Fintech Innovation and Financial Power Construction in China: Influencing Mechanisms, Existing Problems and Solutions(https://doi.org/10.63386/628837)

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 Author:  Ziyu Li1*

Affiliation:

1*Student, School of Finance, Yunnan University of Finance and Economics, Kunming, China, 650221

 All authors’ email:

First author’s email: LiZiyu200311@163.com/754291154@qq.com

Corresponding author’s email: LiZiyu200311@163.com/754291154@qq.com

All authors’ ORCID account link:

First author’s ORCID: https://orcid.org/0009-0005-0337-0466

Corresponding author’s ORCID: https://orcid.org/0009-0005-0337-0466

 All authors’ title:

First author’s title: Student

Corresponding author’s title: Student

 

 

Funding:

As a key member, I participated in the National Social Science Fund Project for the Study of Rare and Esoteric Scholarship – “Collection, Collation and Database Construction of Yi Medicine Knowledge in Yi Manuscripts”, and was responsible for assisting in the translation for database construction.

All authors’ bio:

  • The paper “Fintech Innovation and the Construction of China’s Financial Power: Research based on Practice” was published in Economic Circle. I am the first author. It was included in the 4th issue of 2024, a general journal.

(2)The paper “Applications of Deep Learning in Financial Time Series Forecasting” was published in DEIS.I am the first author.

Abstract: This paper mainly discusses the relationship between financial technology innovation and the construction of China’s financial power. Through practical research, it analyzes the influencing mechanism, current situation and existing problems, as well as the practical path of financial technology innovation on the construction of China’s financial power. The purpose is to clarify the position and role of financial technology innovation in the construction of China’s financial power, and provide targeted suggestions for China’s financial technology innovation and financial power construction. The research finds that financial technology innovation helps improve the ability and level of China’s financial technology innovation, promote the development of China’s financial market, improve the international competitiveness of China’s financial industry, enhance China’s voice and influence in the global financial system, prevent financial risks, ensure the stable operation of the financial market, and promote the process of China’s financial power construction.

Key words: Fintech innovation; financial power; practical path

1 Introduction

In the current context of global economic integration, financial technology innovation has become a crucial driving force for economic development in various countries[1, 2]. As the world’s largest developing country, China’s financial technology innovation plays a pivotal role in the construction of a financial power[3]. This paper aims to explore the relationship between financial technology innovation and the construction of a financial power in China through practical research, with the hope of providing beneficial theoretical and practical guidance for China’s financial technology innovation and the construction of a financial power.

1.2 Methods and Data Sources

The research methods adopted in this paper mainly include literature review, case analysis, and empirical research. The data sources for this paper mainly include policy documents on financial technology innovation released by the Chinese government, academic papers related to financial technology innovation, cases of financial technology innovation, and practical research results. Additionally, we will obtain firsthand practical experience and perspectives through activities such as interviewing experts and participating in seminars.

1.3 Objectives and Contents

The purpose of the study is to deeply analyze the relationship between financial technology innovation and the construction of China’s financial power, clarify the position and role of financial technology innovation in the construction of China’s financial power, and provide targeted suggestions for China’s financial technology innovation and the construction of its financial power. The main contents of the study include the theoretical foundation of financial technology innovation and the construction of China’s financial power, the impact mechanism of financial technology innovation on the construction of China’s financial power, the current status and existing problems of financial technology innovation in China, as well as the practical paths of financial technology innovation and the construction of China’s financial power.

1.4 Significance of the Research

Firstly, it helps enhance our country’s ability and level of financial technology innovation, promoting the development of our financial market. Secondly, it improves the international competitiveness of our financial industry, strengthening our influence and voice in the global financial system. Thirdly, it aids in preventing financial risks, ensuring the stable operation of the financial market. Lastly, it advances the process of building our country into a financial powerhouse, providing beneficial theoretical and practical guidance for the development of our financial industry.

2 Overview of Fintech Innovation

2.1 Definition and Characteristics of Fintech Innovation

Financial technology innovation refers to the use of new technologies, concepts, and mechanisms in the financial industry to innovate products and services, meeting customer needs, enhancing the efficiency of the financial sector, reducing financial costs, and optimizing the allocation of financial resources[4]. Its characteristics mainly manifest in four aspects: innovativeness, disruptiveness, practicality, and sustainability.

