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The digital age often means innovation, opportunities and challenges. The report "the era of Digital interdependence" released by the United Nations on June 10 pointed out that global opportunities outweigh risks in the digital age, worries about the digital economy will curb global innovation, and smart governance will stimulate new opportunities. In this context, how can China's financial industry better grasp the opportunity period of the digital era and stimulate the substantial improvement of service capacity? In this regard, "China Foreign Exchange" interviewed Cheng Li, chief technical officer of Ant Financial Services Group Group. He believes that financial technology is not the name of a class of institutions, but a common path for the development of the financial industry in the digital age. In the digital age, whether we can take the lead in realizing the breakthroughs of the new generation of key financial technologies and helping to further improve the efficiency of the real economy is the key to building the core competitiveness of China's financial industry.

Cheng Li Ant Financial Services Group Group Chief Technical Officer

China Foreign Exchange: what do you think of financial technology in the digital age?

Cheng Li: financial technology is not the name of a class of institutions, but a common path for the development of the financial industry in the digital age. From the perspective of financial history, the financial industry has been continuously enhancing its ability to serve the real economy by absorbing advanced technology. In the era of digital economy, the financial industry will continue to absorb the key technologies of digital finance and improve its service capacity.

On the one hand, the digital age has put forward new requirements for the financial industry, for example, to provide real-time and uninterrupted financial services for hundreds of millions of users, to be more intelligent and personalized, to ensure users' more convenient and smooth service experience, and to be more secure at the same time; on the other hand, the digital age also gives the financial industry the opportunity to better serve the real economy. Because of the digitization of the economy, the financial industry has a more convenient and lower-cost way to reach users; it has made use of multi-dimensional big data to provide risk assessment and credit evaluation opportunities for small and micro enterprises and individuals who lack credit data, and then provide them with a series of financial services, including credit, insurance and so on. Such examples are numerous in today's financial industry. Technology and finance are further achieving and merging with each other.

China Foreign Exchange: in the digital age full of opportunities and challenges, how can China's financial industry better grasp the pulse of the digital era?

Cheng Li: the era of digital economy has come. Whether we can take the lead in achieving breakthroughs in the key technologies of the new generation of finance, and then helping to further improve the efficiency of the real economy, is the key to building the core competitiveness of China's financial industry.

In the digital age, China's financial industry needs to pay attention to the following key digital financial technologies: blockchain (Blockchain), artificial intelligence (Artificial Intelligence), security (Security), Internet of things (Internet of Things) and computing (Computing). These technologies will be the key basic technologies for the development of the financial industry in the digital era, and these technologies are referred to as BASIC in the financial industry. The financial industry can firmly grasp these areas for innovation.

Blockchain (Blockchain) technology can credibly connect the services of financial institutions with the business processes of the real economy. Access to financial services must be credible. With the development of digital economy, the production mode of network cooperation will become the mainstream, and the information and services on the industrial chain will be more fragmented. All these will pose challenges to financial services. On the other hand, the trust endorsement mechanism of blockchain based on network consensus enables financial services to penetrate the needs of enterprises and consumers. In recent years, Chinese financial technology enterprises have continuously invested in R & D in the field of blockchain, and have occupied a dominant position in the number of patented technologies in the global blockchain.

In digital finance, the core competence of artificial intelligence (AI) technology is based on deep data insight and real-time decision-making, which can make financial services more efficient, safer and more personalized. Take Ant Financial Services Group as an example, artificial intelligence technology has been widely used in its risk control, loan, insurance and customer service business, bringing a better product and service experience for a large number of users. Every payment made by users on Alipay, the risk control engine based on data intelligence, will scan and make decisions in real time, and the risk control model can be learned online in real time and updated continuously. Automatic risk prevention and control, credit evaluation and intelligent customer service based on data intelligence have been more and more used in the financial industry.

Security (Security) technology is one of the basic technologies of digital finance, which provides solutions for regulatory technology, data security and privacy protection. In recent years, there has been a "surge" in the number of new types of financial institutions in various parts of our country, which makes "risks difficult to prevent and institutions difficult to manage" become the difficulty of local financial supervision, so it is urgent to strengthen the capacity building of regulatory science and technology. The "ant risk brain" system based on big data and artificial intelligence has been used by financial regulatory departments in more than a dozen provinces or cities across the country to help identify suspected stakeholders' illegal financial activity platforms for nearly 16000 times, and found more than 5000 suspected illegal fund-raising platforms. at the same time, block chain technology is introduced into supervision to create a more transparent innovation regulatory system. Data security and privacy issues can also be improved through AI-based data classification and classification, sensitive data identification and protection, trusted computing, multi-party secure computing and other technologies, and have been applied in government, fund, insurance, Internet and other industries.

Internet of things (IoT) technology helps to improve user access and experience upgrades in digital finance. The mobile Internet has profoundly changed the life experience of hundreds of millions of users, and financial services allow users to move their fingers anytime and anywhere. The next Internet of everything will further promote the popularity and experience innovation of financial services. In the Internet of things operating system, the Internet of things edge computing, the Internet of things intelligent platform and other aspects, the financial industry has carried out some pilot projects and made some breakthroughs. In payment terminals, retail facilities, buses and subways and other scenes, real-time online, facial scanning payment, license plate payment and other more convenient and secure payment methods separated from the mobile phone carrier are becoming the norm. The new data brought by IoT has also become the data source of credit and risk control, and the automatic transaction ability between devices has opened up a new space for the penetration of payment and financial services. The arrival of the era of the Internet of things brings unlimited imagination to the innovation of digital financial services.

