Dialogue with Chen Daofu: Coexisting with value is the best risk control for inclusive finance
"After years of development, inclusive finance has made great progress. It has basically achieved that every village has institutions, every township has services, and every household has financial accounts. China's inclusive credit has reached the forefront of the world in terms of scientific and technological services." On the 8th, Chen Daofu, deputy director of the Financial Research Institute of the Development Research Center of the State Council, said in an interview with Sino-Singapore Jingwei and other media during the 2023 Financial Street Forum Annual Meeting.
Chen Daofu pointed out that the entities providing inclusive financial services are now more diversified, and almost all types of institutions in China are involved in providing inclusive financial services. There are both policy financial institutions and traditional financial institutions, including small and medium-sized financial institutions, large state-owned banks, and various financial institutions, such as small loan companies, consumer finance companies, financing guarantee companies in various places, and even leasing companies are involved in providing inclusive financial services. Chinese technology companies are also deeply involved in the inclusive finance provision system, directly or indirectly providing new inclusive financial services by providing scenarios and flows, as well as credit assistance and credit support.
In addition to the rich entities providing services, Chen Daofu also mentioned that after years of development, the service areas of China’s inclusive finance have become wider and wider, from the original provision of basic financial services to more complete financial needs, including deposits, loans, insurance, etc.
At present, large state-owned banks are lowering their services and squeezing the business of small and medium-sized banks to varying degrees. How can the two engage in misaligned competition?
In Chen Daofu’s view, there are two ways of thinking that can lead to misaligned competition and even cooperation. For example, inclusive finance below the county level can be entrusted to county financial institutions to carry out; another example is that large banks focus on inclusive financial services that can be distributed digitally and modelled, while small and medium-sized banks focus on relationship-based and characteristic inclusive financial services.
In addition, some small and medium-sized banks have additional mortgage guarantee requirements for inclusive financial products. How to carry out product innovation? Chen Daofu told Sino-Singapore Jingwei that it is necessary to find the intrinsic value of inclusive finance, and coexisting with value is the best risk control. You can explore transaction credit, commercial credit, and focus on developing back-end dynamic automatic financing models, etc.
Looking forward to the next development of inclusive finance, Chen Daofu said that in the future, inclusive finance can explore more in discovering the intrinsic value of investment operations, solving market difficulties, and exploring more sustainable business methods. Especially in the era of digital economy, it can find a path to independently realize value within the inclusive financial system from an ecological perspective.
