Chinese banks are highlighting the importance of financial technologies, or fintech, for client acquisition, service improvement and risk management amid intensified competition between financial institutions and fintech firms.

Financial services firm EY defines fintech firms as "organizations combining innovative business models and technology to enable, enhance and disrupt financial services".

Fintech firms have seen a wide adoption of their services in China in different fields, including money transfer and payments, financial planning, and borrowing.

Sixty-nine percent of digitally active consumers in the Chinese mainland use fintech services, according to online interviews conducted by EY this year on fintech adoption across 20 markets.

The EY report said that "consumers are drawn to fintech services because propositions are simpler, more convenient, more transparent and more readily personalized. This has a ripple effect across the industry as consumers come to expect these characteristics in all financial products", regardless of whether such products are related to retail banking, wealth management or insurance.

The booming fintech services have already enabled some Chinese internet-based companies to make considerable progress in the financial sector.

Liu Jianjun, executive vice-president of China Merchants Bank Co Ltd, said, "I don't think traditional banks are completely lagging behind in terms of technology application, not to mention their huge advantage in owning a large amount of client transaction data. I believe commercial banks will find a path with bright prospects regarding financial technologies as long as they attach great importance to relevant investments."

China Merchants Bank, a Shenzhen-headquartered commercial lender well-known for retail banking, has positioned itself as "a fintech bank". It will strive to develop fintech to give stronger support to consumer finance, Liu said.

Merchants Union Consumer Finance Co Ltd, jointly founded by a wholly-owned subsidiary of CMB and State-owned telecom giant China Unicom, developed its business and risk control systems based on cloud computing and big data technologies. Apart from acquiring customers online, the company runs a digital business.

Similarly, a growing number of Chinese banks are exploring fintech in terms of big data analytics, facial recognition and blockchain. Some of the technologies are already used to improve everyday banking services.

Huaxia Bank Co Ltd, a Beijing-based commercial lender, has been promoting the use of third-party data in processing customers' applications for credit cards.

It started to source information on even prospective clients' educational background from third-party credit agencies, to zero in on well-educated, returns-minded young people, thus increasing its credit approvals by more than 8 percent.

Wang Hanming, chief information officer of Huaxia Bank, said, "We will take cloud computing, big data and artificial intelligence as punch points in our battle for digital transformation."

At the same time, the bank is planning to build a research and development platform related to artificial intelligence.

"Based on the platform, we will use both internal and external data of our bank to transform traditional niche marketing, risk management and personalized services," he said.

Huaxia Bank has researched robo-advisors, which are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision.

Based on real-time data analytics and analysis of traders' mental characteristics, robo-advisors will choose the right time for the clients to make investments and improve returns.

Wang said data collection and algorithm verification are still on, so the launch of robo-advisor products will be determined by market conditions.