Financial technology development: banks are not playing a "solo act"

Ask AI · How can multi-party coordination crack the tough challenges of the technology finance ecosystem?

The 2026 Government Work Report states, “Guide financial institutions to step up support for expanding domestic demand, scientific and technological innovation, and small and medium-sized enterprises and micro and small businesses, among other priority areas.” However, today’s development of technology finance still faces numerous constraints. China’s financial system is characterized by a strong emphasis on indirect financing, which is not sufficiently compatible with the laws governing scientific and technological innovation and the financing needs of technology enterprises. Digital finance enablement is an important lever for innovative development in technology finance.

On March 28–29, the Shenzhen Xiangmihu International Finance and Technology Research Institute and the Digital Finance Cooperation Forum jointly organized the “Shenzhen Xiangmihu Guojinyuan 2026 Spring Conference.” Among them, the special seminar on “Technology Finance Helps Develop New Quality Productive Forces” released the research report titled “Digital Finance Empowering the Development of Technology Finance.” Participants generally believe that technology finance development currently faces a structural mismatch between financial resources and the needs of S&T (science and technology) innovation enterprises. Relying solely on bank credit is insufficient to cover the financing needs of technology enterprises throughout their entire life cycle. It is urgent to use digital finance as a key lever, promote coordinated efforts among multiple parties such as banks, securities firms, insurance companies, and venture capital/venture investment, and build a technology finance ecosystem featuring risk-sharing and functional complementarity.

Structural Mismatch Between Financial Resources and Technology Enterprise Financing Needs

When discussing the development process, Li Lihui, former president of Bank of China and academic advisor to the Shenzhen Xiangmihu International Finance and Technology Research Institute, said that China has formed a technology finance product and service system covering four categories: indirect financing for S&T innovation, direct financing for S&T innovation, insurance services for S&T innovation, and financial services for S&T innovation. During the “15th Five-Year Plan” (“十五五”) period, the frontiers of technology finance services offer broad prospects across multiple key technology tracks, such as cutting-edge information technology, biotechnology and life sciences, semiconductors and integrated circuits, and new energy industries and green technologies.

Although China’s technology finance policies have continued to improve and a relatively large-scale, full-coverage, system-based technology finance service system has been established, Li Lihui also emphasized that technology finance development still faces structural shortcomings such as a mismatch in the allocation structure of financial resources and technology enterprises’ financing needs, as well as an imbalance between the proportions of direct financing and indirect financing. It also faces institutional difficulties including economic, institutional, and data-related factors.

Why does this “mismatch” occur? In the view of Gao Feng, former chief information officer of the China Banking Association and a member of the academic committee of the Shenzhen Xiangmihu International Finance and Technology Research Institute, technology-oriented enterprises show the “three highs and three lows” characteristics: “high risk, high technological barriers, and high service requirements,” along with “low transparency, low creditability/low ability to provide collateral, and low asset liquidity.” Meanwhile, commercial banks have shortcomings in risk identification and matching between “risk and returns.” Public-sector and SME/microbusiness account managers do not understand the above “three highs and three lows,” and they also do not understand the industry and the industrial chain, resulting in insufficient understanding of technology enterprises.

“Compared with traditional industries, technology innovation has enormous uncertainty. Whether it’s from 0 to 1, from 1 to 10, or from 10 to 100, it faces challenges such as a ‘valley of death’ and a ‘Darwinian sea.’” Tu Guangshao, founding chairman of the Shanghai Advanced Finance School of Shanghai Jiao Tong University and former executive vice mayor of the People’s Government of Shanghai, said that it is difficult for technology finance to simply apply the risk-return, service-cycle, and pricing mechanisms of traditional industry finance. What is urgently needed is optimization of the financing system and transformation of financial institutions.

Full Life-Cycle Financing Needs Urgently Need an “End-to-End” Solution

In the face of these challenges, the participating guests believe that digital finance enablement could be an important lever and key direction.

Gao Feng said that the core development advantage of digital finance comes from innovative applications of underlying digital technologies. Its core value is reflected in three dimensions: lowering transaction costs, reshaping the structure of market customers, and optimizing the microstructure of financial markets. At present, digital finance plays an important role in enabling full-chain digitalization of technology finance at financial institutions, innovation in products and services, and governance in key areas.

It is important to note that different types of financial institutions differ in their capabilities and forms of enabling technology finance through digital finance. In banking, the focus is on using big data operations to convert data assets into business value, building products and services that cover the entire life cycle of technology enterprises. In securities, the focus is mainly on enhancing investment banking and investment research capabilities to optimize the experience of technology enterprises’ direct financing. In insurance, the focus is mainly on using digital technologies to achieve precise pricing and risk control, improve the supply of technology insurance products, and provide long-term patient capital.