2.2 Analysis of the Current Situation of Fintech Innovation

2.2.1 General Overview of Fintech Innovation in China

The development of financial technology in China started relatively late but has progressed rapidly, showcasing characteristics such as diversified entities, expanded fields, enriched methods, and optimized ecological environments[5]. It not only promotes innovation and development in the financial industry but also provides more financial support for the real economy, laying a solid foundation for building a strong financial nation. However, compared to developed countries, there is still a certain gap in China’s financial technology innovation[6]. The reform of government fiscal science and technology investment and management methods is relatively lagging or progressing slowly. Additionally, the focus of China’s financial technology innovation mainly lies in the financial sector, while corresponding institutional innovations in scientific and technological innovation and management have yet to be addressed[7]. We still need to accelerate development to adapt to the needs of economic transformation and upgrading, improving the efficiency of financial resource allocation and services to the real economy.

Science and technology investment of Chinese financial institutions from 2019 to 2027

2.2.2 Main Fields and Achievements of Fintech Innovation in China

Financial technology, the integration of finance and technological innovation, has profoundly transformed the ecosystem and structure of the financial industry[1]. In practical exploration, China’s financial technology innovation mainly covers the following areas:

Analysis of Main Types of Fintech Industry

  • Financial technology enterprises: They are the main body of financial technology innovation, including various financial technology companies, internet finance companies, third-party payment companies, etc[8]. These enterprises utilize big data, cloud computing, artificial intelligence, and other technologies to provide convenient and efficient services for the financial industry, promoting the popularization and upgrading of financial services. Examples include Ant Financial, Tencent Finance, and JD Finance, which are representative companies of China’s financial technology sector.
  • Application of financial technology in financial regulation: Regtech is a firewall for risk prevention and control[9]. The application of financial technology in financial regulation mainly manifests in real-time monitoring of financial markets, risk warnings, anti-fraud, etc. For instance, using big data technology for risk assessment, employing artificial intelligence for fraud detection, and utilizing blockchain technology to achieve transparent transaction supervision.
  • Practice of financial technology in rural revitalization: Utilizing financial technology methods to improve financial service levels in impoverished areas, aiding poverty alleviation efforts[10]. For example, using mobile payments and internet finance to increase financial service coverage in impoverished areas, helping residents achieve self-development.

Development History of China’s Fintech Industry

With the joint advancement of the three fields, the development of China’s fintech has formed a virtuous circle of innovative risk management and control. In terms of financial technology enterprises, the number and scale of China’s financial technology companies have been growing annually, providing strong technical support for the financial industry. The corporate ecosystem has shifted from scale expansion to capability output[11]. As of 2023, unicorn enterprises with a valuation exceeding 1 billion US dollars account for 32% of the global total. State-owned investment financial institutions have exported various technical models to financial institutions around the world, while companies like Tencent have also taken the lead in participating in the formulation of global standards[12]. Regarding the application of financial technology in financial regulation, China’s regulatory system is gradually improving, effectively preventing financial risks. Regtech has formed a Chinese-style intelligent risk control system for supervision. The regulatory sandbox has incubated 132 projects, most of which are applied to inclusive finance.[13] Meanwhile, the world’s first digital regulatory reporting system has been created to realize automatic data capture. As for the practice of financial technology in rural revitalization, China has made remarkable achievements in rural revitalization, making important contributions to global poverty reduction efforts. Satellite remote sensing and AI models have covered 120 million rural long-tail users, and the penetration rate of mobile payment in rural areas has reached 87.7%.

2.2.3 Challenges and Problems Faced by Fintech Innovation in China

With continuous technological progress, financial technology innovation has become an important driving force for the development of the financial industry[14]. However, China’s financial technology innovation still faces a series of issues and challenges that limit its speed and quality, affecting the construction of a financial power.

  1. Insufficient innovation capability in financial technology.

Compared with developed countries, China’s investment and research in financial technology innovation are still relatively insufficient. China’s financial technology innovation mainly relies on introduction and imitation, lacking independent innovation capabilities[15]. Additionally, the talent reserve for financial technology innovation in China is relatively insufficient, with a shortage of high-end financial technology innovation talents, which affects the speed and quality of financial technology innovation.

