Development Practice of DFI in China

He YangChina Academy of Information and Communications Technology

January 2019

Client

Farmer

Mobile payment

Internet loan

Internet financial management

Internet insurance

Development System of Digital Finance Inclusive in China

Service Mode

law and policy terminal network

Infrastructure

Medium, small and micro enterprises

Low-income,disabled and old people

The development of 4G,broadband, has established the foundation

The scale of Internet users in China

63200 64875 66769 68826 70958 73125 75116 77198 80166

2014.06 2014.12 2015.06 2015.12 2016.06 2016.12 2017.06 2017.12 2018.06

the number of Internet users（million）

Fixed/mobile broadband penetration rate

56.60% 59.60% 61.40% 65.30% 69.10%72.50% 74.40%

78.90% 82.00%85.40%

61.50% 65.00% 68.00%72.10% 75.00% 78.30% 81.40%

86.30% 90.40%93.10%

2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3

Fixed broadband Mobile broadband

The construction of 3G/4G Base stations

63.2 81.7 109.2 128.4 143.6 141.4 133 121.1

6.373.3

177.1

263.2328.4 346.4

2011 2012 2013 2014 2015 2016 2017 2018.6

3G（million） 4G（million）

The comparison on the penetration of 4G

7.6

29.6

58.2

70.373.5

1.7 6.314.4

25.535.8 46.7

55.1 58.3

0.4 1.5 3.2 7.3

1524.5

33.838.2

2011 2012 2013 2014 2015 2016 2017 2018.06

China OECD Worldwide

Source : PRC

Chinese mobile phone and smart phone penetration have build a solid foundation for the DFI

Source：MIIT,PRC

Chinese Mobile Phone penetration rate has reached 112% in 2018

Chinese smartphone penetration rate have reached 68% in 2018

73.682.6

90.8 94.5 95.5 96.2 102.5112.16

1

0

20

40

60

80

100

120

2011 2012 2013 2014 2015 2016 2017 2018Mobilephone

30%39%

58%66% 68%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2014 2015 2016 2017 2018Smartphone

With the Rapid Development of Mobile Payment in China, Inclusive Finance penetrates into Remote Poverty-stricken areas

Source ：China payment clearing associationPeople's Bank of China、People's Bank of China

Chinese mobile payment transaction have reached 200 trillion yuan in 2017

Chinese mobile payment has become the most common payment in 2017

Filling in Remote Rural Financial Gaps to

Revitalize the Rural Economy

17.2919.44

21.6123

25.1

4.5 5.36 6.15 78.1

3.04 3.4 3.51 3.66 3.9

2013年 2014年 2015年 2016年 2017年Rural loan balance (trillion yuan)

Farmer loan balance (trillion yuan)

Agricultural loan balance (trillion yuan)

52.01 96.06

1063.37

3118.86

2013 2017

ATMs (per 10, 000 persons)

POS Terminals (per 10, 000 persons)

12.5

42.5

9

29

2015 2016

The amount of Internet financial transactions (billion yuan)

The number of P2P platforms supporting the “Three Rural”

Source：People's Bank of China、China's " three rural areas" Internet finance development report (2017)

The loan balance of the “three Rural” have reached

37 trillion yuan in 2017

The number of ATMs and POS have reached three

thousand per 10 thousand in 2017

The amount of Internet financial transactions have reached 42 billion yuan in

2016

Internet loan

Internet financialmanagement

Internetinsurance

• for consumers to borrow by Ant credit pay• for merchants to provide online business wang wang agricultural loans

100 million Annual Active Users

Case-Ant Financial Constructs Inclusive Financial Platform by Internet

• Open operation platform for financial institutions• Provide users with customized financial products and services

• Ant insurance service platform has cooperated with 78 insuranceinstitutions

• Provide more than 2000 types of insurance products• Average daily insurance amount already exceeded 21 million sheet

330 million Accumulative user

392 million Annual Active Users

Case-A New Model for Agricultural Loans Provided by JD Finance

Make the cultivation loan

Distribute feed to users

Feed demand

Feed manufacturer

Feed acquired

Loan process

Cultivation ERP

Run out of feed

Baby chicks

Chickens

Slaughterhouse

Repayment process

breed

delivery

Pay off the arrears

The digital agricutrual loan of Jingdong(JD) Finance is a micro supply chain financial model with total loan of about 1 billion yuan in the past two years

Source：CAICT《China Digital Inclusive Financial Development Analysis Report》

Suggestions-Improve policies, Strengthen the supports

A

• Formulate and perfect the

relevant laws and regulations on

digital finance，putting the

development of DFI into the track

of legalization.

C

• Promote the application in the

field of public livelihood ,meeting

people‘s needs for a better life.

Promote the widespread

applications in various fields.

B• Improve the regulatory process

and capability, balancing the

innovation and risk during the

promotion of DFI

D

• Strengthen policy

communication with countries

along the “One Belt and One

Road” and improve regulatory

mechanism.

Source：CAICT《China Digital Inclusive Financial Development Analysis Report》

Suggestions-Strengthen foundation，Cultivate users

1

• Based on the infrastructure projects, A series of infrastructures are needed to be improved urgently, such as Anti-fraud system, Cloud Credit System, Third-party credit ratings and Credit agencies, etc.

2

• Encourage digital innovation throughmarket-oriented incentives and public-private partnerships, therefore stimulate the creativity in the DFI.

3

• Combing with projects about vulnerable groups, the relevant rules of anti-fraud in digital financial services should be further enforced and a reasonable recourse mechanismshould be established.

Source：CAICT《China Digital Inclusive Financial Development Analysis Report》

Suggestions-Industrial cooperation，Ecological construction

Cooperation• Multi-level and in-depth cooperation will help to improve the speed and scale

of the development of DFI in a short time. At the same time, traditional and new finance have their own advantages and characteristics. Only through cooperationcan we achieve win-win results.

Business model• The business model of DFI has been continuously innovated. New models of DFI

have initiated and many groups compete to enter the field of DFI, promoting the financial resources to small and micro entrepreneurs, individual businesses, ordinary wage earners and other inclusive financial groups.

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