(Yicai Global) July 26 -- China's recent fifth National Financial Conference called for efforts to tighten up regulation over internet finance including peer-to-peer lending sites and to reinforce financial institutions' accountability over financial risk prevention.

This year's conference included financial technology on its agenda for the first time. 

Similarly, the People's Bank of China's annual branch managers meeting, held earlier this week, placed effective financial regulation high on the agenda. Both the central government and financial regulators have repeatedly emphasized the importance of tightening regulation and extended the special inspection of the internet finance market.

The conference warned a regulation storm may be on the horizon for P2P lending businesses. Policies may impose restrictions on large-sum loans and accelerate the transformation of lending models. Most P2P lending sites have become microloan businesses, resulting in a widening gap between them. Micro-financing is seen as the general trend going forward, while fintech is key to the survival of enterprises in the P2P lending industry.

Authorities have set out more specific rules for internet-based lending services, so companies will look to focus on small value loans with reduced asset concentrations, said Su Wei, chief operations officer at online finance website Etongdai.com.

A decline in large-sum loans against an increase in small loans means that P2P lending sites can reach more customers. The total number users is expanding at a monthly rate of above 10 percent, data show, with growth coming from an increasing number of sites reducing or suspending large-sum loan businesses and shifting their focus to consumer finance. 

This is primarily attributable to the internet effect and economies of scale created by fintech, Zhang Jun, chief executive at peer-to-peer lender Ppdai.com said.

"Unlike traditional financial institutions that tend to focus on large-sum lending businesses, P2P lending sites mainly offer fragmented and diversified microloan services catering to specific consumer scenarios," Zhang added.

"Declining loan amounts and a continuous increase in the total number of borrowers indicate that fintech has enabled P2P lending services to tackle inherent problems with traditional micro-finance businesses, such as high cost, limited coverage of consumer scenarios and poor customer satisfaction."