Reform and fintech become key to success in financial inclusion

One way to deepen reform in the area of financial inclusion is to build a commercially sustainable strategy for the development of the field keeping risks under control, officials and experts said.

Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs, according to the World Bank.

Apart from making full use of accessible information to solve the problem of information asymmetry that exists between the provider and the candidate recipient of finance, banks should adopt effective risk management instruments and measures by improving technologies in this field, said Wang Zhaoxing, counselor of the State Council, China's Cabinet.

To encourage provision of financial inclusion services, banks should also make changes to their performance evaluation, motivation and accountability mechanisms while preventing corrupt practices during the process, Wang said at the third China financial inclusion innovative development summit held recently by People's Daily.

He said local governments ought to provide banks more support and convenience to improve risk management and advised financial authorities to establish credit guarantee schemes if they have sufficient funds.

Li Yang, chairman of the National Institution for Finance and Development, called for the deepening of reform for small and medium-sized banking institutions and the development of a multilayered capital market to expand channels for small businesses to replenish capital.

Moreover, financial regulators should guide city commercial banks, rural commercial banks and rural credit unions to focus on giving financial support to the real economy, the part of the economy that produces goods and services, Li said.

With the help of technologies like artificial intelligence, big data and cloud computing, banking institutions created precise rural customer profiles and allocated poverty alleviation funds flexibly and efficiently, said Pan Guangwei, executive vice-president of the China Banking Association.

At the end of the second quarter, the balance of loans to farming-related businesses with total credit lines of up to 10 million yuan ($1.52 million) per borrower reached 7.2 trillion yuan, rising by 12.3 percent from the beginning of this year, Pan said.

China Construction Bank Corp, a large State-owned commercial lender, integrated a large amount of its client data with external data, like tax information and property ownership information, and turned information on clients' business activities and consumption behavior into quantifiable data.

The bank restructured its credit evaluation system for small business clients and launched express loan service for small and micro enterprises. In March, it became China's first commercial bank whose balance of loans to small businesses with total credit lines of up to 10 million yuan per borrower exceeded 1 trillion yuan, said Jin Panshi, chief information officer of CCB.

WeBank, China's first online-only private bank backed by Tencent, which also operates WeChat, China's biggest all-in-one app, relies on its financial technology capabilities to create a new model of small business banking.

It launched an unsecured small business loan product at the end of 2017. Up to now, WeBank has issued over 2.4 million small business loans via this product, with the loan amount totaling more than 320 billion yuan.

The bank has granted credit to over 500,000 small and micro enterprises. About two-thirds of its corporate clients are first-time receivers of bank loans, said Wan Jun, chairman of the board of supervisors of WeBank.