Chinese financial industry regulators face difficulties in keeping up with rapidly advancing technology but they are fighting back with their own new high-tech security measures, delegates said at Shanghai's Lujiazui Forum on the financial sector said on Tuesday and Wednesday.
The rise of big data, cloud computing and artificial intelligence has significantly changed the way people use financial services and presented many new challenges.
Such innovation has made it difficult for regulators to identify risks. Deng Zhiyi, director-general of the Trust Institution Supervision Department at the China Banking Regulatory Commission (CBRC), said that traditional regulatory systems have now become inefficient.
"In the past, when we wanted to conduct inspections, we just went to the banks and checked their financial reports and their vouchers. This is very inefficient. That's why now we see not only the emergence of fin-tech business, but also the emergence of the business of regulation technology," explained Deng at the forum.
New tech developed for the financial security field includes 600 ATMs installed with facial recognition functions in Macao. The ATMs are connected an ID database to ensure that the withdrawer is the actual bank card owner.
Macao will finish installing 1,300 units by the end of July. With that amount of new technology, the cost of supervising the financial industries will certainly rise. But Teng Lin Seng, chairman of the Monetary Authority of Macao, said the cost is worth it.
"We've taken the rising cost and the risk prevention into consideration and come to the conclusion that it is more important to have a better regulation strategy. Also, withdrawers will have to pay some commission fees when they are using the ATMs. So that will help subsidize the rising regulation costs," Teng said.
Nicolas Aguzin, who heads the Asia Pacific region for JPMorgan Chase, also believes regulators need better technology and that investment in this will be cost-effective in the long term.
"Technology will lower the cost for the public and for the population. Technology has been around to lower the cost of financial services for a very long time; regulations will adapt and find ways to co-exist together with new developments," he said.