  1. Incomplete regulatory mechanisms.

The regulatory mechanisms for financial technology innovation in China are still incomplete, with inadequate regulatory efforts and many regulatory gaps. Some unscrupulous individuals exploit regulatory loopholes for financial fraud, severely impacting customers’ confidence in financial technology innovation[16]. Moreover, the legal system for financial technology innovation in China is incomplete, lacking legal norms for financial technology innovation, making it difficult to provide strong legal protection for financial technology innovation.

  1. Development of financial technology constrained by institutional restrictions.

China implements a ‘separate operation, separate management’ management model, which imposes severe institutional constraints on commercial banks’ financial technology innovation. Furthermore, overly cautious credit approval policies by regulators and excessively strict capital adequacy ratio regulatory targets both limit the enthusiasm of commercial banks to engage in financial technology business.

  1. Incomplete rating system for financial technology innovation.

China’s rating system for financial technology innovation is still in its infancy and is in the exploratory stage[17]. This makes it difficult to effectively assess risks during financial technology innovation processes, affecting the quality and speed of financial technology innovation.

In summary, China’s financial technology innovation faces numerous issues and challenges, requiring improvements in areas such as innovation capabilities, regulatory mechanisms, legal systems, institutional constraints, and rating systems to promote financial technology innovation and achieve the construction of a financial power.

2.3 Driving Factors and Key Technologies of Fintech Innovation

The driving factors of financial technology innovation include technological progress, policy environment, market demand, etc. Among them, technological progress is the fundamental driving force behind financial technology innovation.[18] The emergence and development of key technologies such as artificial intelligence, big data, and cloud computing provide new technical support and possibilities for the financial industry. Changes in the policy environment also affect financial technology innovation, directly influencing the direction and speed of its development. China’s policy environment is characterized by strategic guidance and dynamic supervision.[19] As of 2023, the localization replacement rate of distributed databases for bank core systems has reached 68%. Changes in market demand are another important factor driving financial technology innovation. Market demand is transforming from one-size-fits-all coverage to segmented and precise supply. C-end demand is upgrading from basic payment to digital twin wealth management. The structural gap on the B-end is driving technological innovation. For financing of small, medium and micro enterprises, dynamic pledge based on the Internet of Things and blockchain has been realized. The settlement cycle of cross-border trade through smart contracts can be shortened from 14 days to 4 hours[20]. The emergence of new financial models such as internet finance and mobile finance poses new challenges to traditional financial institutions, promoting the development of financial technology innovation.

The proportion of the number and amount of investment and financing events exceeding 100 million yuan to the total number and total amount respectively (by sub-industry)

Key technologies include artificial intelligence: Big data, and cloud computing. The development and application of artificial intelligence technology enable the financial industry to better understand and analyze customer needs and behaviors, providing more personalized and precise financial services.[21] The development and application of big data technology allow the financial industry to better understand and analyze large amounts of unstructured and semi-structured data, improving the scientific nature and efficiency of financial decision-making[22]. The development and application of cloud computing technology enable the financial industry to better manage and process large volumes of data and information, enhancing the efficiency and quality of financial services.

In summary, the development of driving factors and key technologies in financial technology innovation has had a profound impact on the development of the financial industry[23]. The emergence and development of key technologies such as artificial intelligence, big data, and cloud computing provide new technical support and possibilities, driving the innovation and development of the financial industry. Artificial intelligence is evolving from shallow rule understanding to in-depth analysis, which has greatly improved the accuracy of Bank of China’s prediction of users’ product needs. Cloud computing technology has reduced the operation and maintenance costs of commercial banks to one-fifth of those of traditional banks. Changes in the policy environment and social environment also influence financial technology innovation, promoting its development. Unlike the principle of technological neutrality adopted by European and American countries, Chinese regulators proactively guide the direction of innovation. The central bank’s regulatory sandbox has prioritized blockchain-based supply chain finance for pilot projects, and continuously shortened the risk assessment cycle through simulation testing platforms. In the future, financial technology innovation will continue to develop, providing new impetus and possibilities for the development of the financial industry.

