Following the development of finance and the progress of science and technology, digital technology has had a profound impact on the management of traditional commercial banks and financial institutions. However, while financial technology continues to improve banking and financial technology, it also brings new risks and challenges.

The innovation and promotion of digital technology brings new opportunities and challenges to China’s financial institutions and regulatory bodies, which are being forced into a process of digital transformation.

On the night of April the 15^th, 2017, the second lecture at Peking University (PKU)’s Digital Finance Forum – organized by PKU’s Institute of Digital Finance (IDF) – was held in Langrun Garden. Two authoritative experts in regulatory affairs and the financial industry were invited to address those in attendance. Sun Guofeng, Director of the Financial Research Institute and Director of The People's Bank of China’s Institute of Internet Finance, spoke first. He was followed by Liu Xiaochun, President of China Zheshang Bank (CZB) and Academic Adviser to the IDF. Both guests addressed the topic of ‘digital finance: new practices and regulations’, providing a scintillating discussion. The lecture was hosted by prof. Huang Yiping, Vice-President of the National School of Development (NSD) and Director of the Institute of Digital Finance..

Dr. Sun discussed financial (Fintech) and regulatory technology (RegTech). He asserted that FinTech's risks were largely due to its own failings, which required effective regulatory measures to alleviate.. Fintech is also required to serve the real economy – namely, by improving the allocation efficiency of financial resources. Dr. Sun proceeded to introduce applications of financial regulations abroad: the United States’ functional regulation system, as well as the ‘sandbox model’ used in the UK and Singapore. China's financial market is large and the willingness of micro agents to innovate is strong. To eradicate systemic risks in finance, we should take micro-functional supervision and macroprudential management as two pillars, and make efforts to strengthen transnational cooperation. Dr. Sun then moved on to RegTech. He asserted his belief that artificial intelligence (AI) is capable of in-depth learning, and has a higher computing potential than global optimization. AI may also prove uniquely useful in the bid to prevent systemic risks; solving the issues surrounding the mechanism of incentive and restraint for regulators. Simply put, Dr. Sun suggested China make use of AI to transform financial regulations, and use RegTech to handle issues with FinTech.

Liu Xiaochun then took to the stage, to discuss the profound impact digital technology has had on bank operation and management. President Liu asserted that, with the development of digital technology, commercial banks had started to subvert traditional models of operation and management. More specifically, digital technology has broken the boundaries between bank branches[Jh1] , banks and their customers, and separate banking companies. However, this new technology brings varying degrees of risk. Commercial banks therefore need to carefully consider their dealings with digital technology. Used correctly, digital technology is a useful tool and channel through which to provide unique services, and can be of great value for society. Banks should comprehensively analyse the market, with a focus on designing their own effective internal technical processes. Meanwhile, they must not neglect risk management, and make full use of digital technology in ammending financial issues.

At the lecture’s close, Prof. Huang praised the thorough and detailed analysis presented by the night’s two speakers. He concluded that, whilst the development of digital finance in China is certainly worthwhile, the wide application of digital technology is still fraught with many risks. He suggested that the digital finance industry focus on alleviating such risks in order to improve the allocation of resources.