With the rapid development of digital technologies and the ever-increasing demand for financial services, digital finance has gradually become a significant driver of economic growth and an important force in improving the quality of financial services. To respond to the fast development of digital finance and provide support for the high-quality development of the digital economy, on November 27, 2024, the People’s Bank of China, along with six other departments, jointly issued the “Action Plan for Promoting the High-Quality Development of Digital Finance” (hereinafter referred to as the “Action Plan”) []\. This plan clearly outlines the strategic goals, key tasks, and implementation paths for digital finance development, marking a more determined step in China’s digital transformation of finance and financial technology innovation.
II. Purpose of the Release
The release of the “Action Plan” aims to implement the decisions and deployments made at the 20th Party Congress and the Central Financial Work Conference, and to promote the high-quality development of the digital finance industry. This document not only responds to the new demands for financial services in the era of digital economy but also provides legal and policy guarantees for the innovation of digital financial products and services. By strengthening the construction of the digital financial system, promoting the digital transformation of financial institutions, and innovating financial service models, the plan seeks to enhance China’s financial system’s international competitiveness, ensure the deep integration of financial services with the real economy, and promote the development of the digital economy.
III. Overview of Main Content
The “Action Plan” is rich in content, covering a broad range of aspects such as the strategic layout of digital finance development, technological innovation, service quality improvement, and risk prevention and control. The specific tasks can be summarized into the following main sections:
1. Systematic Promotion of Digital Transformation of Financial Institutions
The “Action Plan” emphasizes the need for systematic measures to accelerate the digital transformation of financial institutions, focusing on the following aspects:
1) Strategic Planning and Organizational Management: Financial institutions are required to formulate comprehensive digital transformation strategies, clarify objectives and paths, and establish sound management and collaboration mechanisms. For example, setting up a “leader responsibility system” ensures that the leadership prioritizes digital transformation, and through collaboration between organizational departments, the transformation process is accelerated. Additionally, enhancing the assessment of digital transformation outcomes and implementing corresponding incentives and evaluation mechanisms is necessary.
2) Digital Technology Support Capability: The plan stresses that financial institutions must enhance their grasp and application of digital technologies by strengthening cooperation with external technology departments to improve the development and application of digital technologies. For instance, cross-departmental teams should be established to accelerate the research and application of new technologies, thereby improving the flexibility and responsiveness of financial services.
3) Data Governance and Integration: As data forms the foundation of digital finance, strengthening its governance and integration is essential. Financial institutions must establish a robust data governance system, integrate internal and external data resources, improve data quality management, and utilize big data and artificial intelligence to enhance business operations and risk control capabilities. This not only improves the precision of financial services but also enhances the intelligent level of business decision-making.
4) Building a Digital Financial Service Ecosystem: Financial institutions are encouraged to build a service ecosystem compatible with digital finance, especially in areas such as retail finance and inclusive finance. By utilizing digital technologies, inclusive and accessible financial services can be constructed to meet the needs of a wide range of users. Additionally, financial institutions should participate in the construction of digital governments, thereby enhancing the digital level of public services.
5) Enhancing Operational Management Capabilities: Beyond technical support, financial institutions must improve their digital operational management capabilities. By using digital tools such as robotic process automation (RPA) and digital marketing tools, work efficiency can be improved, resource allocation optimized, and operational costs reduced. Furthermore, strengthening the training and incentive mechanisms for digital talents is crucial for driving digital transformation.
2. Using Digital Technologies to Enhance the Quality and Efficiency of Financial Services in Key Areas
The “Action Plan” proposes that digital technologies be used to improve financial services in five key areas:
1) FinTech: The plan encourages financial institutions to use technologies such as big data and cloud computing to create comprehensive profiles of tech companies, thereby enhancing their service capabilities for startups and growth-stage enterprises. This helps diversify the financing channels for tech companies and improves the precision of financing through intelligent risk control.
2) Green Finance: Financial institutions are encouraged to leverage digital technologies to innovate financial products and services in areas such as carbon emissions and environmental, social, and governance (ESG) ratings. This enhances the ability to identify green projects and strengthens risk management for green finance products. This not only supports the financing of environmental protection projects but also improves the overall service quality of green finance.
3) Inclusive Finance: In the digital-inclusive finance domain, the plan proposes the construction of credit financing platforms like “Credit Easy Loan,” which rely on big data and transaction data to innovate financing models and enhance financial support for small and micro enterprises. The plan also emphasizes the need to strengthen digital financial services for rural revitalization, integrating financial information in rural areas and building digital payment systems.
