DYMPLES LEONG explores how people’s use of fintech changes during times of unrest in China.

The push towards a cashless society by governments and the private sector has led to a rapid global development of the financial technology (fintech) industry. Countries in Asia are increasing their adoption of fintech to meet the challenges of a globalized digital economy, such as access to underbanked individuals and reduction of fraud and scam payments. In times of civil unrest, uncertainty and protests, the attitudes of individuals towards fintech undergo a dynamic reversal as fears of surveillance and privacy violations induce a shift away from going cashless.

Fintech consists of an amalgamation of automated technology services and products used to disrupt traditional financial services such as banking. Some examples of fintech include mobile payments, money transfers and robo-advisors in investment. The push towards fintech adoption can be most evidently observed in China. The country’s conducive, pro-technology environment coupled with a tech-savvy population allows for the proliferation of fintech adoption.

Dubbed the world’s largest cashless marketplace, the widespread adoption of technology-based financial services in China has resulted in an extensive usage of mobile digital payment wallets. Popular mobile payment wallets such as AliPay and WeChat Pay comprise up to 92% of the Chinese mobile payment market. The gross merchandise value of digital cashless payments make up a total of $57.7 trillion yuan in China’s economy. Other countries in Asia are catching up, with Singapore, Indonesia and Malaysia leading fintech innovation across Southeast Asia.

The ease of convenience has driven the rapid adoption of mobile payment applications. Integrated mobile applications consisting of multiple functions provide a functional and convenient way of digital online payments. WeChat, for instance, is a super app combining functions such as messaging, social media and mobile payment gateways. The app, which is linked to an individual’s bank account, uses a variety of security tools such as fingerprint scanning, QR codes or encrypted passwords for identity verification.

However, periods of unrest and uncertainty can disrupt the confidence and trust in fintech and lead to changes to the economic behaviour of citizens. While protestors guard their offline identities, the focus has increasingly shifted to securing online identities and activities. A shift from the minimisation of digital financial transactions online towards the anonymity of cash reflects the significance of privacy protection in increasingly connected cities today.

This was evident during the June 2019 protests against the extradition bill in Hong Kong. Young, technologically savvy protestors refrained from using their contactless transport card (also known as Octopus card) for travel and, instead, bought single-ride metro tickets using cash. They feared their travel journeys could be tracked by serial numbers on Octopus cards and financial transactions accorded to the card, which could allow authorities to determine participation in the protests. This behavioural change served to prevent potential retaliation by authorities employing mass data collection on protestors. It presents a dynamic shift from confidence and trust of a cashless society to viewing digital financial transactions as concerns regarding surveillance and privacy issues.

As mobile payment systems are increasingly knitted into an integrated digital ecosystem like WeChat, the integration of chat messaging, digital financial transactions and other online activities on the social media ecosystem collated paints a picture of select groups or targeted individuals to monitor. The identification of individuals participating in the protests are possible by compiling together the information obtained using data collation.

There are concerns that authorities could forcibly compel technology companies to obtain access to data on protestors. Upgraded national laws empower authorities to access a vast array of data points. For instance, China’s 2018 Cybersecurity Law requires network operators to store personal information or important data collected or generated in China domestically. Furthermore, network operators can suspend or remove user accounts –  Tencent, the parent company of WeChat, could hand over user data to the authorities when legally compelled to do so. A lack of end-to-end encryption could leave a back-door channel for third parties to access users’ messages and data, whether they be the internet operators or the government. For instance, the recent DDoS (Distributed Denial of Service) cyber-attack on Telegram during the Hong Kong protests were allegedly conducted by Chinese state actors. Therefore, the possibility of cyber-attacks on specific individuals’ digital wallets or identity accounts cannot be ruled out. Hackers (be it state or non-state actors) could potentially target the digital wallets of targeted users and proceed to manipulate or disrupt the financial transactions of users online, as a possible retaliation for participation in civil protests.

Another factor which could influence a change in economic behaviour could lie in the social credit rating system. Privately owned social credit rating companies such as Sesame Credit (芝麻信用) – which calculate the scores of customers based on a list of factors including online consumer purchasing and behaviour patterns – share data with local authorities in various Chinese provinces piloting their versions of the social credit system (there is currently no single national rating system). The potential expansion of the social credit rating system, with the input of integrated data collation avenues, could significantly deter individuals from participating in civic democracy for fear of being identified by authorities. The identification of a protestor could negatively affect the individual’s social credit score and impact that citizen’s ability to access various services such as housing loans, financial services and government services. Even if individuals refuse to engage in the various functions applications provide, they would find it drastically difficult to live in a society where the usage of such applications are ubiquitous. With China’s goal of building a national social credit rating system by 2020, the pervasiveness of the fintech and social media ecosystem signifies an increase in opportunities for surveillance and the potential for the erosion of privacy for individuals.

The potential of blockchain-based technologies has been raised as an alternative to minimise the surveillance capabilities on mobile payment gateways. While blockchain-based cryptocurrencies such as Ethereum could assist in assuaging privacy and surveillance concerns in other countries,  China has banned cryptocurrency over concerns of financial speculative bubbles and wasteful energy consumption. Thus, cash is seemingly the only viable option for protestors to retain their economic agency and limit the opportunities for surveillance. However, with widespread access of digital payments, some have predicted the death of cash in the future – with multiple concerns for privacy and security. Above all, the perennial question remains – can there be an adequate level of trust to assuage society’s privacy-fuelled fears of surveillance in smart cities, in times of both peace and disruption?

Dymples Leong can be contacted at isdsyleong@ntu.edu.sg.