China Invests in Technology and Innovation to Boost Financial Inclusion

There’s a general consensus across the financial industry that greater financial inclusion should be achieved by incorporating more technology and by investing in digital innovation.

The representatives from the National Institution for Finance and Development voiced similar ideas on how to boost financial inclusion so that the services are affordable and accessible to every segment of the population.

The road to greater financial inclusion will see some major transformative changes along the way. The traditional financial models will have to be reinvented as new financial and business concepts are incorporated. Digitally driven financial inclusion will also demand changes in the organizational structures, business procedures, and enhancement of the technical skills as well as the data integration capabilities.

As commercial banks increase their reliance on technology and data, they will be able to cut down on costs and boost operational efficiencies.

Big data integration is a major area of focus in this attempt to bring about a digitally-driven financial inclusion.

There is a need to set up an enterprise data collection mechanism that will also ensure that the relevant data is analyzed and applied appropriately. Furthermore, data-driven mechanisms need to be put into place that will cover the front and back offices of the banks and manage the entire data collection process. Extracting key data is vital in this whole move to boost financial inclusion. The data will allow the banks to enhance their products, customer acquisition, and to improve financial services.

Financial institutions, on the other hand, are focusing more on the collection of non-financial data. Financial institutions have a shorter history so they’ll look to data gathered by other businesses such as the telecommunication providers.  The non-financial data thus collected will be helpful in designing more realistic simulations.

Most large financial institutions and banks are increasingly inculcating a business culture and operations that are data-driven and rely heavily on financial technologies such as big data, artificial intelligence, Blockchain, and cloud computing.

There have been a number of cost benefits as a result that will go on to make the financial services more affordable and boost financial inclusion as a result. One area that technology incorporation has helped the financial institutions with is fraud. Using machine learning and Blockchain technology in their business processes, they have successfully minimized frauds. For example, a consumer finance company in Shenzhen province achieved remarkable yearly statistics as there was only one case of fraud out of a million loan applications.