With the number of fintech companies setting up base in China increasing with each passing day, many business analysts have started to become worried about how the financial landscape of the eastern powerhouse will continue to evolve as time passes on.
In this regard, Vince Zhang, the President of Chinese financial investment platform ‘Phoenix Finance’, believes that if the number of fintech companies in China continue to grow, the country might be placed under a big risk of complete economic collapse.
While talking at CNBC’s East Tech West conference recently, Zhang said that the many of the financial technology firms that are cropping up in China right now do not possess the necessary tools to make them “sound conduit mediums, either for consumers or the wider economy”.
In this regard, he also said:
“A lot of companies are not there in terms of their business plan, in terms of their risk management process, in terms of their overall management. A lot of these corporate control mechanisms are not in place.”
More On The Matter
Over the past couple of years, China has been witnessing a massive increase in the number of businesses that are trying to harness the power of blockchain technology in order to gain a foothold over the nation’s large unbanked population.
While such a tech revolution is quite remarkable, Zhang says that since many of these companies deal with a lot of money on a day-to-day basis, things could turn quite dangerous, quite quickly (if left unsupervised).
He also said:
“Without proper risk control mechanism personnel, without proper ways of communicating with regulation, it’s potentially becoming a very big risk going forward.”
In order to combat the aforementioned problem, Zhang believes that the Chinese government needs place more regulations within niche areas such as consumer protection rights and risk control.
“I would predict in 2019 it’s becoming more regulated. There will be less and less players in this field.”, Zhang finished off by saying.