The Shenzhen branch of China’s central bank has developed the country’s first internet finance app monitoring system, signaling that efforts to improve internet finance regulation and reduce risks will continue in 2020.
Why it matters: The country’s regulators have redoubled a crackdown on illegal and risky financial practices such as peer-to-peer lending.
- Nearly 100,000 internet finance apps were found by a government-affiliated think tank to have high-risk vulnerabilities. Many finance apps have been accused of over-collecting user data and privacy infringement.
- Shenzhen, with its proximity to Hong Kong, is playing an increasingly significant role in finance and technology innovation in the Greater Bay Area. The city is a key site for researching and promoting government-led financial technology and blockchain initiatives.
Details: The Shenzhen branch of the People’s Bank of China (PBOC) met on Tuesday to discuss key tasks for 2020. Preventing and resolving major financial risks and strengthening financial technology applications were among the six key areas of focus for this year.
- The Shenzhen branch of the central bank unveiled the country’s first internet finance app monitoring system, which it developed in order to continue to reduce associated financial risks, National Business Daily reported (in Chinese).
- The system applies technologies including the Hadoop Distributed File System (HDFS), web crawling, big data analytics, and other methods based on financial technologies.
- Another areas of focus for the year include financial technology development in the Greater Bay Area as well as the Shenzhen pilot zone announced in August, and deepening financial reforms and efforts to open up. This includes expanding the PBOC’s trade finance blockchain platform launched in 2018, which so far has processed business volume upwards of RMB 90 billion ($13 billion).
Context: China has been tightening its oversight of finance apps.
- In December, the National Internet Finance Association (NIFA) selected 23 institutions from sectors including banking, securities, and payments to participate in a pilot program for finance apps.
- NIFA ordered the selected financial institutions to register their apps for evaluation and compliance purposes. The program will be rolled out nationwide in the future.