3 Theoretical Basis and Practical Exploration of China’s Financial Power Construction

3.1 Theoretical Basis of Financial Power Construction.

The fundamental requirements for building a financial power mainly manifest in five aspects: first, a strong market, where a robust financial market is a basic characteristic of a financial power; second, strong institutions, where powerful financial institutions form the organizational foundation of a financial power; third, strong talent, where a powerful financial workforce is a fundamental element of a financial power; fourth, strong infrastructure, where robust financial infrastructure is an important support for a financial power; fifth, strong systems, where powerful financial systems and mechanisms are crucial safeguards for a financial power[1].

Key tasks to accelerate the construction of a financial power include[10, 15]: 1) Establishing and improving the financial regulatory system. All financial activities should be fully included in regulation according to law, effectively enhancing the effectiveness of financial regulation, and actively participating in international financial regulatory cooperation; 2) Improving the modern financial institution system, deepening the supply-side structural reform of finance; 3) Improving the modern financial market system. Strengthening market rules, promoting the formation of long-term capital, focusing on advancing high-level financial openness, and increasing the internationalization of the RMB through various means; 4) Improving the financial infrastructure service system; 5) Improving the financial legal system, quickly issuing local financial regulatory laws and regulations, accelerating the legislative process of the Financial Stability Law, and severely cracking down on illegal financial activities; 6) Strengthening the construction of financial talent and cadre teams.

3.2 Practical Exploration and Achievements of China’s Financial Power Construction

3.2.1 Practical Exploration

In terms of policy support, the Chinese government has introduced a series of policies that provide strong backing for building a financial powerhouse. The government has increased its support for financial technology innovation, encouraging financial institutions to leverage technological advancements to enhance service levels.[24] Additionally, it encourages the opening up of the financial sector, creating an internationalized environment for the construction of a financial powerhouse[6]. The Fintech Development Plan of the State Council clearly defines two paths: data factorization and technological autonomy. Meanwhile, tax reductions and exemptions are implemented in 15 national-level fintech innovation demonstration zones such as Xiong’an and Suzhou.

Regarding financial reform, the Chinese government has advanced a series of financial reforms aimed at optimizing the financial system and improving service efficiency. The government has promoted interest rate liberalization to reduce financing costs for the real economy. Furthermore, it has pushed for financial regulatory reforms to strengthen oversight of financial markets, prevent financial risks, and ensure stable market operations.

In terms of financial innovation, China’s financial industry actively engages in financial innovation to improve service levels. The banking sector has launched various new financial products such as internet banks and mobile payments to meet diverse customer needs[25]. Additionally, the securities industry has introduced innovative products like convertible bonds and ETFs to enrich investment options for investors. A representative innovative achievement of banks is the integration of satellite remote sensing with AI-based credit, which has reduced the non-performing loan ratio of rural unsecured loans to 1%. In the securities field, blockchain platforms have been used to lower securitization costs. In the insurance industry, IoT-based health insurance has increased the participation rate of chronic disease insurance by more than 50%[26]. In cross-border finance, the central bank’s digital currency bridge has reduced cross-border clearing fees to $0.1 per transaction.

3.2.2 Achievements

Firstly, the level of financial services has significantly improved. The introduction of innovative financial products has made financial services more personalized and convenient, meeting customers’ diverse needs for financial services. Secondly, the stable operation of the financial market has been ensured. The advancement of financial regulatory reform has effectively controlled risks in the financial market, ensuring its stable operation. Lastly, the financing costs of the real economy have been reduced. The successful implementation of interest rate liberalization reforms has significantly lowered the financing costs of the real economy, which is beneficial to its development.

4 The Inherent Connection and Interaction between Fintech Innovation and China’s Financial Power Construction

4.1 The Relationship between Fintech Innovation and Financial Power Construction

There is a close intrinsic connection between financial technology innovation and the construction of a financial power. Financial technology innovation provides strong technical support, rich innovative impetus, and a favorable development environment for the construction of a financial power, while the construction of a financial power offers broader development space for financial technology innovation[27]. Only by promoting each other and developing together can the construction of a financial power truly be realized.

