Earlier this week China’s central bank, The People’s Bank of China, said they would be accelerating infrastructure development for its own financial technology, this includes big spending to upgrade its data centers and the network linking all of the central bank’s offices and branches, and comes along with creating a “central bank cloud” by the end of this year. The reason why is because the central bank is in a bid to keep up the pace with the financial technology that is increasingly shaped by data, artificial intelligence, and Big Tech.
The People’s Bank aims to strike a balance between “supervision and growth”, of fintech companies, the bank said in a released statement on their website following a wrap-up with a national technology workshop on Monday, April 19th. The statement also included that the bank would draft a new plan for the entire industry by year’s end.
The central banks move in fintech come after the government recently made strides to ring in some of the industry’s biggest players by placing staggering new restrictions on internet-based financial and credit services. Ant Group, an affiliate of the world-renowned Alibaba, was ordered to restructure into a financial holding group and diminish its money market fund Yu’ebao. Ant, which handles China’s top mobile payments platform Alipay, will now be overseen by Beijing-based agencies once the move to place all of its financial services into a holding company is complete. This will include not only its mobile payments but also Ant’s credit origination platform, investment technology unit, and budding insurance operations.
Alibaba isn’t the only one being singled out. JD.com, Alibaba’s rival, was also slammed by this new regulatory overhaul. JD Technology, its financial technology arm, has also been in the process of restructuring after its plan to go public via an initial public offering in Shanghai.
What is currently unknown is how the new structure will affect the People’s Bank’s power over the data obtained from these companies this includes consumer credit data and others. What many experts believe is since there is a vast array of services offered from these Big Tech companies, this data can show how any individual who has used their services spends their money, where they have traveled, and other sensitive information. Also, what is unknown is the central bank’s current capabilities with dealing with such massive amounts of user data, although recent moves suggest the bank is looking at many different ways to address this issue.
This comes on the heels of the Peoples Bank’s registration of two new fintech companies. Back in July of 2020, the central bank created a business called Chengfang Fintech with 2 billion yuan (US$307 million) in registered capital. This company is tasked with handling software development, technology transfer, data processing, and sales of software, equipment and electronics. Then three months later, it founded Chengfang Financial Information Technology, with 1.5 billion yuan in registered capital. This holding will run the network that serves to be the bank’s technical backbone and handles its four data centers. In the statement referenced, earlier the bank said they envision fintech as a tool for improving services in the real economy within the existing financial system.
Chen, Celia. “China’s Central Bank to Build out Fintech Cloud Infrastructure after Clipping the Wings of Ant Group, JD.Com.” South China Morning Post, 20 Apr. 2021, www.scmp.com/tech/policy/article/3130292/chinas-central-bank-build-out-fintech-cloud-infrastructure-after.