New know-how as the important thing to the globalization of the digital economic system – world
Visitors check their phones behind the screen and advertise facial recognition software during the Global Mobile Internet Conference at the National Convention in Beijing on April 27, 2018. [Photo/Agencies]
In the midst of the COVID-19 pandemic, the integration of digital technologies into the financial industry has accelerated and generated economic and social value in many application scenarios.
The use of digital technologies to identify and detect risks in the digital finance sector is a major issue for global government agencies, financial regulators and related stakeholders.
Andrew Sheng, former chairman of the Hong Kong Securities and Futures Commission, said that finance and technology are inextricably linked today as a financial deepening in speed, scale and scope without the recent developments in technology, especially in blockchain, 5G, artificial, Intelligence and big data would not have been possible. In addition, despite the pandemic, financial markets have grown when working from home was made possible by the relocation of commercial transactions and payments to the internet.
The People’s Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission recently prepared for consultation the measures to manage the due diligence of customers of financial institutions and to keep customer identity information and transaction records would require that financial institutions the Take the necessary technical measures to ensure the complete and accurate retention of customer identity data and transaction information, to prevent the loss, corruption or loss of customer identity data and transaction records, and to ensure that every transaction can be reproduced and traced.
Financial technologies like blockchain and facial recognition have made financial transactions safer and more widespread. Mainstream banks, insurance companies, investment firms, and asset managers have taken over fintech wholesale, changing the supply, speed, and cost of financial services. Therefore, digital KYC or “Know Your Customer” should be approached as a form of digital authentication in which appropriate guiding principles and technological solutions can effectively and completely meet the requirements of the Financial Action Task Force.
As a result of the advent of cyber currencies, some countries have experimented with official central bank digital currencies, while mainstream retailers are considering accepting such means of payment. In parallel with advances in fintech, there is innovation in regulatory technology, where digital authentication plays a critical role in enabling businesses and regulators to improve their cybersecurity.
Against the background of the current trend of ever faster financial innovations, forward-looking thinking and predictive strategies are particularly important for the use of regulatory technologies and cross-border international cooperation. Following the trend of emerging digital financial services, the development of digital authentication is a key component of regulatory technology as a “new infrastructure” essential to improving a country’s digital financial industry and managing the digital economy.
Anselmo Teng, former chairman of the Monetary Authority of Macau and co-chair of the Alliance for Financial Stability with Information Technology, recently pointed out at a workshop that digital “Know Your Customer” and digital authentication are new forms of infrastructure that security for the solid development of the digital economy and digital trade, including international trade.
In China, the digital transformation of the domestic financial industry is accelerating in several directions as it has benefited from the comparative advantages of more advanced infrastructure, more extensive business scenarios, and larger market size. With the rapid advance of digitization, applying digital authentication to improve regulatory efficiency and promote market regulation is not only an inevitable way to shape the digital finance development trend, but also a technological transformation of the regulatory wisdom and experience that contribute to it that can have applications for many other industries.
Chiang Chun Yuan, co-chair of the technical committee of the Alliance for Financial Stability with Information Technology, said, with the goal of sustainable development of the digital economy, services supported by digital technologies should focus on financial inclusion and health care for trust strengthen and avoid discrimination against the elderly and other people with special needs. Some Asia Pacific jurisdictions have already established digital authentication centers, which are effective in facilitating the operational standards of digital financial services and improving the efficiency, security and globalization of the digital economy.
With a view to financial oversight assisted by digital technology, China should establish its own kind of digital financial model by coordinating the efforts of government agencies, industry participants, universities and research resources to promote digital authentication research and application in the field of digital finance and improve quality and effectiveness of digital financial supervision to ensure financial stability.
With such an approach, China can add its wisdom and strength to the solid and sustainable development of the digital economy.
The author is a research fellow and Deputy Secretary General of the Beijing-based Think Tank Center for China and Globalization.