4) Pension Finance: In the field of pension finance, the “Action Plan” encourages financial institutions to develop financial products tailored for elderly populations, especially those offering barrier-free services and age-friendly digital financial products. Empowering technology will enhance the convenience of financial services for seniors, and efforts should be made to ensure the widespread dissemination of financial knowledge among older populations to improve their ability to use digital finance.
5) Integration of Digital and Real Economy: The plan highlights the need to accelerate the penetration of digital finance into traditional industries. Financial institutions should integrate with the “Industrial Internet” and “AI + Industry” models to promote the digital transformation of traditional industries, improve the efficiency of financial services in supply chains, and help the real economy better integrate with the digital economy.
3. Strengthening the Foundations for the Development of Digital Finance
To support the sustainable development of digital finance, the “Action Plan” proposes the following infrastructure measures:
1) Optimizing the Payment Environment and Ensuring Security: Enhancing the security and stability of payment systems is fundamental for the development of digital finance. The plan clearly states that the ability of payment systems to handle emergencies should be strengthened to ensure their stable operation in exceptional circumstances. At the same time, the digital yuan pilot should be steadily advanced, promoting the application scenarios of digital currency and expanding its use.
2) Building the Financial Data Market: The construction of the financial data market should be strengthened to promote the integration and sharing of financial data, reducing the cost for financial institutions to access data. The plan also emphasizes the need to promote the aggregation and utilization of financial credit information, foster the development of the credit rating market, and enhance the transparency of financial markets and the efficiency of financing.
3) Improving Financial Infrastructure: The plan proposes to vigorously build green, smart financial data centers and network architectures to support the technological application of digital finance. By enhancing data storage, computing power, and cloud computing, the security and efficiency of financial networks will be improved, providing a solid foundation for the rapid development of digital finance.
4. Improving the Governance System of Digital Finance
To effectively manage the risks of the digital finance industry and ensure its healthy development, the “Action Plan” proposes several regulatory and governance measures:
1) Risk Prevention in Digital Finance: Financial institutions need to strengthen compliance management and conduct regular compliance reviews and risk assessments for innovative businesses. In particular, risk management for algorithms and models should focus on improving the transparency and explainability of algorithms to avoid unfair or opaque financial products.
2) Data and Network Security Protection: As financial services become increasingly digitalized, data and network security become paramount. The “Action Plan” emphasizes the need for financial institutions to strengthen data security management, ensure that data protection measures comply with relevant laws and regulations, and enhance cybersecurity capabilities.
3) Regulation of Digital Finance Businesses: The plan calls for strengthening the regulation of digital financial products and services to ensure their compliance. It requires enhanced supervision of emerging digital finance businesses, employing both penetrative and functional regulatory approaches to ensure that financial innovation stays within the bounds of risk control.
4) Financial Consumer Protection: As digital finance develops, the protection of financial consumers’ rights becomes a critical issue. The “Action Plan” stresses the need to establish a comprehensive consumer protection mechanism, particularly for vulnerable groups such as the elderly, ensuring that they can enjoy the benefits of digital finance on an equal footing.
IV. Impact on Relevant Industries
The development of digital finance is likely to have the following impacts on the financial industry:
1. Challenges and Opportunities for Financial Institutions: Financial institutions will face significant pressure to undergo digital transformation, requiring deep reforms in technology, management, and business models. However, this also provides opportunities for innovation, particularly in risk control, product design, and customer service. For example, with the implementation of the “Action Plan,” traditional banks may need to undergo digital transformation to enhance their competitiveness. Banks will improve operational efficiency, optimize customer experience, and offer personalized services through data governance, fintech innovations, and cloud computing, among other methods.
2. Support for Technology Enterprises: The “Action Plan” encourages financial institutions to use digital technologies to create comprehensive profiles of technology enterprises to support their development. For instance, artificial intelligence can be used to assess the growth potential, technical strength, and market performance of tech companies, thereby providing them with targeted financing solutions. Additionally, blockchain technology can ensure the transparency and security of the financing process.
3. Deepening Green and Inclusive Finance: Digital technologies will provide more support for the innovation of green finance and inclusive finance, promoting the sustainable development of these fields. With the support of the “Action Plan,” financial institutions will increasingly rely on digital technologies to develop financial products related to carbon emissions, environmental, social, and governance (ESG) criteria. For example, financial institutions may use big data to analyze a company’s carbon emissions data or the effectiveness of environmental protection projects and launch innovative products such as green bonds, carbon trading, and green funds.
