The market shouldn't be overly concerned about risks posed by the country's booming online finance sector, which is still at a nascent stage, former top banking regulator Liu Mingkang said on Thursday at the Davos Forum in Tianjin.

Of about 1,000 online financial services firms operating in the country, some 170 have fled with clients' money, Liu, now distinguished fellow at the Fung Global Institute in Hong Kong, said at a panel discussion during the ongoing World Economic Forum's eighth Annual Meeting of the New Champions, also known as the Summer Davos Forum.

But it is unnecessary to be overwhelmed by a few failed cases, he continued, because if handled well, Internet-based finance would see substantial growth in the country.

Noting that regulators in the US won't be as tolerant as their counterparts in China in pushing the development of online finance, Zhang Yichen, chairman and CEO of alternative asset management firm CITIC Capital, told the same panel that Internet finance is seen as a significant force in kickstarting innovation in China's financial system.

Still, the lack of regulatory oversight over the online financial sector is a matter of concern.

Rules regulating Internet finance need to be put in place after the initial warm-up stage to deal with potential turbulence in the future, stressed Liu, former chairman of the China Banking Regulatory Commission.

Instead of being pitted against traditional banks, Internet financial services firms should focus on small-scale, simple businesses with risks being dispersed, he suggested.

Traditional banks are more concerned with pressure from the digitalization of finance that enables a dynamic response to customers' needs than risks of asset bubble or property crisis, Rob Whitfield, chief executive of Australia-based Westpac Institutional Bank, told the Global Times on Thursday on the sidelines of the forum, speaking of the significance of a shift to Internet-based finance.

But it would be "daunting" if regulations remain absent with customers exposed to risks, Whitfield noted.

In a sign of caution due to the absence of regulatory supervision, CITIC Capital's Zhang disclosed that his company has been exploring partnerships with Internet finance businesses, but is yet to make any investment.

As for the health of the broad financial system amid an unprecedented reform of the economy, panelists also set aside worries that especially the banking sector might not be able to endure the stress in light of the buildup of nonperforming loans.

Though banks are seeing an increase in nonperforming ratios amid a cooling economy which is going through broad-based reforms, it is not a matter of worry as the lender hold adequate capital and reserves, Liu remarked.