Author: Guan Pinfang
Source: Point News
Many people do not quite understand the difference between fintech and tech finance. In fact, fintech focuses on improving the technological support for the operation of the financial system, aiming to reconstruct the ecosystem of the future financial industry. As for tech finance, its essence is the financial industry that uses high technology to keep pace with the times. Therefore, from the perspective of the securities market, fintech is tech stocks with a higher price-to-earnings ratio; tech finance is financial stocks with a lower price-to-earnings ratio. For example, Ant Financial is tech finance, not fintech.
Looking at fintech, we stand at the forefront of technological development, comprehensively examining the future of tech finance. This is the driving force behind financial reform, a strong combination of finance, technology, and capital. Modern economic progress is closely linked to financial innovation, which in turn is intricately related to technological advancement. The information revolution represented by technologies such as computers, the internet, blockchain, and supercomputing has created technology-driven financial innovations collectively known as fintech.
Fintech is one of China's infrastructures in the digital economy. China is rapidly transitioning from relying on internet (computers, fixed networks) and mobile internet (mobile phones, WiFi) fintech phases (1.0, 2.0) to a technology-driven fintech phase (3.0 or even 4.0) characterized by cloud computing, big data, blockchain, and artificial intelligence, continuously attracting more funds, talents, and related industries, either actively or passively entering this wave of fintech.
Fintech has its evolutionary path, driving factors, and strategic significance, according to different technology categories combined with the financial industry. We see that cloud computing, big data, blockchain, and AI technologies are establishing operational rules in the financial sector, anchoring development trends, and demonstrating evolutionary logic, from which we can clearly see the ultimate goal of fintech and the current development strategies of the country.
In the era of fintech, both enterprises and individuals should develop themselves under the strong guidance of the government, exploring various investment and financing channels, utilizing the construction of fund circulation and asset trading (grid or knot), to better leverage the role of the financial market. Therefore, the development of fintech is closely interactive with the evolution of the financial industry itself.
Every step of fintech development will profoundly change our economic structure, social forms, and behavioral habits. In the realm of the digital economy, the mobile payment of the digital renminbi and the cross-border settlement system of the renminbi are two crucial hands, both involving the application of fintech. Additionally, as one of the special administrative regions under 'one country, two systems,' Hong Kong should leverage its special advantages as an international financial center to accelerate the pace of the circulation system for new types of anonymous virtual currencies (such as Bitcoin, Ethereum, stablecoins, etc.). Currently, the United States may use cryptocurrencies as a means to continue the hegemony of the US dollar. Cryptocurrencies are like chips on a gambling table, anonymous and freely exchangeable. Although they facilitate currency circulation, a lack of effective regulatory norms can create opportunities for hosts to make huge profits and allow illegal actors to launder money. This is precisely a characteristic of capitalism that allows monopolistic capital groups to manipulate the situation. Therefore, establishing relevant regulatory systems internationally is of utmost importance.
As a socialist country, China's control over money supply is a responsibility to its people, hence it does not allow uncontrollable anonymous cryptocurrencies to circulate domestically or through cross-border settlement systems outside of the central bank, the Ministry of Finance, and relevant regulatory bodies. However, Hong Kong, as one of the financial centers connecting the domestic and international markets of China, should be able to carve out a different path.
The so-called tech finance has lost its particular mystery by today. To keep up with the development of the international financial industry, it is essential to timely apply the latest relevant technologies, which is already a given. Moreover, Hong Kong Special Administrative Region aims to become a global asset (wealth) management center, attracting asset inheritance, establishing trusts, and developing family office businesses. In the future development of virtual banks and the digital economy across various fields, there must be absolutely reliable black technology support. For instance, effective technological operations and regulatory systems must be established between cryptocurrencies and blockchain. Digital finance is the digital revolution, which requires that relevant fintech can quickly keep up in the area of virtual asset trading. The importance of the virtual economy lies in virtual asset trading, which involves the interaction of related financial products, financial markets, and financial institutions. There are still several loopholes in digital asset trading today, such as online lending information platforms (commonly known as P2P), ETFs (exchange-traded funds), futures, Bitcoin, Ethereum, VTC (VeriCoin), and various derivative tools, which involve many novel trading forms and methods, bringing corresponding risks. China is a responsible socialist government that ensures the assets of the people (whether leeks or wool) are not plundered by international capital predators, which is a given.
Finally, digital finance involves collaboration between industry, academia, and research, with capital investment focusing on product, program, and system application development, tightly connecting to form a value chain, which cannot be separated from industry drive. Learning and research in universities should keep pace from a theoretical perspective, ultimately subordinate to the market, responding to the demands of capital and the market. This differs somewhat from the basic and theoretical research in natural sciences in the field of innovative technology. Is that so? This article is merely a brick to attract jade, hoping that scholars, experts, and high-ranking officials will elaborate on this, providing a clear development direction for digital finance in Hong Kong.