V. Comments
The “Action Plan for Promoting the High-Quality Development of Digital Finance” outlines the strategic direction and specific measures for China’s digital finance development, covering a wide range of issues from technological innovation to risk prevention and control, from infrastructure construction to regulatory system improvement. Through the implementation of these measures, digital finance will further promote innovation and efficiency in China’s financial services while providing solid policy support for the rapid development of the digital economy.
II. Purpose of the Release
The release of the “Action Plan” aims to implement the decisions and deployments made at the 20th Party Congress and the Central Financial Work Conference, and to promote the high-quality development of the digital finance industry. This document not only responds to the new demands for financial services in the era of digital economy but also provides legal and policy guarantees for the innovation of digital financial products and services. By strengthening the construction of the digital financial system, promoting the digital transformation of financial institutions, and innovating financial service models, the plan seeks to enhance China’s financial system’s international competitiveness, ensure the deep integration of financial services with the real economy, and promote the development of the digital economy.
III. Overview of Main Content
The “Action Plan” is rich in content, covering a broad range of aspects such as the strategic layout of digital finance development, technological innovation, service quality improvement, and risk prevention and control. The specific tasks can be summarized into the following main sections:
1. Systematic Promotion of Digital Transformation of Financial Institutions
The “Action Plan” emphasizes the need for systematic measures to accelerate the digital transformation of financial institutions, focusing on the following aspects:
1) Strategic Planning and Organizational Management: Financial institutions are required to formulate comprehensive digital transformation strategies, clarify objectives and paths, and establish sound management and collaboration mechanisms. For example, setting up a “leader responsibility system” ensures that the leadership prioritizes digital transformation, and through collaboration between organizational departments, the transformation process is accelerated. Additionally, enhancing the assessment of digital transformation outcomes and implementing corresponding incentives and evaluation mechanisms is necessary.
2) Digital Technology Support Capability: The plan stresses that financial institutions must enhance their grasp and application of digital technologies by strengthening cooperation with external technology departments to improve the development and application of digital technologies. For instance, cross-departmental teams should be established to accelerate the research and application of new technologies, thereby improving the flexibility and responsiveness of financial services.
3) Data Governance and Integration: As data forms the foundation of digital finance, strengthening its governance and integration is essential. Financial institutions must establish a robust data governance system, integrate internal and external data resources, improve data quality management, and utilize big data and artificial intelligence to enhance business operations and risk control capabilities. This not only improves the precision of financial services but also enhances the intelligent level of business decision-making.
4) Building a Digital Financial Service Ecosystem: Financial institutions are encouraged to build a service ecosystem compatible with digital finance, especially in areas such as retail finance and inclusive finance. By utilizing digital technologies, inclusive and accessible financial services can be constructed to meet the needs of a wide range of users. Additionally, financial institutions should participate in the construction of digital governments, thereby enhancing the digital level of public services.
5) Enhancing Operational Management Capabilities: Beyond technical support, financial institutions must improve their digital operational management capabilities. By using digital tools such as robotic process automation (RPA) and digital marketing tools, work efficiency can be improved, resource allocation optimized, and operational costs reduced. Furthermore, strengthening the training and incentive mechanisms for digital talents is crucial for driving digital transformation.
2. Using Digital Technologies to Enhance the Quality and Efficiency of Financial Services in Key Areas
The “Action Plan” proposes that digital technologies be used to improve financial services in five key areas:
1) FinTech: The plan encourages financial institutions to use technologies such as big data and cloud computing to create comprehensive profiles of tech companies, thereby enhancing their service capabilities for startups and growth-stage enterprises. This helps diversify the financing channels for tech companies and improves the precision of financing through intelligent risk control.
2) Green Finance: Financial institutions are encouraged to leverage digital technologies to innovate financial products and services in areas such as carbon emissions and environmental, social, and governance (ESG) ratings. This enhances the ability to identify green projects and strengthens risk management for green finance products. This not only supports the financing of environmental protection projects but also improves the overall service quality of green finance.
3) Inclusive Finance: In the digital-inclusive finance domain, the plan proposes the construction of credit financing platforms like “Credit Easy Loan,” which rely on big data and transaction data to innovate financing models and enhance financial support for small and micro enterprises. The plan also emphasizes the need to strengthen digital financial services for rural revitalization, integrating financial information in rural areas and building digital payment systems.
4) Pension Finance: In the field of pension finance, the “Action Plan” encourages financial institutions to develop financial products tailored for elderly populations, especially those offering barrier-free services and age-friendly digital financial products. Empowering technology will enhance the convenience of financial services for seniors, and efforts should be made to ensure the widespread dissemination of financial knowledge among older populations to improve their ability to use digital finance.
