Shenzhen aims to be a fintech hub

The Metropolitan Government unveils draft plan to support the sector driven by breakthrough solutions

Shenzhen, Guangdong province, aims to build an international financial technology center by 2025 through a comprehensive digital upgrade of financial institutions and support real economies with innovative fundraising channels.

The goal was proposed in a draft plan recently unveiled by the municipal financial supervisory authority. The plan said Shenzhen will build five industrial parks and office clusters oriented towards fintech development, cultivating more than 10 world-renowned leading fintech firms.

On the heels of the document, the China Development Bank and Shenzhen’s Guangming District signed a 10 billion yuan ($1.42 billion) financing agreement on Monday to meet diversified fundraising needs for scientific research and commercialization projects in a science city in the district. The city is pegged as one of the national science centers in the Guangdong-Hong Kong-Macao Greater Bay Area. Several supercomputers in the city are expected to pave the way for fintech innovations, including the Peng Cheng Cloud Brain jointly forged by Huawei and Peng Cheng Laboratory.

Similar to the annual fintech week in Hong Kong and the FinTech Festival in Singapore, Shenzhen announced that it would organize an annual fintech festival starting this year. As part of the festival, an international competition – the FinTechathon – started this week.

Liu Guohong, director of the Finance and Modern Industry Research Center at the Shenzhen-based think tank China Development Institute, said Shenzhen has already laid a strong foundation, but there is still a gap between it and global fintech hubs such as New York and Singapore.

Many financial heavyweights have set up their technology subsidiaries in the city, including banks and securities firms. Shenzhen-based tech giants such as Tencent and Huawei have invested heavily in related technology platforms. WeBank, China’s first digital-only private bank, was also founded in Shenzhen.

The city’s advantage is technical support in software and hardware, with a number of leading technology companies’ established platforms. But Liu also pointed out that its weakness is its oversight and talent pool compared to Beijing and Shanghai.

In the Global Financial Centers Index published jointly by Z/Yen, a British think tank, and the China Development Institute in March, Shenzhen was ranked 10th, behind Shanghai in fourth and Beijing in eighth.

In addition to urging financial institutions to strengthen the technology sector, the new government document also emphasizes leveraging technology as a tool to make breakthroughs in financial services, he said.

The plan encourages financial firms to make full use of technologies, such as big data and artificial intelligence, and to digitize loan approvals and risk controls. For example, comprehensive analysis based on data from firms, public services and financial sectors can provide accurate profiles of potential borrowers, reducing reliance on collateral and reducing information gaps between banks and borrowers.

Shenzhen HTI Group Co Ltd, a local investment company for high-tech startups, has established an online fundraising platform to provide loans without traditional collateral requirements.

Zhang Meng, director of risk control in the company’s fundraising arm, said they developed an intelligent risk control model based on big data analysis of statistics in business operations, legal departments, tax systems, intellectual property rights and social credit information.

Regarding supervision, Liu Yang, deputy head of the technology section of Shenzhen Central Subbranch of People’s Bank of China, said the central bank initiated fintech innovation supervision pilots in 2020, and so far nine innovative fintech applications are undergoing tests for blockchain, big data, cloud computing and AI – technologies.