Deep integration of digital technology and finance, increasing supply and improving efficiency

The experience and economic theory of the development of my country’s financial system since the reform and opening up have shown that the combination of technology and finance is improving financial efficiency. While improving service efficiency, it also promotes the transformation and reform of the financial system. In the 1980s, my country's commercial banking business transformed from manual accounting to electronic automation, realizing cross-regional deposits and withdrawals. After entering the 21st century, the network transformation of financial institutions has enabled online business approval and real-time transfer of funds to different places, and has promoted significant improvements in the efficiency of fund settlement, risk control and internal management of financial institutions. In recent years, with the rapid development of digital technologies such as big data, artificial intelligence, and cloud computing, these technologies have begun to be deeply integrated with financial services, driving the transformation of financial institutions' services into scenarios, and also driving financial institutions to become digital and intelligent. transformation.

If the biggest problem in financial transactions is information asymmetry, which can easily lead to adverse selection and moral hazard problems, the greatest contribution of digital technology is precisely to help reduce the degree of information asymmetry, especially for those with traditional Small, medium and micro enterprises and low-income groups that are difficult for financial institutions to reach and serve. my country's digital financial innovation provides a possible path to solve the common problems of "difficulty in acquiring customers" and "difficulty in financing" in the development of inclusive finance. This innovation has very important implications for traditional financial institutions and even the financial industry around the world.

The rapid development of digital technology, the insufficient effective supply of traditional finance and the relatively loose regulatory environment are the main reasons for the rapid development of emerging digital finance and digital economy. So far, my country has achieved great success in the fields of mobile payment, big data risk control, online loans, digital insurance and online investment, and its innovation and achievements in developing inclusive finance are even world-class. To date, most of these digital financial innovations have been driven by new digital financial institutions.

The process and challenges of digital transformation of financial institutions

The next step in the development of digital finance in my country may present a new trend, that is, while new digital financial institutions continue to lead innovation, traditional Financial institutions may become the main force in my country's digital finance. There are even situations where technology companies and financial institutions leverage their respective comparative advantages and cooperate closely, that is, technology companies provide technical solutions for financial transactions, and financial institutions use digital technology to improve the efficiency of financial services. From the perspective of business development, digital technology will be further integrated with the business models, business processes and financial products of traditional financial institutions. For example, the combination of big data risk control and traditional bank risk control can not only improve the accuracy of risk control, but also expand the coverage of financial services. From a business perspective, digital finance will expand from current payments and loans to new areas such as smart investment services and digital currency. It can be said that the process of digital technology changing finance has just begun.

In reality, many financial institutions are already actively promoting their own digital transformation: First, traditional financial institutions actively use digital technology to achieve service paradigms, channel innovation, technology empowerment and ecological construction. Digital and intelligent transformation; second, traditional financial institutions take the initiative to learn from some business methods of digital finance to improve financial services. For example, learn big data risk control methods based on digital technology and combine them with traditional risk control models to improve the efficiency of risk control, especially to improve services for inclusive financial customer groups; third, regulatory authorities should actively respond to the challenges caused by the development of digital finance Some new issues include using practices such as the “Chinese-style regulatory sandbox” to balance financial innovation and financial stability.

However, it is worth pointing out that although my country has made rapid progress in the integration of digital technology and financial services in recent years, the digital transformation of my country's financial institutions still faces many challenges.

For example, there are significant differences in the digital capabilities of different types of financial institutions, the digital thinking of traditional financial institutions has not yet truly formed, there is a lack of effective collaboration mechanisms between cross-departments and lines within financial institutions, there is a shortage of innovative technical talents, there are issues with data quality and data governance, and supervision Model and efficiency are difficult to adapt to the rapid integration of digital technology and financial services, etc. These are the main challenges currently faced by financial institutions in their digital transformation. Therefore, it is of great practical significance to actively guide and promote the digital transformation of financial institutions and build a financial system that is compatible with the digital economy and financial technology.

Policy recommendations for promoting the digital transformation and healthy development of financial institutions

The research team believes that the integration of digital technology and financial services is the law and natural trend of financial development, and financial institutions should actively promote the integration of digital technology and financial services. Digital and intelligent transformation of institutions, and following the principles of adapting to the market, supporting innovation and optimizing supervision. Especially since the outbreak of the new coronavirus, the digital economy has played a role as a macroeconomic stabilizer. During this period, the demand for contactless financial services has been relatively strong. Not only young people are more inclined to online financial services such as mobile payment and online financial management, but the elderly, patients, and people with disabilities also urgently need to "do not go out or meet each other". Obtaining safe and convenient financial services puts forward higher requirements for the digital transformation of financial institutions.

To this end, the research team put forward the following six specific suggestions:

First, actively use digital technology to promote traditional financial institutions to achieve differentiated transformation of business models and service groups. Large financial institutions should increase the integration of digital technology research and development with traditional financial services to improve service efficiency. Small and medium-sized financial institutions should focus on cooperation with financial technology service platforms, clarify differentiated market positioning, transform more towards digital retail banks, use digital technology to control operating costs, improve risk control effects, and expand the scope of service customer groups. Financial institutions of different types and sizes should establish differentiated and refined division of labor and cooperation, optimize the financial industry chain structure, expand financial service groups, and improve financial service efficiency.

Second, accelerate the construction of digital financial infrastructure and create a good business environment for the digital transformation of financial institutions. This can include laying 5G networks across the country, improving intelligent identity recognition systems, including remote account opening at financial institutions, and building a unified data platform.

Third, speed up data legislation and strengthen comprehensive management of data use and data privacy protection. The first is to focus on solving the problem of data portability. Only when individuals can carry data on big technology platforms can we talk about big data. But at the same time, the interests and enthusiasm of big technology platforms must also be protected. The second is to ensure market competition, avoid a winner-take-all situation among big technology platforms, enhance the vitality of the digital financial industry, and protect consumer interests.

Fourth, actively innovate financial regulatory tools and use regulatory technology to promote the digital transformation of financial institutions. The first is to use the “regulatory sandbox” mechanism to provide a safe and convenient testing environment for innovative financial technology applications. Conditionally test new business models, technical processes and financial products, and then launch them on the market if successful. The second is to take into account the characteristics of digital financial risks that spread quickly, spread widely, and have complex composition, actively develop regulatory technology capabilities, and combine them with traditional information disclosure, on-site inspections and other means to better identify and deal with financial risks.

Fifth, timely promote the construction of standards for financial technology, regulatory technology and digital financial products, and promote a reasonable balance between financial innovation and financial risks. First, we must actively study and timely formulate relevant standards for the application of innovative technologies such as big data, cloud computing, blockchain, and artificial intelligence in the financial field; second, the application of these digital technologies in the financial field has spawned new business models, New business formats, accelerate the improvement of standards for financial products, financial services, and financial supervision, and give full play to the supporting and leading role of financial standards in innovation promotion and risk management.

Sixth, reform the regulatory framework, shift from institutional supervision to functional supervision as soon as possible, and attach importance to behavioral supervision to strengthen the protection of the legitimate rights and interests of financial consumers in digital transformation. Comprehensive financial operations and the further integration of digital technology and financial activities are the current basic trends in financial development and an inevitable choice for financial institutions to enhance their competitiveness in the process of economic globalization. Our country should shift from institutional supervision to a combination of functional supervision, prudential supervision, and behavioral supervision, and at the same time gradually build a comprehensive financial supervision framework to cope with the trend of comprehensive operations of financial institutions.