Deloitte Global Chair on construction of Shanghai's IFC
On 15 July, the Shanghai International Financial Advisory Council (SIFAC) meeting was convened in Shanghai. The meeting, a platform for high-level dialogue, connects leaders from Shanghai government bodies with their peers from major financial institutions worldwide, gathering perspectives and experiences to accelerate efforts to build Shanghai into an International Financial Center. Leaders from the Shanghai government, People's Bank of China and other regulatory agencies were present at the meeting, including Gong Zhong, Mayor of Shanghai; Wu Qing, Vice Mayor of Shanghai; Xie Dong, Director of Shanghai Municipal Financial Regulatory Bureau; Jin Penghui, Deputy Director of the Shanghai headquarters of the People's Bank of China (PBOC) and President of PBOC's Shanghai Branch; and Cheng Hehong, Secretary of the Party Committee and Director of the Shanghai Securities Regulatory Commission. Over 10 heads from major global financial institutions, financial markets and consultancies also attended the meeting, which was chaired by Zhou Xiaochuan, SIFAC Convenor and former Governor of the People’s Bank of China.
Representatives from Deloitte were invited to the event, including Sharon Thorne, Deloitte Global Chair, David Wu, Deloitte China Vice Chairman, and Christine Hu, Deloitte China FSI ER Leader. As a member of SIFAC Council, Sharon discussed how stakeholders can drive fintech transformation against the backdrop of accelerated digitalization, prevent risks and achieve responsible fintech development.
Below are the highlights from her speech.
Accelerating financial services digitalization
The global financial community is undergoing its own technology revolution. It has witnessed faster adoption of cloud and AI technologies, and digital currency is rapidly becoming mainstream. Digitalization touches every aspect of financial services, and Shanghai is a major driver of this trend. In the 29th Global Financial Centers Index, the city ranks 2nd only to New York in fintech development. Fintech has vast potential to enable a swift, strong, economic recovery from the pandemic by enabling faster transfer of value across jurisdictions and supporting the real economy.
Be prepared and prevent fintech risks
As fintech advances, we must be careful that this does not outpace our ability to prevent risks, particularly breaches of privacy. Last year the Deloitte Global Financial Services team and World Economic Forum published a whitepaper that argues emerging technologies can not only leave institutions vulnerable, but can also create ethical, social and environmental risks. We must ensure fintech's attendant risks are understood and acknowledged and that sector participants deploy proper controls and governance.
Driving responsible fintech development through joint efforts
Regulatory coordination is critical to responsible fintech development. Beyond the financial sector incumbents, leading tech companies are expanding into financial services. Their financial innovations sometimes exist beyond the reach of financial supervision, which can create unforeseen risks that threaten financial market stability. Responsible fintech development will therefore require more cohesive regulatory regimes and cross-border cooperation, and the adoption of prudent approaches and methods.
But it is not all up to regulators. Professional organizations have a role, and as practitioners, we should play our part.
First, we must work with others. Whether colleagues or competitors, to forge common principles and practices that benefit markets and protect healthy competition and ethical practices.
Second, we must be patient. Too often financial institutions have raced to bring out new products without considering their systemic implications.
Third, we must lead. This is about establishing relationships that facilitate constructive collaboration and smart design for mutual benefit.
"Harmonization among stakeholders in the fintech, regulatory, and public sector ecosystems is good for society and the public interest. As a world-leading professional services organization, Deloitte is committed to fulfilling our obligation to act in the public interest and establish relationships. We also cooperate extensively with regulators as part of our commitment to continuous improvement in audit quality and building trust in markets and society. The financial reporting ecosystem can’t work for society unless all its stakeholders work together," Sharon added.
Deloitte aspires to make an impact that matters in strengthening the financial systems of Shanghai, China, Asia Pacific, and the world.