4.1.1 Fintech innovation provides strong technical support for the construction of a financial power.

The application of emerging technologies such as big data, cloud computing, and artificial intelligence helps improve the operational efficiency of the financial industry, reduce financial risks, and enhance its international competitiveness.

4.1.2 Fintech innovation provides abundant innovative impetus for the construction of a financial power.

Financial technology innovation can not only drive innovation and development in the financial industry but also promote innovation and development in the real economy. Financial technology innovation provides more financing channels and methods for the real economy, making its development more efficient and convenient[28]. At the same time, financial technology innovation offers new models and paths for the construction of a financial power, making the construction of a financial power more vibrant and dynamic.

4.1.3 Fintech innovation provides a favorable development environment for the construction of a financial power.

Financial technology innovation can effectively reduce the costs of financial transactions and improve the efficiency of financial markets, thereby providing a favorable market environment for the construction of a financial power[29]. At the same time, financial technology innovation can also effectively prevent financial risks and ensure the stability of financial markets, thus providing a favorable policy environment for the construction of a financial power.

4.2 The Impact of Fintech Innovation on the Construction of a Financial Power

4.2.1 Enhancing China’s Financial Strength.

Through financial technology innovation, China’s financial industry can better integrate technological resources with financial resources, improve the allocation and service efficiency of financial resources to the real economy, thereby enhancing China’s financial strength.

4.2.2 Promoting China’s Financial Innovation.

The development of financial technology innovation can drive innovation in the financial industry, increase the variety and quality of financial products, meet the needs of customers at different levels and with different demands, thereby promoting financial innovation in our country.

4.2.3 Improving the scientific nature of China’s financial decision-making and the ability to prevent financial risks

In new financial institutions, Ant Financial from Alibaba and Tenpay from Tencent have started using big data to establish their own risk control systems.[30] Many commercial banks have also developed purely online credit products based on the data they possess. These online credit products mainly analyze comprehensive information by integrating static data such as customers’ basic information, historical records, and behavioral preferences, along with dynamic data such as transaction and social information. By searching for sensitive keywords, they create a credit profile for each customer and grant corresponding credit limits based on this profile, thereby enhancing risk prevention capabilities. In summary, financial technology innovation has a significant impact on the construction of China’s financial power[31]. It not only enhances China’s financial strength and promotes financial innovation but also improves the scientific nature of financial decision-making and the ability to prevent financial risks. Therefore, we should actively promote the development of financial technology innovation to facilitate the construction of China’s financial power.

4.3 Practical Paths for Fintech Innovation to Assist in Building a Financial Power

4.3.1 Giving Full Play to the Key Role of Fintech Innovation in Supporting the Real Economy

Financial technology innovation should be regarded as an important means of financial support for the real economy, improving the efficiency of financial services to the real economy, and achieving a virtuous interaction between finance and economic development.

4.3.2 Consolidating the Construction of Financial Infrastructure to Ensure the Safe, Efficient Operation and Overall Stability of Financial Markets

In the construction of financial infrastructure, both hardware facilities and soft environment construction should be carried out simultaneously, improving the financial industry chain and promoting the further deepening of financial reforms.

4.3.3 Promoting the Leapfrog Development of the Internet Finance Industry

Through technological innovation, drive leapfrog development in the internet finance industry, solve core issues in the financial sector, and accelerate the transformation of traditional financial departments by the internet. In summary, financial technology innovation is an important means for building a strong financial nation in China and a key factor in achieving high-quality economic development[32]. China should leverage the critical role of financial technology innovation in supporting the real economy, strengthen the construction of financial infrastructure, and promote leapfrog development in the internet finance industry to provide valuable references for the construction of a strong financial nation.

5 Case Analysis of Fintech Innovation and the Construction of China’s Financial Power

5.1 Case 1: Analysis of the Development Practice of China’s Fintech Enterprises.

Taking JD Finance as an example, this financial technology company, established in 2013, has been committed to using technology to transform finance since its inception. From financial decision-making service platforms, insurance platforms to products like Bai Card and Bai Bar, JD Finance always focuses on user needs, continuously launching financial products and services that meet market demands. In terms of technology, JD.com has independently developed the Zeus distributed database to support 500,000 transactions, reducing costs by 60% compared with the traditional IOE system. Through the federated learning risk control platform, it has connected data from more than 2,000 financial institutions, controlling the credit non-performing loan ratio of small, medium and micro enterprises at 1.35%.

