Unlike foreign regions, China's financial institutions and FinTech companies have no passion for the development of RegTech service. At this stage, the development of RegTech is currently driven by governments and regulators. In China, when the government is purchasing goods and services, they shall launch a bidding process first and strictly abide by the laws and regulations of bidding. So does their purchase of RegTech services.
However, in consideration of national security, the governments will give priority to state-owned companies rather than foreign-invested companies.
In China, it is still early days for the RegTech. RegTech is a new area to the public. At present, the PRC laws did not set forth the definition of RegTech, not even set forth the obligations and requirements in order to provide RegTech-services.
In May 2017, the People's Bank of China, one of the PRC banking authority, announced to establish the Fintech Committee, which aiming at strengthening the planning and coordination of financial science and technology work. According to the People's Bank of China, they will put the supervision of science and technology (RegTech) into application, use big data technology, artificial intelligence and cloud computing technology to enhance the ability to respond to financial risks. We understand this is the development direction and tendency for RegTech in China.
The market capacity of RegTech depends on the demand of governments and regulators. In China, the RegTech industry is still relatively fragmented, with a large number of service providers. To our knowledge, some giant technology companies have close cooperation with the government, including Huawei, ZTE and Inspur etc.
In China, “Reg” is the responsibility of governmental authority. Generally speaking, RegTech services companies are companies who mainly provide service to the governments and regulators. For companies doing business with the governments, there are several rules and obligations they should comply with. In most cases, a confidential deed with strict confidential obligations is necessary.
Norah Yinuo Zhang