Briefly describe the differences and links between Internet finance and traditional finance

There are five major differences between traditional finance and Internet finance:

One, the positioning is different: Internet finance mainly focuses on the long-tail customers who cannot be served by the traditional financial industry or who are not paid enough attention to it, and utilizes the scale effect and lower marginal cost brought about by the information technology revolution to enable the long-tail customers to obtain effective financial services in the areas of small transactions and market segments. For example, one segment of Internet finance, the real estate mortgage market, provides users with convenient real estate mortgage financing services as the core content, and the customer group is mostly middle-class users who own individual residential properties.

Second, the driving factors are different: the traditional financial industry is process-driven, focusing on direct face-to-face communication with customers, in the process of collecting information, establishing and controlling risks, and delivering services, the Internet finance is data-driven demand, the customer's all kinds of structured information can become the source of marketing and the basis of risk control.

Third, the model is different: traditional financial institutions and Internet financial institutions are actively using the technology of the Internet, but the model design is different. The former is offline to expand online, and strive to make fuller use of the original basis to enhance the convenience of service. The Internet finance is the opposite, generally use O2O mortgage mode, for example, Internet finance under the mortgage generally create online application, audit, offline approval signing notary, mortgage combination of new models, this use of online to offline expansion mode in tapping into the customer has a strong advantage.

Four, the governance mechanism is different: compared to traditional financial institutions need to guarantee the mortgage registration, post-loan management and other governance mechanisms, the Internet financial enterprises have a higher degree of marketization, through the development of transparent rules, the establishment of public supervision mechanism to win the trust.

Fifth, the advantages are different: traditional financial institutions have significant advantages in terms of funds, capital, risk management, customers and outlets. Internet financial enterprises have different customer acquisition channels, good customer experience, fast business promotion, low marginal cost, significant economies of scale and other advantages.