5) Integration of Digital and Real Economy: The plan highlights the need to accelerate the penetration of digital finance into traditional industries. Financial institutions should integrate with the “Industrial Internet” and “AI + Industry” models to promote the digital transformation of traditional industries, improve the efficiency of financial services in supply chains, and help the real economy better integrate with the digital economy.
3. Strengthening the Foundations for the Development of Digital Finance
To support the sustainable development of digital finance, the “Action Plan” proposes the following infrastructure measures:
1) Optimizing the Payment Environment and Ensuring Security: Enhancing the security and stability of payment systems is fundamental for the development of digital finance. The plan clearly states that the ability of payment systems to handle emergencies should be strengthened to ensure their stable operation in exceptional circumstances. At the same time, the digital yuan pilot should be steadily advanced, promoting the application scenarios of digital currency and expanding its use.
2) Building the Financial Data Market: The construction of the financial data market should be strengthened to promote the integration and sharing of financial data, reducing the cost for financial institutions to access data. The plan also emphasizes the need to promote the aggregation and utilization of financial credit information, foster the development of the credit rating market, and enhance the transparency of financial markets and the efficiency of financing.
3) Improving Financial Infrastructure: The plan proposes to vigorously build green, smart financial data centers and network architectures to support the technological application of digital finance. By enhancing data storage, computing power, and cloud computing, the security and efficiency of financial networks will be improved, providing a solid foundation for the rapid development of digital finance.
4. Improving the Governance System of Digital Finance
To effectively manage the risks of the digital finance industry and ensure its healthy development, the “Action Plan” proposes several regulatory and governance measures:
1) Risk Prevention in Digital Finance: Financial institutions need to strengthen compliance management and conduct regular compliance reviews and risk assessments for innovative businesses. In particular, risk management for algorithms and models should focus on improving the transparency and explainability of algorithms to avoid unfair or opaque financial products.
2) Data and Network Security Protection: As financial services become increasingly digitalized, data and network security become paramount. The “Action Plan” emphasizes the need for financial institutions to strengthen data security management, ensure that data protection measures comply with relevant laws and regulations, and enhance cybersecurity capabilities.
3) Regulation of Digital Finance Businesses: The plan calls for strengthening the regulation of digital financial products and services to ensure their compliance. It requires enhanced supervision of emerging digital finance businesses, employing both penetrative and functional regulatory approaches to ensure that financial innovation stays within the bounds of risk control.
4) Financial Consumer Protection: As digital finance develops, the protection of financial consumers’ rights becomes a critical issue. The “Action Plan” stresses the need to establish a comprehensive consumer protection mechanism, particularly for vulnerable groups such as the elderly, ensuring that they can enjoy the benefits of digital finance on an equal footing.
IV. Impact on Relevant Industries
The development of digital finance is likely to have the following impacts on the financial industry:
1. Challenges and Opportunities for Financial Institutions: Financial institutions will face significant pressure to undergo digital transformation, requiring deep reforms in technology, management, and business models. However, this also provides opportunities for innovation, particularly in risk control, product design, and customer service. For example, with the implementation of the “Action Plan,” traditional banks may need to undergo digital transformation to enhance their competitiveness. Banks will improve operational efficiency, optimize customer experience, and offer personalized services through data governance, fintech innovations, and cloud computing, among other methods.
2. Support for Technology Enterprises: The “Action Plan” encourages financial institutions to use digital technologies to create comprehensive profiles of technology enterprises to support their development. For instance, artificial intelligence can be used to assess the growth potential, technical strength, and market performance of tech companies, thereby providing them with targeted financing solutions. Additionally, blockchain technology can ensure the transparency and security of the financing process.
3. Deepening Green and Inclusive Finance: Digital technologies will provide more support for the innovation of green finance and inclusive finance, promoting the sustainable development of these fields. With the support of the “Action Plan,” financial institutions will increasingly rely on digital technologies to develop financial products related to carbon emissions, environmental, social, and governance (ESG) criteria. For example, financial institutions may use big data to analyze a company’s carbon emissions data or the effectiveness of environmental protection projects and launch innovative products such as green bonds, carbon trading, and green funds.
V. Comments
The “Action Plan for Promoting the High-Quality Development of Digital Finance” outlines the strategic direction and specific measures for China’s digital finance development, covering a wide range of issues from technological innovation to risk prevention and control, from infrastructure construction to regulatory system improvement. Through the implementation of these measures, digital finance will further promote innovation and efficiency in China’s financial services while providing solid policy support for the rapid development of the digital economy.