Why America has no "internet finance"

The new issue of Caijing magazine published the article "Internet financial Authenticity", a Distinguished professor at Renmin University of China, which answers a question: Why does the concept of "internet finance" exist in the United States, the earliest, most mature and most widely applied field of Internet technology?

He said that the Internet as a technology, despite increased efficiency, but did not generate new finance. Putting the two together on the so-called "internet finance" as a new form of financial analysis, is unique to China. In China, there is a large number of so-called "Internet financial" companies exist, the root cause is the formation of financial regulation of the regulatory arbitrage space.

Here's a concrete analysis of why America doesn't have "internet finance":

The United States is the most developed financial and internet countries, but the United States does not have "internet finance" argument.

This is due to the Internet as the essence of technology. The impact of the Internet on finance is essentially the conflict between machine and human capital, and the result depends on the extent to which the machine can replace human resources. This conflict has been going on since the beginning of finance. At this point, there is nothing particularly prominent about the Internet.

The characteristic of Internet is the convenience and scale of standardization and digital content transmission. In the financial sector, such information (such as transaction data) and processes are most in the background of the business. Difficult to standardize human capital (such as business relations) is stored in the individual, it is difficult to be hit by the internet. Historically, technological advances in the financial field have been phased out of human capital. But some information is destined to be difficult to deal with by machines, which are often the most important part of finance.

Trading market because the transaction data is standardized massive data, so the Internet technology has the most far-reaching impact. For example, stock trading, in the business process is the stock ownership of the registration and transfer. This proprietary information is stored digitally in a computer for easy transmission over the Internet. The Ice,intercontinental exchange, which was established in the 90 's, was to use internet technology to build an energy trading market. Today, the Intercontinental Exchange has merged the NYSE into one of the world's largest exchanges. In the trading market, the Internet has also facilitated the Ameritrade and ETrade, such as internet-based stock trading platform, reduced transaction costs, for retail investors to provide more convenience for stock trading, the traditional securities trading platform has a great impact.

The data in the area of payment is more unitary and standardized. In the case of money, most currencies exist in the form of bank accounts, in addition to cash in hand. In other words, we often say that the currency, the vast majority of the digital debit and credit relationship. This accounting relationship is stored digitally in computers and is very easy to transmit on the Internet. When developing countries promote microfinance, the widely used smartphone payment transfer function is the use of mobile Internet.

Other information in the financial field, such as credit information and economic, industry and corporate research reports, are also produced and disseminated in digital form.

Those internet-based communities and interactive technologies have facilitated market participants to communicate with each other, making trading easier and increasing the liquidity of transactions. It also strengthens the already existing network effects of financial transactions. Western exchanges have been actively adopting a variety of technologies, including the Internet. Trading systems are evolving and technological innovations are emerging. After continuous cross-border and trans-market mergers, a small number of large global exchanges, such as intercontinental exchanges, are available to trade in many varieties, regions, and 24 hours.

It can be said that over the past more than 20 years, the Internet technology has profoundly changed the Western financial sector, especially the financial market structure represented by the United States. But the impact of the internet on Western finance can only be said to be a "quiet revolution". Finance has increased efficiency in the background, but in more times it has not been noticed. The six major functions of finance in the economy (payment, financing, allocating resources, managing risks, providing price signals, processing information asymmetry) have never changed. The internet has not derived new financial functions. From this point of view, it and the music, film and other industries have no essential difference in the impact.

On the Intercontinental Exchange, for example, it has driven a huge shift in the US trading market, even annexing the NYSE, the most representative of traditional finance. But no one sees an intercontinental Exchange as an internet company. The merged exchange is not known as the "Internet Exchange".

Then take the stock of online trading platform for example. Online trading systems such as Ameritrade and exchange systems are directly connected, reducing the intermediate links, thereby reducing costs and enhancing the user experience. But from a stock investor's point of view, the technical improvement of the background trading system is more convenient for the implementation of the established investment strategy, but his investment income is still invested in the company (share price changes and dividends).

The function of allocating resources to the stock market has not changed because of the internet, and investors still decide whether to invest according to the company's operating and earnings prospects. Similarly, for research, the Internet has changed the transmission of research reports, but the Internet itself does not produce research reports.

The internet as a technology has been widely used in the U.S. financial industry and has had a profound impact. But the internet has not produced new finance. This awareness of the sober, so that the Western market does not produce the so-called "internet finance" concept.