Moreover, other financial technology companies such as Baidu Finance and Suning Finance have also achieved significant results in terms of their development process, technological innovation, and market performance[18]. The growth of these enterprises not only promotes the innovative development of China’s financial technology but also provides strong support for building a powerful financial nation in China. China’s fintech has completed the upgrade from technological substitution to rule output, and has become the core driving force for building a financial power.

In summary, the development practices of China’s financial technology companies fully demonstrate the important role of technological innovation in the development of the financial industry. In the future, China’s financial technology companies will continue to focus on user needs, driving the innovative development of financial technology, and contributing to the construction of a powerful financial nation in China.

5.2 Case 2: An analysis of the application cases of China’s fintech in financial supervision.

The application of financial technology in financial regulation not only improves the efficiency and accuracy of financial supervision but also effectively reduces financial risks. China should continue to strengthen the application of financial technology in financial regulation, promoting the continuous development of China’s financial technology and the construction of a financial power[17]. Xiamen’s breakthrough in blockchain technology adopts a ternary governance structure, reducing the delay in credit data sharing from 72 hours to 5 seconds, and significantly increasing the lending rate.

5.2.1 Blockchain Technology

Blockchain technology, due to its decentralized nature, security, reliability, and immutability, has been widely applied in the field of financial regulation[33]. For example, China’s first commercial platform for blockchain regulatory technology, ‘Xiamen ‘Xin e Dai’ Micro-loan Credit Information Sharing Platform,’ uses blockchain technology to share micro-loan credit information, effectively enhancing the efficiency and accuracy of financial regulation.

5.2.2 Big Data Technology

The application of big data technology in financial regulation mainly manifests in risk management, anti-money laundering, and compliance audits. For example, Ant Financial has established a quantitative personal and corporate credit evaluation model through big data technology, effectively improving the identification and control of financial risks[34]. The innovation of Ant Group’s Yijian System integrates weakly related data such as tax, logistics, water and electricity. The recognition rate for illegal fund-raising and shadow banking infiltration has been raised to over 90%.

5.2.3 Artificial Intelligence Technology

The application of artificial intelligence technology in financial regulation mainly manifests in customer identity verification, risk screening, and anti-money laundering. For example, JD Finance uses artificial intelligence technology for collecting and verifying customer information, and establishes an anti-money laundering model based on a complete KYC process, effectively improving the accuracy and efficiency of financial regulation[1, 35]. The dynamic stress test of the central bank’s Fengling Intelligent Supervision System has simulated more than 200 financial crisis scenarios through generative adversarial networks, advancing the early warning timeliness for cross-border capital flow monitoring to 3 hours in advance.

5.2.4 Internet of Things Technology

The application of Internet of Things (IoT) technology in financial regulation mainly manifests in agricultural production financial services and cross-border settlement payments. For example, the blockchain credit project built jointly by Golden Hill Technology and UnionPay Business—Xiamen ‘Xin e Loan’ small loan credit information sharing platform—achieves real-time sharing of small loan credit information through IoT technology, effectively enhancing the efficiency and accuracy of financial regulation[36]. By integrating blockchain with live collateral and deepening such integration, the credibility of chattel ownership confirmation has been raised from 50% to 99%, while the risk loss of mortgage financing has dropped to 76%.

5.3 Case 3: Analysis of the Practice of Fintech in Financial Work for Rural Revitalization

Firstly, financial technology has improved the effectiveness of rural revitalization. The application of financial technology not only enhances the efficiency of financial services but also effectively boosts the impact of financial support on rural revitalization. For example, through big data and artificial intelligence technologies, financial institutions can more accurately identify impoverished populations, enabling more precise rural revitalization efforts. Additionally, the application of financial technology can effectively monitor the use of rural revitalization funds, preventing waste and loss[24]. Technological means have solved the predicament of rural finance. The air-space-ground integrated credit model has enabled more than 13 million farmers to obtain loans, with an average loan amount of 32,000 yuan per household. Fruit growers have reduced losses by at least 67% through rainfall index insurance.