“Technology finance is not a solo performance by banks. Instead, it requires coordinated collaboration among non-bank institutions such as securities, insurance, and trusts to find the different risk preferences and needs of technology-oriented enterprises at different stages.” Gao Feng said.

Lv Zhongtao, former chief technology officer of the Industrial and Commercial Bank of China and a member of the academic committee of the Shenzhen Xiangmihu International Finance and Technology Research Institute, believes that the full life-cycle financing needs of technology enterprises urgently need an “end-to-end” solution. How to integrate financial services from institutions such as banks, securities firms, insurance companies, and trusts into a coherent solution is a major challenge for forming a complete solution.

Lv Zhongtao pointed out that the digital technology enablement for technology finance development should break through constraints from multiple aspects. First, use technologies such as big data and AI to improve evaluation models for technology enterprises, and incorporate indicators such as technological innovation capability, the value of intellectual property rights, R&D investment, and market investment into a credit risk profile. Second, use digital risk control models to replace traditional collateral and guarantees, lowering the financing threshold. Third, fully leverage data management technologies such as tag technologies, privacy computing, and blockchain to build a secure and compliant data-sharing platform, improve platform services, and promote data interconnectivity among government departments, financial institutions, and industrial entities.

Gao Feng concluded that in the process of digital finance empowering technology finance development, “data + models” is the key to reshaping the risk control system; finding suitable business scenarios in technology finance is the entry point; personalized product innovation is the carrier; and a cooperative ecosystem with risk-sharing and functional complementarity is the cornerstone for long-term development.

Cracking the Problems of “Investing Early, Investing Small, Investing Hard”

The 2026 Government Work Report emphasizes making effective use of the National Venture Capital Guidance Fund, vigorously developing venture capital and angel investment. Government investment funds should take the lead in acting as patient capital, and help more start-up enterprises grow faster into technology-leading enterprises.

Direct financing injects the necessary lifeblood of capital into technology finance, accelerating its innovation and progress. On one hand, kechuang bonds are issued intensively, lowering financing costs. On the other hand, in the process of supporting the early development of kechuang enterprises and their listing in the middle and later stages, private equity (PE) and venture capital (VC) play important roles. However, as the aforementioned participating guests pointed out, direct financing occupies a relatively low share in technology finance development, and there are also obstacles such as difficulty obtaining information, lack of smooth exit channels, and an imperfect information disclosure mechanism.

In response, Li Jiong, deputy head and chief information officer of Hangzhou Bank, proposed three practical directions: using data modeling and AI technologies to empower finance practitioners and bridge the differences in talent knowledge structure between the finance field and the field of scientific and technological innovation, thereby tackling the “investing hard” challenge; creating innovative products through coordinated efforts driven by data and the model of “investment + lending + subsidies + guarantees + insurance,” thereby tackling the “investing early” challenge; and providing supporting services such as personnel and human resources, financial services, and policy consulting for kechuang small and micro enterprises, deepening finance’s understanding of enterprises and thereby tackling the “investing small” challenge.

Chen Wenhui, former deputy chairman of the China Banking and Insurance Regulatory Commission, and academic advisor to the Shenzhen Xiangmihu International Finance and Technology Research Institute, said that in recent years, China’s kechuang bond market has gradually expanded, and structurally it shows highly concentrated characteristics of “high credit rating, central SOEs and state-owned enterprises, and mid-to-short maturities.” As venture capital/venture investment institutions are newly added issuing entities, their issuance scale and share in the overall kechuang bond market remain relatively limited.

Chen Wenhui believes that kechuang bond issuance by venture capital/venture investment institutions faces three major pain points: first, the integrated financing cost for GPs (general partners) to issue bonds is high, while LPs (limited partners) still occupy the group’s quota; second, the match between kechuang bond terms and project funding needs is weak, and the strong payment/repayment guarantee attributes may affect investment decisions; third, the uncertainty of policy support strength makes issuers worry about risks of follow-on refinancing and liquidity-related discounts. There are three blockages for institutional investors to participate in kechuang bond investments: first, high due diligence costs upfront, making the direction of capital allocation questionable; second, the mismatch between risk and returns of kechuang bonds, with credit enhancement mechanisms needing improvement; third, blockages such as limited liquidity in the kechuang bond market and insufficient information disclosure.

Chen Wenhui suggested that efforts should focus on clearing GP financing blockages and continuing to support LP bond issuance; innovating credit enhancement channels for kechuang bonds and improving product risk-return compensation mechanisms; improving supporting mechanisms to support high-quality development of the kechuang bond market; improving the regulatory framework and encouraging medium- to long-term capital to enter the market; and using kechuang bonds as a pilot to cultivate a high-yield bond market with Chinese characteristics.

Beijing Business Daily reporter Dong Hanxuan