre-settled through digital platforms by the end of the year.
The said digitization was linked to lessening physical experience and leaned towards the adoption of the digital experience of its banking system. About 30 percent of China's insurance companies were also reported to cooperate with at least three insurance technology companies by 2021 that would further the digitization of financial transactions in the country.
About 40 percent of China's banks were also predicted to partner with financial technology companies operating in the cloud ecosystem by 2022. By the end of said year, the IDC forecasted that 35 percent of China's insurance companies would be using AI technology and voice interaction as an automation method for claim settlements.
According to Project Syndicate, China has long perceived the substantial importance of increasing financial access for small and medium-sized enterprises. The report claimed that online banks have been providing services that fulfill China's plan of furthering the growth and innovation of its banking systems.
The report claimed that 40 million small and medium-sized enterprises (SMEs) in China may overcome the lack of access to finances if the country would adopt economic dynamism.
Since 2005, its policymakers have expanded SME's access to financial services including low-income households. The country has imposed measures that would enable more than 8,000 micro-credit companies to ease of access to financial aid and has increased the annual SME loan requirements for banks. It also instituted a mandatory reduction in the average interest rate for loans of SMEs. The policies have imposed one percentage point per year since 2018.
The report then revealed that only 20 percent of Chinese SMEs have acquired loans from banks. It suggested that geographical diffusion is one of the main reasons why financial access has been trying for its SMEs. It was also claimed that banks in China find it more challenging to impose market-based risk pricing for SMEs.
