Source: China Business News
Recently, the exploration of regulatory technology has been frequently mentioned. On February 14, 2020, the "Opinions on Further Accelerating the Construction of the Shanghai International Financial Center and Financial Support for the Integrated Development of the Yangtze River Delta" (hereinafter referred to as "Opinions") was officially released. It mentioned in particular the need to strengthen the application of fintech in the regulatory field.
In addition, the central bank and the China Securities Regulatory Commission have recently mentioned the issue of fintech innovation supervision. In response, Liu Bin, director of the Financial Research Office of the China (Shanghai) Free Trade Zone Research Institute, told a reporter from China Business Daily that the application of emerging technologies such as big data, artificial intelligence, blockchain, and cloud computing in the financial field has promoted financial technology. Technology development, but technology is a double-edged sword. While increasing efficiency, it also brings potential risks, which puts new demands on regulatory technology.
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Double-edged sword for financial technology development
The "Opinions" stated that it is necessary to strengthen the application of fintech in the regulatory field and firmly adhere to the bottom line of not having systemic financial risks. At the same time, support financial institutions and large-scale technology companies to set up fintech companies in the Lingang New Area according to law, actively and steadily explore the application of new technologies such as artificial intelligence, big data, cloud computing, and blockchain in the financial field, and attach importance to the cultivation of fintech talents .
At the 2020 SFC System Working Conference, key tasks for 2020 were deployed, one of which was to support science and technology to further enhance regulatory effectiveness. During the meeting, it was mentioned that the application of innovative financial technologies such as blockchain should be actively explored in the supervision.
In addition, in January this year, the Business Management Department of the Central Bank also stated that it will further explore the construction of fintech innovation supervision tools that are in line with China's national conditions and in line with international standards, and guide licensed financial institutions to comply with laws and regulations and protect consumer rights. The use of modern information technology can empower finance to improve quality and efficiency, and create a defensive, safe, inclusive, and open financial technology innovation and development environment.
Why is the recent emphasis on the exploration of regulatory technology?
Liu Bin believes that emerging technologies have promoted the development of fintech, but at the same time they have brought potential risks. For example, the application of big data can aggregate and analyze large-scale data sets. However, under the current conditions of China's data laws and regulations, the application of big data in the financial field, especially the collection and use of personal financial information, will cause potential risks. , Resulting in personal privacy leaks.
At the same time, with the acceleration of the application of artificial intelligence in the financial field, potential risks will also arise in the future, such as the fairness and ethics of artificial intelligence algorithms. How to ensure the safety and robustness of artificial intelligence algorithms, but also prevent artificial intelligence Algorithms discriminate against certain groups of people and so on. Also, with the application of artificial intelligence in the investment field, the convergence of investment behavior will become more and more obvious, which may cause potential systemic risks.
The application of blockchain technology will also generate unpredictable risks while optimizing traditional business processes. For example, in the alliance chain widely used in the financial field, how to ensure the security of the data on the chain, ensure that only the authorized subjects can access the confidential business information, and prevent the leakage of sensitive business information.
Therefore, from the current actual point of view, the application of fintech improves the efficiency, but also brings potential risks. Traditional regulatory methods cannot effectively supervise the risks brought by fintech. Therefore, the recent regulatory agencies have particularly emphasized the need to develop Regulatory technology.
Liu Bin further added that at present, compared with foreign countries, there is still much room for improvement in the development of domestic regulatory technology. Foreign regulatory technology has developed into a relatively powerful segment in the financial technology field, and the number and size of enterprises far exceed domestic ones. This is mainly driven by the dual needs of financial institutions and regulatory agencies. Institutions' demand for compliant technology in regulatory technology is still very small, restricting the development of domestic regulatory technology.
"So we also see that domestic regulatory technology has not yet formed an obvious industry, and there is no regulatory technology enterprise group with regulatory technology services as its main business as abroad. Financial institutions are investing more in this area. "
Blockchain goes one step ahead
Regarding the combination of blockchain technology and financial supervision, what can be done specifically?
In this regard, Ma Chenyun, CEO of Beijing Trust Technology believes that there are three main aspects:
First, the key business data (operating data, reports, etc.) and key business processes of the monitored objects are chained. Pre-documentation to facilitate the post-event audit to determine the authenticity of the data.
Second, the introduction of smart contracts can be used to code and contract key business rules and requirements of regulatory authorities, enabling business rules to operate in accordance with pre-defined specifications, reducing human operations and violations of the law.
Third, the connection with the Internet court's blockchain certificate deposit platform enables judicial deposit of certificate deposits, on the one hand, to prevent potential disputes, and on the other hand, to restrict the regulatory authorities to improve the transparency and authority of the entire mechanism. The reporter noticed that fintech has been applied in the judicial process as one of the financial supervision. Hang Seng's Fan Tai Chain and Beijing Trust Technology's TDChain products provide blockchain technology support for Hangzhou and Beijing Internet Courts respectively to build electronic evidence platforms.
Ma Chenyun told reporters that with the development of the digital economy, various types of online civil disputes have also increased. Internet assets have the characteristics of mass, rapid spread, and easy loss. The traditional passive responsive trial mode and the identification mode of electronic evidence can not meet the needs of judicial trials in the new era, and it has shown problems such as difficulty in storing evidence, authentication, and identification.
In response, Hu Huipan, a product technology expert at Fantai Chain, told reporters that the blockchain technology is embedded in the judicial process through the form of an electronic evidence platform. After the electronic signing platform is docked with the electronic evidence platform, the corresponding digital fingerprint of the contract signed by the users on the platform is synchronized to the blockchain-based electronic evidence platform, which can be directly retrieved by the court. Benefits of doing this,
On the one hand, because the full nodes are synchronized and the electronic evidence forms a chain structure, each subsequent block will contain the hash of the previous block, which can prevent tampering.
On the other hand, it is convenient for relevant institutions to provide evidence and cross-examination from the procedure. At the same time, the problem that traditional copying of evidence may be damaged or tampered with is also solved. However, after the data is uploaded, how to ensure its privacy and security? Ma Chenyun said that in fact, from the perspective of regulatory applications, the data does not need to be uploaded in the original text, and the data hash value can be uploaded. Only when the audit is performed, the original data needs to be taken out.
Hu Huipan said that the most important thing for fintech in the supervision system is to improve the penetration and efficiency of supervision. Hang Seng Electronics is also exploring the application of blockchain in the financial system to trace the source, such as writing regulatory rules or logic into blockchain smart contracts, and then replacing manual supervision with embedded business processes. Regulated business, the process cannot proceed, so as to prevent the occurrence of risk events in a timely manner.