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New Ideas on Financial Consumer Rights Protection in the Context of Digital Financial Development

Nov 15-2024   



*Source: Peking University Financial Review, by Shen Yan, Jiang Hongyi

 

With the booming development of big data, artificial intelligence, blockchain and other cutting-edge technologies, all industries are rapidly advancing their own digital transformation, and the financial industry is no exception. Going forward, how to strengthen the protection of financial consumers' rights and interests is a key challenge to enhance the functionality of finance and improve the quality of services.

 

Protection of financial consumers' rights and interests still needs to be strengthened in China

The protection of financial consumers' rights and interests in China still needs to be greatly improved in at least the following four aspects. First, there is a lack of specific legislation on financial consumer protection. Second, the overall level of financial literacy and financial health of consumers in China is low, with large disparities between different groups. Third, financial consumer protection is particularly weak for certain groups. Fourth, the pace of financial regulation lags behind innovation, and there is insufficient coordination in the regulation of cross-sector and financial products, which has harmed the interests of some financial consumers.

 

Digital finance helps protect the rights and interests of financial consumers

As one of the most important innovations in the financial industry in recent years, digital finance mainly refers to the new infrastructure, new financial instruments and new financial models that use digital technology to provide financial services such as payment, lending, insurance and investment. In the new stage of development, the development of digital finance can not only directly strengthen the protection of financial consumers' rights and interests from the perspective of improving financial literacy and financial health, serving key groups, and strengthening consumer privacy and data security, but also indirectly help in legislation and regulation, etc., through cooperation with relevant government departments.

 

Firstly, digital finance can help improve consumers' financial literacy and financial health. Digital finance companies can collect and analyse financial consumers' data through relevant platforms, and the high-frequency, scenario-based big data thus constructed will in turn provide a data basis for assessing financial literacy, constructing financial health indicators, and intervening in financial risk behaviour.

 

Second, digital financial platforms can be used to better protect vulnerable financial consumers. In the megatrend of rapid ageing and rapid digitalisation, internet access and digital financial inclusion, as two dimensions of digital technology, play a positive role in helping older people avoid fraud. In addition, digital financial platforms can also guide individuals to spend rationally by providing meaningful reminder tools online.

 

Third, digital financial platforms have much to offer in terms of consumer privacy and data security. Consumer protection in the digital age needs to balance the challenges of security and trustworthiness, avoiding breaches of consumer privacy and data security while not overprotecting security to the extent that different types of data cannot be used interchangeably.

New Ideas on Financial Consumer Rights Protection in the Context of Digital Financial Development

Nov 15-2024   



*Source: Peking University Financial Review, by Shen Yan, Jiang Hongyi

 

With the booming development of big data, artificial intelligence, blockchain and other cutting-edge technologies, all industries are rapidly advancing their own digital transformation, and the financial industry is no exception. Going forward, how to strengthen the protection of financial consumers' rights and interests is a key challenge to enhance the functionality of finance and improve the quality of services.

 

Protection of financial consumers' rights and interests still needs to be strengthened in China

The protection of financial consumers' rights and interests in China still needs to be greatly improved in at least the following four aspects. First, there is a lack of specific legislation on financial consumer protection. Second, the overall level of financial literacy and financial health of consumers in China is low, with large disparities between different groups. Third, financial consumer protection is particularly weak for certain groups. Fourth, the pace of financial regulation lags behind innovation, and there is insufficient coordination in the regulation of cross-sector and financial products, which has harmed the interests of some financial consumers.

 

Digital finance helps protect the rights and interests of financial consumers

As one of the most important innovations in the financial industry in recent years, digital finance mainly refers to the new infrastructure, new financial instruments and new financial models that use digital technology to provide financial services such as payment, lending, insurance and investment. In the new stage of development, the development of digital finance can not only directly strengthen the protection of financial consumers' rights and interests from the perspective of improving financial literacy and financial health, serving key groups, and strengthening consumer privacy and data security, but also indirectly help in legislation and regulation, etc., through cooperation with relevant government departments.

 

Firstly, digital finance can help improve consumers' financial literacy and financial health. Digital finance companies can collect and analyse financial consumers' data through relevant platforms, and the high-frequency, scenario-based big data thus constructed will in turn provide a data basis for assessing financial literacy, constructing financial health indicators, and intervening in financial risk behaviour.

 

Second, digital financial platforms can be used to better protect vulnerable financial consumers. In the megatrend of rapid ageing and rapid digitalisation, internet access and digital financial inclusion, as two dimensions of digital technology, play a positive role in helping older people avoid fraud. In addition, digital financial platforms can also guide individuals to spend rationally by providing meaningful reminder tools online.

 

Third, digital financial platforms have much to offer in terms of consumer privacy and data security. Consumer protection in the digital age needs to balance the challenges of security and trustworthiness, avoiding breaches of consumer privacy and data security while not overprotecting security to the extent that different types of data cannot be used interchangeably.