Secondly, the application of financial technology in financial innovation. Chinese financial institutions are continuously exploring ways to empower finance through technology in rural revitalization work. Through technological innovation, they have promoted the in-depth development of rural revitalization efforts. For instance, some financial institutions have started establishing their own fintech subsidiaries, and some innovative financial products have been introduced to impoverished areas, providing financial support to some poor residents.

Lastly, the application of financial technology in financial regulation. In China’s rural revitalization work, it is necessary to rely on information technology to establish electronic archives for financial support in rural revitalization. This includes setting up a set of financial support archives for impoverished households and small and micro enterprises in impoverished areas. On one hand, this allows for dynamic tracking of the progress of rural revitalization efforts and feedback on their effectiveness. On the other hand, it helps prevent the waste and loss of rural revitalization funds, positively contributing to targeted rural revitalization. The system integrating blockchain with financial subsidies has realized the function of precise targeting to households, with the fraudulent claim rate approaching 0%. Meanwhile, the fund traceability function has reduced the approval cycle from one month to real-time. Through the effect evaluation function, the income data of poor households are automatically linked back, and the response speed of policy adjustment has been increased to over 90%.

In summary, the practical application of financial technology in rural revitalization work has not only improved the efficiency of financial services but also significantly enhanced the impact of financial support on rural revitalization, promoting its in-depth development and providing strong support for building a financial power in China.

6 Conclusions and Prospects

6.1 Research Conclusions

6.1.1 Fintech innovation is an important means to build a financial power

Financial technology innovation can improve the efficiency and convenience of financial services, reduce the costs of financial transactions, and also better meet the needs of social and economic development. The value of fintech innovation is mainly reflected in the restructuring of technical architecture, the reform of risk pricing, and the strengthening of China’s currency autonomy.

6.1.2 Fintech innovation plays an important role in promoting the transformation and upgrading of the real economy.

Financial technology innovation can effectively address issues such as difficult and expensive financing for the real economy, promoting structural adjustments and industrial upgrading of the real economy. Transform from financing difficulties to industrial structure reshaping. For example, through financial technologies like supply chain finance and blockchain, it can effectively solve the problem of difficult financing for small and medium-sized enterprises, driving innovation and development in the real economy.

6.1.3 Fintech innovation is of great significance to the construction of a financial power.

Financial technology innovation can improve the efficiency and convenience of financial services, reduce the costs of financial transactions, and better meet the needs of social and economic development. In terms of efficiency improvement, blockchain-based cross-border payments can significantly reduce clearing costs. In terms of security, it has greatly increased the early warning time. In terms of inclusiveness, the coverage rate of mobile payments in rural counties exceeds 90%. China has also taken the lead in participating in the formulation of some international standards. For example, through financial technology means, we can achieve real-time payments and settlements, greatly enhancing the efficiency of capital circulation; by using big data and artificial intelligence technologies, financial institutions can better understand customer needs and provide more personalized financial services.

6.1.4 The development of fintech innovation requires policy guidance and support.

The government should introduce a series of policies for financial technology innovation to encourage and guide financial institutions and tech companies to engage in such innovations, thereby promoting the development of financial technology innovation. At the same time, the government should strengthen risk regulation of financial technology innovation to prevent potential risks associated with it. Overall, financial technology innovation is an important means to achieve a strong financial nation, playing a crucial role in the transformation and upgrading of the real economy and being significant for the construction of a strong financial nation. However, the development of financial technology innovation requires policy guidance and support, and it necessitates our joint efforts to promote its development and achieve the goal of a strong financial nation.

