People walk past the headquarters of the People’s Bank of China (PBOC), the central bank, in Beijing, China September 28, 2018.
Jason Lee | Reuters
BEIJING – China’s central government is making it clear that fintech companies like Ant Group will come under the same strict financial regulation as banks.
Many new businesses are starting up in China and other countries using new technology to sell cheaper and faster financial services, from cash transfers to loans. Rapid consumer adoption has encouraged banks to work with start-ups, which often assert that they are technology or fintech companies, rather than financial institutions.
“But fintech is still a finances, so there should be a ‘same business, same rules’ principle,” Pan Gongsheng, deputy governor of the People’s Bank of China, wrote in a piece opinion in the Financial Times Wednesday. Pan will also head the national foreign exchange regulator, the State Administration of Foreign Exchange.
“We need regulation that emphasizes the product and not the form of a company,” Pan said. “The goal is to align business rules and standards with regulation to stop arbitrage.”
Chinese authorities have stepped in to regulate fintech companies in recent months.
In particular, regulators abruptly stopped listing Ant-linked Alibaba in November just days before the company was poised to become the world’s first largest public offering.
Pan did not mention Ant by name in the op-ed, but noted that “non-bank mobile payment business, led by Alipay and WeChat Pay” saw a 75% year-on-year growth between 2015 and 2019 in non-bank mobile payments. Ant Group owns Alipay and WeChat Pay is run by Tencent.
He said fintech companies face the same risks as others in the financial industry, and could also collect “excessive” data and infringe on consumer privacy.
On Tuesday, China’s central bank governor Yi Gang indicated that Ant could restart the IPO process if it can resolve legal issues.
Read the full comment piece in the Financial Times here.