Fintech in China and U.S.

 
Fintech in China and US
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Fintech in China and US
Fintech, which is stands for financial technology, refers to the use and development of financial technology systems to make financial transactions easier (Hernández, Öztürk, Sittón, & Rodríguez, 2019). It is estimated that there have been more than 55 billion dollars invested in the Fintech industry globally, and the figure is poised to double given the increase in demographic trends in the world. China and the United States (US) have established some of the best financial technology systems in the world, as most developing countries look up to them for benchmarking. Various factors have driven the growth of Fintech in China and the US. Low levels of banking system penetration are one of the factors that have enhanced its adoption in both countries (Richman Centre News, 2019). The paper focuses on factors contributing to the growth of the Fintech industry in both China and the US, current issues in Fintech, and merits attributed to financial technology.
Demographic change is one of the main issues that has led to the explosive growth of Fintech in the world. For example, China has experienced a significant increase in its middle-class population, which demands more sophisticated and more uncomplicated financial services. The modern population demands easy and fast payment activities to wealth management (Richman Centre News, 2019). This has led to the development of mobile applications in conjunction with the banking systems to enable subscribers to make payments and withdrawals without necessarily going to the bank physically. In the United States, there has been more significant growth in Fintech companies.
 
Table 1: US Fintech top Firms (Kauflin, 2019)

 
As shown in table 1, some of the biggest Fintech companies in the US include Stripe valued at 22.5 billion dollars, Coinbase at 8 billion dollars, and Robinhood Company valued at 5.6 billion according to Kauflin (2019). This is due to the demand that continues to expand by the day. It is also important to note that the increase in population has made it difficult for the incumbent financial institutions to serve the increasing number of customers in the market, especially in China. Nevertheless, in the US, the rise of Fintech is meant to give the population alternatives and convenience in financial institutions (Kauflin, 2019).
Emerging Trends in Fintech
 
Figure 1: Current Issues in Fintech
Companies, as well as consumers, are looking for ways to reduce the use of energy and use of natural resources by going green, as shown in figure 1. The creation of technology that reduces energy usage in financial systems such as the use of energy management software like an intelligent energy management control system helps companies to devise ways of reducing energy consumption and reduction of costs (Hernández et al., 2019). Fixed costs due to economic conditions and regulations in the financial market ensure that people have to come up with relevant software that would be able to monitor firms to ensure that they comply with specific regulations. It is also important to note that there have been financial failures in the market due to increased technological hitches. For instance, during the Facebook IPO, when some of the clients purchased the shares at the wrong price. Knight Capital also suffered a technological breakdown that significantly affected its market value (Kauflin, 2019). Legal systems in most financial institutions are obsolete. Integrating these systems with newer systems tends to be time-consuming, complicated, and expensive.   
Merits of Fintech
The reduction of operating costs for both financial institutions and consumers has led to more development in Fintech. The use of technologies such as PayPal as a form of payment internationally has reduced the costs that customers and banks incur significantly as well as increased the ease and speed of completing a transaction (Richman Centre news, 2019). This has forced banks to integrate these technological applications into their systems to stay relevant in the market. This has reduced the time and costs involved to sign and authenticate checks and cash transfers. It is also important to note that financial companies that acquire already established tech firms also boost their customer base, which increases their revenues in the long run. An example integration of the Zelle payment tool into m...