India leads in FinTech market, ahead of US in financial innovation, US lawmaker says

India is the “fastest-growing” FinTech market in the world and far ahead of the US in terms of financial innovation, Republican Senator Steve Daines said. 

India processed nearly 10 billion more real-time payments than China in 2020, $25.5bn, versus $15.7bn for China, Daines said, adding that the US processed just $1.2bn of real-time payments.

The US faces a challenge from China, which has launched a digital Yuan, which they hope will one day displace the dollar as the world’s dominant reserve currency, the senator from Montana said.

He added, ‘Even beyond the digital Yuan, it’s no secret that China and many other countries are well ahead of us with regard to financial innovation,’ he said during a Congressional hearing by the Senate Banking, Housing and Urban Affairs Subcommittee on Economic Policy on Central Bank Digital Currency.

Echoing a similar sentiment, Stanford Graduate School of Business Professor of Management and Professor of Finance Darrell Duffie said, “At this stage, the United States has fallen behind even India and China with respect to digital currency technology. And the competition for commercial services internationally is very important.

“US banks have been ceding ground to Chinese banks internationally. If the United States wants to compete, it is going to have to invest in technology in this area, particularly with respect to the new uses of digital ledger technology.”

However,  the use of distributed ledger technology with tokenised money may present a future very different from the one known today, according to US Commodity Futures Trading Commission former Chairman Christopher Giancarlo.

Giancarlo said, “Today, we think of a global network of banking institutions that have been very useful to the United States in sanctions, power and other areas but also to clean up money laundering and surveil that banking network. But in the future, we may see very different networks of digital currency. There may be a Yuan network. There may be a dollar-based network.”

How these networks interact with each other is going to be of critical importance and the work of China is looking at blockchain technology and helping to set the standards of interoperability between these networks is going to be of critical importance.

Giancarlo further added that the digital dollar is almost an issue of second-order magnitude. He believes the first issue is that we lead in technological development and in the standard-setting.

Indeed, India’s FinTech sector spewing out unicorns quicker than any other country. Five months into 2021, India already has 14 new unicorns, surpassing this year’s expectations and projections.

In the FinTech sector startups including Digit Insurance, Five Star Business Finance, CRED, Groww, Chargebee and Zeta entered the billion-dollar club in 2021 alone.

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