China’s central bank has issued a development plan for the fintech sector for 2022 to 2025, providing guidance, targets, key tasks, and support for the financial industry’s digital transformation. This, in the long term, might end the imbalance of fintech sector in which only a few key players are carving up the market.
Venture capital funding into the fintech sector globally reached US$132 billion in 2021, according to CB Insights, taking 21% of the total VC funding of US$621 billion, a record high. This indicates the market’s strong confidence in the fintech sector’s long-term growth.
China’s fintech development plan for 2022-2025, as unveiled by the People’s Bank of China (PBoC), follows the first edition, which covered 2019 to 2021. The latest version focuses on the imbalance and insufficiency of fintech development in the country.
The plan’s two major aims are to standardize supervision and boost innovation, according to analysts. Key tasks under the plan are enhancing fintech corporate governance and regulatory supervision, strengthening data capability, bolstering innovation, and upgrading talent.
It also aims to narrow the gap between different regions when it comes to fintech development. Talent will be a key factor. Currently, fintech talents are concentrated in cities such as Beijing, Shenzhen, Shanghai and Hangzhou, with Beijing taking the lead, according to an index tracking fintech talent development of Chinese cities, which was issued by Chinese think tank Fintech Education and Research 50 Forum.
More supportive regulations and measures are needed to boost fintech development in other Chinese cities. And regulators are not wasting much time. Just recently, they declared Nanjing as a pilot city for the capital market’s fintech innovation.
Analysts expect more such measures to be rolled out soon following the release of the PBoC plan. Regulators are likely to focus on inclusive finance, e-CNY, and digitalized credit investigation for small and medium-scale enterprises.
In the long run, the market can expect a more balanced fintech development instead of the current scenario in which giant players are dominating the market.