CHAPTER 11Financial Technology and China’s Inclusive Finance

By Jianxiong Lei1

1Director, Jingdong Digital Technology Big Data Decision Science Center,

The development of financial technology is in the ascendant compared to the traditional financial services model. Digital competitors, such as P2P companies, online micro loan companies, consumer finance companies and wealth management companies as well as major internet companies such as BATJ (Baidu, Alibaba, Tencent, Jingdong) are on the rise and threatening the status quo. The traditional banking industry is standing at the gate of the digital age.

McKinsey & Company predicts that 10–40% of the bank’s top five retail businesses will face competitive threats by 2025 and 20–60% of profits might disappear as a result of digital competitors. In response to the pressures and challenges coming from these “Barbarians at the Gate” the banking industry urgently needs to embed digital technology into daily financial services and open its doors to digital revolution.

At present, China is undergoing a vigorous revolution in inclusive finance. The technology of big data and artificial intelligence has broken through the obstacles in respect to data availability both in terms of breadth and accuracy in the traditional personal credit system based on China’s Central Bank’s credit information system. Therefore, financial institutions can use the behaviour data left by customers when using the internet to identify their risk profile and preferences ...

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