Chinese consumers are very keen users of digital financial services. Source: Shutterstock

Chinese consumers are very keen users of digital financial services. Source: Shutterstock

China exploring verification system for financial technology products

IN LINE with President Xi Jinping’s directive for China to capitalize on blockchain technology, the country is looking at expanding its financial infrastructure using technology.

As a result, China plans to introduce its very own digital currency.

The fintech industry in China is thriving — with an adoption rate of 87 percent recorded this year — and renewed support for digital payments.

With an increasing number of fintech products in the market, the People’s Bank of China has decided to push forward with a new initiative Certification of Fintech Products to regulate how fintech products are reviewed and verified.

So far, it has been reported that 11 financial technology software and hardware are being certified covering point-of-sale mobile terminals, embedded application software, user front-end software, and security carriers and chips.

Related bodies that are adopting the certified fintech products are permitted to label the products accordingly but are prohibited from leveraging it in promotions or advertisements. Further, the awarded certifications will be reviewed and renewed every three years, while the products are subject to random inspections.

The inspections will be conducted by appointed authorities who will be checking on the production process to verify compliance.

All these are to be accomplished while the certification is still valid, indicating a strict procedure in quality control. Nevertheless, other fintech products looking to be verified must be assessed against a certain benchmark to qualify for the certificate.

A good lesson that other developing financial institutions can follow is the fact that China values technologies that can boost the country’s economy while at the same time, regulating the technologies used to ensure quality.

As a powerful entity in fintech adoption, China is unquestionably a quick adopter of technology solutions.

Ultimately, it is the country’s progressive regulations that have helped fintech players WeChat and Alipay to not only lead the industry within the geographic boundaries of the country but also succeed overseas — in the US and Europe — through synergistic partnerships.

In the future, the new system being put in place for the fintech industry will help boost adoption among small- and mid-sized businesses in the country who will have confidence in the security and reliability of the systems as a result of the program.