Computing technology is the cornerstone of all digital technologies. It is the breakthrough in computing power and computing architecture that makes digital technologies such as cloud, mobile interconnection, big data intelligence and blockchain possible. Distributed transaction and big data processing architecture are the basic principles of the new generation of computing technology breakthrough. The distributed architecture based on cloud computing platform, distributed database and distributed middleware technology, it can better meet the requirements of the rapid development of financial business for high concurrent transaction processing capability, strong consistency, business continuity, second disaster recovery and elastic scalability. These have been fully verified in a number of massive user service platforms, including Ant Financial Services Group platform.

China Foreign Exchange: what do you think are the problems in the key technological breakthroughs of digital finance in China?

Cheng Li: while China has made many breakthroughs in the development of key technologies of digital finance, it is also faced with some problems in development, which are worthy of further exploration.

First of all, the breakthrough degree of the basic and core technologies facing the future is not high enough, and there is still a lack of technological capacity in supporting the development of the digital economy. Although our country has made great progress in the key BASIC digital technology innovation, it must be noted that the breakthrough and application of these key technologies in our country has just begun, just as we only ran 100m in the 10, 000-meter race. For example, blockchain technology has the potential to profoundly affect all aspects of economic activities in the era of digital economy, but the current application scene of blockchain in China is still in the local and surface, and the level of innovation and application still needs to be improved.

Secondly, the industrialization and application of key technologies of financial science and technology are still insufficient, resulting in a large number of repetitive R & D costs. At present, the key financial technologies that have made breakthroughs have the problem of "difficulty in application". The financial industry has high security requirements and low fault tolerance rate, and financial institutions generally have the psychology of "dare not try without large-scale application" in the face of the application of new technology. Ant Financial Services Group's distributed database OceanBase faces the above problems in the application of financial institutions. "the difficulty of application" also leads to the phenomenon of "repeating wheels" in the research and development of key financial technologies. Take the research and development of distributed database as an example, at present, large and medium-sized banks in China are carrying out research and development, repeatedly investing a large number of R & D efforts and hundreds of millions of R & D costs.

Thirdly, the development level of regulatory science and technology and safety technology still lags behind the development level of financial science and technology, making it difficult to identify and resolve some financial risks in time. At present, the innovation of China's financial industry emerges one after another, and all kinds of new financial institutions are developing rapidly, but the ability of regulatory technology (RegTech) lags behind the development of financial industry. Especially in the supervision of some types of financial institutions, the use of regulatory science and technology is seriously inadequate. The online supervision platform of some local financial supervision departments has just been built, but there are still some problems, such as data fragmentation, lack of analysis capacity, system maintenance and upgrading, and so on. This makes it more difficult to identify and resolve some local financial risks that already have regulatory difficulties.

Finally, the current financial system is not open enough to meet the needs of strong openness and cooperation in the digital economy era. Under the tide of digital economy, financial institutions in the United States, Europe and China are actively embracing financial technology. But on the whole, the centralized financial information system architecture is still the mainstream of China's financial institutions, and this kind of system is difficult to meet the digital financial needs characterized by high concurrency, large flow, high intelligence and personalization for a long time. It is also difficult to establish an open banking ecosystem in a platform way.

China Foreign Exchange: what thoughts do you have on the rapid development of the new technology system of China's financial industry in the future?

Cheng Li: first of all, it is necessary to strengthen the industrial development of key financial technologies such as cloud computing, data intelligence, and blockchain, and form an innovative chain from key technology research, development, and application. In terms of research and development, we should make good use of the market-oriented mechanism to make breakthroughs in technologies with high commercial value, and make breakthroughs in important basic technologies through policy guidance and financial support. In the aspect of application, it is suggested that the risk of the application of new technology should be appropriately increased, and financial institutions can control the risk by means of batch, gradual upgrade and substitution.

Secondly, it is necessary to strengthen the development of safety science and technology, supervise the development of science and technology, and establish a risk protection network that fully relies on financial science and technology innovation. Financial institutions should be encouraged to cooperate with large financial technology companies to improve their security science and technology capabilities. Similar financial institutions can be regulated by setting up a threshold for access to safety technology. At the national level, uniformly formulate and put forward requirements and standards for the construction of regulatory science and technology, change the current passive situation in which regulatory science and technology lags behind financial science and technology, and use regulatory science and technology to control risks and promote the healthy development of the industry.

Finally, we should face the future and speed up the pace of building a digital, open and cooperative framework for the financial industry. In the era of digital economy, the speed and effectiveness of digital transformation and upgrading of the financial industry is the key to whether our country can build up the core competitiveness of finance. It is suggested that from the national level, based on the development of the financial industry, formulate a timetable and roadmap to complete the upgrading of a new generation of open architecture within a few years. Specifically, the internal system can accelerate the upgrade of distributed architecture, while the external system can form a new open and cooperative architecture between agencies through block chain and multi-party secure computing technology.

Author (our reporter Rong Rong Han Yingtong)

Source: China Foreign Exchange, No. 12, 2019

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