Digital Finance: Driving Efficiency Across Industries

The rise of digital finance marks a transformative era in the global economy, representing one of the most significant shifts in financial services in recent years. Across the world, institutions are adopting innovative technologies and practices to enhance operational efficiency and meet the evolving needs of consumers. This is particularly true in China, where the sector is embracing a digital revolution aimed at fostering inclusive and accessible financial services, bolstering the real economy, and managing financial risks effectively.

Recent initiatives in China underline the importance of digital finance as a crucial pillar for the country's aspirations to become a financial powerhouse. Experts in the field have emphasized that banks and financial institutions must accelerate their digital transformation. This involves not only developing new products and service models but also maintaining stringent standards to mitigate associated risks. An essential part of this transformation is the consolidation of data governance and integration capabilities, which are vital for building a robust digital financial ecosystem.

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One notable example of innovation within the digital finance sphere can be seen at the China (Lianjiang) Cross-Strait International Agricultural Products Logistics Park, located in Fuzhou, Fujian Province. Once fully operational, the logistics park is projected to be the largest wholesale market for agricultural products in Fujian, with an anticipated transaction volume exceeding 6 million tons annually and a transaction value of approximately 50 billion yuan. The park uses advanced technologies to streamline operations and improve transaction processes.

According to Wu Ronghua, Vice Chairman of the park, the previous reliance on manual operations hampered the efficiency of payment and reconciliation in various scenarios. To address these challenges, they partnered with Everbright Bank’s Fuzhou branch, which offered a tailored "Smart Agricultural Distribution" solution. This initiative effectively meets the financial service demands of merchants and market administrators, attracting over 500 merchants who trade in more than 300 varieties of fruits and vegetables, with daily transaction volumes between 5,000 and 6,000 tons.

Li Min, General Manager of the Digital Finance/Cloud Living Business Department at Everbright Bank's Fuzhou branch, described the "Smart Agricultural Distribution" service as a bespoke digital financial solution that consolidates various payment and settlement products to enhance the overall digital operational capabilities of the logistics park. The strategic shift towards smart logistics is indicative of broader trends in the digital economy.

Research from the Bank of China highlights the urgent need for the banking sector to evolve its services, focusing on digital finance innovations that align with core business advantages. The integration of digital solutions can provide better support for enterprises, allowing them to thrive within the digitized industry ecosystem.

The pace of development in China's digital finance sector has been remarkable. Recent statistics indicate that the market size reached approximately 41.7 trillion yuan as of 2023, capturing 15.6% of the global digital finance market and ranking first worldwide. Furthermore, the number of digital finance users surpassed 960 million, accounting for about 68.6% of the total population. These figures illustrate not only rapid growth but also the pressing need for an effective framework to sustain that growth.

While the progression of digital finance is commendable, challenges remain robust. Free data movement between systems, enhancing core financial technology capabilities, related hardware limitations, and evolving regulatory mechanisms are areas requiring concerted attention. The need for a coherent strategy to optimize data as a production factor stands at the forefront of this discourse.

For instance, some organizations have begun to leverage data as a financial asset. Recently, Quanzhou Data Group secured a 50-million-yuan financing credit, achieving a landmark by being the first state-owned enterprise in Fujian to establish data assets on financial statements. Their efforts demonstrate how businesses can innovate by utilizing data-derived products for financial success.

The Quanzhou Data Group leveraged bidding information data to create a product named the "Quanzhou Procurement Data Set," which has been listed on both the Shenzhen Data Exchange and the Fujian Big Data Exchange. Subsequently, Everbright Bank’s Quanzhou branch utilized this dataset as a basis for extending financing credit.

Chinese People's Bank Quanzhou branch Deputy Governor Zheng Jinmin stated, “Data is increasingly crucial in societal production. We advocate for financial institutions to deepen their exploration of industrial needs and innovate financing models based on the future income rights of data assets." This approach can empower industries to adapt and thrive amidst ongoing economic transformations.

A significant aspect of digital finance lies in its tight integration with supply chains, especially in adapting to new trade models. Collaborations between businesses and banks to innovate financial solutions can effectively transition traditional transaction settlements into high-frequency, efficient digital scenarios, driving down costs and enhancing operational efficiency.

According to Chen Liying, General Manager of Xiamen Xiangyu Smart Logistics, the seamless flow of goods, logistics, funds, and information is critical for global commodity circulation. The transition to digital supply chains emphasizes integrating these streams. Currently, Xiangyu applies cutting-edge technologies—including the Internet of Things, blockchain, big data, and AI—to create their "Yuchain" digital supply chain service system. These advancements facilitate the digitization of goods and assets, allowing for innovative financial solutions within the supply chain.

By implementing an intelligent control system, the company can better evaluate the value of goods while capitalizing on inventory as reliable collateral for financing. The initial digital efforts by Everbright Bank's Xiamen branch have resulted in custom financing services designed to meet the needs of supply chain partners, boasting engagement with over fifty clients and securing substantial credit lines.

The movement toward comprehensive online financial support, enabled by modern business models, reflects a shared commitment to leveraging data-driven platforms for decision-making and risk management. Everbright Bank's Xiamen branch's Vice President Li Ming noted that while significant upfront investment is necessary to connect with digitized enterprises, the replicable nature of this model suggests a promising path for the industry as a whole.

In conclusion, the evolution of digital finance represents a formidable shift that holds vast potential for enhancing operational efficiency, expanding access to financial services, and ultimately fostering sustainable economic growth. As institutions navigate the complexities of this digital landscape, proactive collaboration, innovative models, and effective regulation will be paramount in sculpting the future of finance on both local and global scales.