Bloomberg reports that according to Moody’s Investors Service, China’s digital yuan will help banks become more competitive in the payments sector after steadily losing out to popular technology platforms over the years.

“We expect adoption of e-CNY to help reinforce banks’ position in the payments system because it will enhance their data collection ability and broaden their user bases,” analysts said.

The e-CNY -- developed by the central bank and now under trial in a dozen cities -- adopts a two-tier structure, where the central bank issues the digital currency to authorized commercial banks, which then exchanges and circulates it to the public. 

The effort to develop a digital yuan “reflects the authorities’ concerns about data concentration among technology companies”, the Moody’s analysts said. PBOC officials have previously said the e-CNY offers better protection of privacy and the capability to combat crimes.