6.2 Research Limitations and Future Prospects

This study, although it has conducted an in-depth analysis of financial technology innovation and the construction of China’s financial power from a global perspective, still has some limitations. Firstly, the research mainly relies on existing theories and practices, and may not have comprehensively explored specific implementation paths and strategies for financial technology innovation and the construction of China’s financial power. Make breakthroughs in the technological ecosystem that is “bottlenecked” in the fields of computing independence, data sovereignty, and algorithm ethics. Secondly, the focus of this study is on the impact of financial technology innovation on the construction of China’s financial power, but it may not have deeply analyzed the internal mechanisms and driving forces of financial technology innovation. Construct a interdisciplinary framework for fintech, and conduct integrated innovation research in technical omics, behavioral omics, and institutional omics. Lastly, the study primarily focuses on the positive impacts of financial technology innovation on the construction of China’s financial power, and may not have sufficiently discussed potential negative effects and challenges. Develop a crisis resilience preview system, conduct pre-drills based on 300 crisis scenarios trained by the national financial warfare deduction platform, and enhance prevention and control capabilities.

Looking ahead, we believe that research on financial technology innovation and the construction of China’s financial power can be further deepened and expanded in several aspects. Firstly, further exploration of specific implementation paths and strategies for financial technology innovation and the construction of China’s financial power can provide clearer directions and paths for the construction of China’s financial power. Secondly, a deeper analysis of the internal mechanisms and driving forces of financial technology innovation can provide more theoretical support for China’s financial technology innovation. Finally, a thorough discussion of the negative impacts and challenges of financial technology innovation on the construction of China’s financial power can provide a more comprehensive perspective for the construction of China’s financial power.

6.3 Recommendations for Policy Makers

6.3.1 The government should increase investment in fintech innovation.

Financial technology innovation is a crucial driving force for financial development, and government support and investment are key to promoting financial technology innovation. The government can encourage financial institutions and tech companies to engage in financial technology innovation by setting up special funds and providing tax incentives. By establishing a national fintech fund, risk subsidies are provided for early-stage technology investments. Strengthen incentives for talent capitalization and provide subsidies to scientific and technological personnel. Additionally, the government should strengthen the regulation of financial technology innovation to prevent associated risks. Upgrade the regulatory sandbox, deploy quantum computing simulation environment stress tests through technical penetrative testing, and allow 30% of trial-and-error costs for failures in basic technology research and development.

6.3.2 The government should further improve the financial market.

The improvement of financial markets is an important foundation for promoting financial technology innovation. The government should strengthen the construction of financial market infrastructure, enhance market transparency and efficiency. At the same time, the government should also intensify supervision over financial markets to prevent disorder and risks. Accelerate the establishment of a confidential communication network for financial magnitude, and reduce the delay in transaction verification and calculation. Enhance the capability of the regulatory chain through transparent market governance, make the flow of implemented funds transparent, and rate the risks of institutions, so that the money laundering identification rate can be increased to 99% and the deviation of risk pricing can be reduced to 58%.

6.3.3 The government should increase support for technology-based small and medium-sized enterprises.

Technology-oriented small and medium-sized enterprises are crucial forces driving technological innovation, and government support for these enterprises is key to promoting technological innovation. The government can support the development of technology-oriented SMEs by establishing special funds and providing tax incentives. Additionally, the government should strengthen supervision over technology-oriented SMEs to prevent their development from being hindered. Implement a gradient cultivation mechanism for small and medium-sized enterprises, and encourage them through measures such as free access to computing power of the national supercomputing center, reserving 30% of government procurement contracts, and opening up green channels for scientific and technological innovation. Provide domestic AI framework pools for small and medium-sized enterprises free of charge, establish a credit monopoly mechanism for small and medium-sized scientific and technological enterprises, and improve the survival rate of enterprises.

6.3.4 The government should strengthen international cooperation in fintech innovation.

Financial technology innovation is a global trend, and international cooperation is an important way to promote financial technology innovation. Governments should strengthen cooperation with other countries in the field of financial technology innovation and share the fruits of technological innovation. Export digital inclusive terminals and regulatory chain solutions to countries in Southeast Asia and other regions, establish a market digital currency stabilization fund to deal with financial turmoil caused by cryptocurrencies, improve the Digital Silk Road countermeasure plan, and when the United States restricts chip exports, launch a plan to export domestic cloud computing infrastructure to European, African and other countries to cope with the crisis. In general, financial technology innovation is a crucial driving force for building a strong financial nation in China, and the support and guidance from policymakers are key to promoting financial technology innovation. Only when policymakers fully recognize the importance of financial technology innovation and take effective measures to promote it can the goal of building a strong financial nation in China truly be achieved.

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