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Wei Chenyang: Digital Finance Empowers New Development of Financial Services

Time: 2022-09-19 08:21 Print

                                             

 

Photo: Wei Chenyang at the roundtable

The following is a stenographic summary of Wei Chenyang's speech at the 2022 China International Fair for Trade in Services (CIFTIS):

Dear Guests,

I'd like to share my views on wearable smart devices empowering health insurance. This is an exciting topic. From the global perspective, health insurance is developing from simply post-event compensation to active health management, providing services to customers in a proactive manner. There is a huge potential for wearable devices and technology. Many of our guests may be wearing smart watches that simply monitor basic personal health data, e.g. walking steps, body fat, body temperature, and heartbeat in a timely manner. If the data can be synergized from smart wearables with health insurance companies, the value will be empowered in several ways.

Imagine that, when a client buys a health insurance, he/she shares the health data timely with insurance company. The insurance company analyzes the client’s health condition and provides advices on client’s personal health management in real time. Through further data feedback, the insurance company would provide further evaluation and give adjustment advices. The insurance company helps the client reduce health risk by tracking client’s health data and providing personalized, customized and timely health management services.

With the sufficient data, the initial pricing of health insurance products could be more reasonable. The client would also benefit from the health service provided by insurance company and reduce the risk of health problem. Even when a compensation occurs, the sufficient data will provide accurate support for solutions and calculating insurance claims.

It is a global consensus that technology empowers the business process of health insurance. A total of 30% of US insurers are using smart wearables in combination with health insurance services. China is seeing rapid development in this area. Insurers and health management companies are still at the trial stage in terms of public recognition. There are also concerns of possible personal information breach. And privacy protection is an important issue. I believe that the in-depth cooperation between intelligent health management and insurance is a very exciting field in the future development.

Data protection concerns data markets. China has defined data as a new factor of production and an integral part of the digital economy. As a data intensive industry, the financial industry keeps creating more effective methods of data collection, data governance and management, and more powerful infrastructure through FinTech.

More importantly, the financial industry has many scenarios for data applications, including privacy protection, data compliance, data validation and etc. There are many scenarios where data elements can be legal and compliant in the economy and play a more effective role. In insurance business, finance provides a wide range of scenarios, which entail the building of corresponding infrastructure. Therefore, it is necessary for the finance industry to play an active role in building a market for data elements.

There are long practice and studies on economic factors, such as standardization, value assessment, circulation, trading, market trading venues, trading mechanisms, governance and compliance. The finance industry provides a series of standardized systems for evaluation of data elements and risk management on environmental, social and governance (ESG) risks, facilitating the flow of data elements in a transparent, more reasonable and fair environment with appropriate and timely disclosure. The value of their service to the real economy will be continuously amplified. In general, the financial industry provides elements, and at the same time provides many scenarios that greatly contribute to the infrastructure development of the data elements market. The financial industry plays a central role in the transaction and distribution process.

As for data protection, the first task is to seek legislation and global consensus, where still lies many challenges. The EU adopted the General Data Protection Regulation (GDPR) in 2016. China adopted the Personal Information Protection Law of the People's Republic of China in November 2021. There is still much specific work to do at supervision and business levels in terms of practical compliance administration.

As a special industry, the financial industry holds a large amount of customer data, especially transaction habits, consumption, payment habits and other privacy and preference information. So privacy protection is extremely important and challenging for the financial industry. The Personal Information Protection Law explicitly mandates that financial institutions should protect such information by law. The industry has been proactively trying to desensitize data and use federated learning and privacy computing or other technical methods to utilize such data as much as possible while protecting it.

It is also important to strengthen corporate compliance and industry self-regulation. Recently, the Ministry of Industry and Information Technology announced that it has started to explore cyber security insurance in cooperation with the China Banking and Insurance Regulatory Commission, which is quite exciting and very challenging. The research center where I work also actively participates in this process from a research and education perspective. The global development of cyber security insurance is rapid. The real innovation and diversification of such products is meaningful and has huge potential.

Thank you!

About the Event:

From August 31 to September 5, 2022, the 2022 China International Fair for Trade in Services (CIFTIS), co-organized by the Ministry of Commerce and the Beijing Municipal People's Government, was held. This year's CIFTIS consisted of three special international forums: the Global Sovereign Wealth Fund Forum, the China-Europe Innovation Investment Conference, and the China-Gulf Innovation Investment Conference.

Over 70 speakers from 50 plus organizations in more than 20 countries were invited to speak at the three international forums, to explore development trends, analyze opportunities and challenges, share best practices, and find solutions with a global perspective.

On September 1, the sub-forum China-Europe Innovation Investment Conference was held. The PBC School of Finance (PBCSF) of Tsinghua University was the co-host of this forum. Wei Chenyang, Associate Dean of the National Institute for Financial Research, Tsinghua University and Director of the China Insurance and Pension Research Center, attended the roundtable themed "Financial Innovation: Digital Finance Enables New Development of Financial Services". He shared his insights on topics such as "the impact of wearables and smart devices on the insurance industry", "the role of the finance industry in the data element market", and "the impact of privacy protection on financial development".