Can Internet finance really "subvert" traditional finance?

At present, financial technology has attracted much attention at home and abroad, but it is worth discussing seriously to say its views on the subversive changes of traditional finance. Only by going deep into the subdivision of financial industry can we understand the new connotation of current new finance and grasp the new trend of financial technology development.

Differences in the rise of financial technology at home and abroad

Emerging financial technology originated in the United States and other developed countries, and has become a hot field pursued by various capital investment institutions at home and abroad in recent years. Financial technology innovation is a very broad field, including artificial intelligence such as Internet, big data, cloud computing, blockchain and machine learning. In today's digital age, financial technology is not only a hardware device, software development and application, and an integrated and personalized comprehensive service scheme, but also a model of "Internet plus technology to increase data". Without big data, the so-called financial technology is also "passive water, trees without roots". The core competitiveness of financial technology needs to obtain big data conveniently through modern technical means, and intelligently analyze and mine big data through algorithms.

Different from foreign countries' penetration and integration from emerging technologies to the financial sector, China should be regarded as an extension of the future transformation and development of Internet finance. On the one hand, Internet finance has greatly solved the problem of information asymmetry among domestic financial transaction subjects, and made financial activities more efficient through almost free information collection, sharing, storage and dissemination. However, with the rapid development of modern society and technological progress, only solving information asymmetry can no longer meet people's escalating financial consumption needs, and people begin to pay attention to more intelligent, experiential and efficient service experience, so the application of new technologies in Internet finance is really full of expectations. On the other hand, domestic financial technology is a new exploration of its own breakthrough after the bottleneck of Internet finance development. After the brutal growth of Internet finance in previous years, the industry risks are constantly exposed under the new economic normal, and the regulatory norms are increasingly strengthened. Internet finance is entering a new era of rational development. How to find the next outlet of internet finance, financial technology has become a key area of concern in the industry. Many domestic internet finance enterprises really realize that the essence of internet finance is risk management, and the lack of professional risk management is the early congenital defect of internet finance. However, if we can grasp the future financial development trend, give full play to our own technological innovation advantages and flexible institutional advantages in the future financial division of labor, or cooperate with traditional financial institutions to form complementary advantages, it may become an important path for the transformation of Internet finance.

Financial technology has aroused great concern from the society.

While seeing the development trend and influence of financial technology, the debate between technology and finance and financial technology, like the debate between internet finance and financial internet in previous years, has attracted the attention of domestic and foreign industries, even tit for tat. The subversive remarks of the new financial industry with technology as the breakthrough point on traditional finance reappeared in the rivers and lakes. In practice, Internet finance has not completed the mission of subversion. Can financial technology really subvert traditional finance? The so-called subversive change is actually destructive innovation, that is, breaking the original market competition pattern and then forming a new competition order, including new business entities replacing the original market leaders and new services and business models replacing the old business models. From the perspective of social psychology, the high attention and hot discussion on financial technology in the current society is, to a certain extent, people's expectation of subverting existing competition and bringing new fair opportunities. In the real business world, once competitive barriers are formed through low-cost or differentiated strategies, latecomers will have to pay a higher price, which may pose a threat or substitute for the rulers of the existing world. Subversive changes provide new opportunities and possibilities. Newcomers or traditional weak people can surprise the winners and even take their place. This is what the entrepreneurial public psychology is full of expectations. After all, it embodies a market economy concept of equal opportunity in the commercial order. Apple in the United States has subverted traditional mobile phone giants such as Nokia, China's WeChat social software has subverted the traditional communication information service model, and Ali's Taobao e-commerce platform has revolutionized the traditional commercial wholesale and retail formats. All these vivid success stories make people see the realization of this hope. Especially in the era of "mass entrepreneurship and innovation" in China, "making the impossible possible" has become the psychological expectation and invisible incentive for ordinary people and entrepreneurs. The effect of scientific and technological innovation is obviously nonlinear. Moore's Law tells us that when a new technology reaches a breakthrough point, its impact on social economy and life is often subversive and explosive. For a long time, because finance is a special industry with high supervision and high threshold access, people naturally expect financial technology to be the magic key to open the door of financial fence.

Financial technology is not completely subversive.

Generally speaking, the subversion of traditional finance by financial technology is inevitable. Because the connotation and boundary of modern finance are very broad, it includes not only traditional financial institutions such as banks, insurance, securities, funds and asset management, but also new financial formats such as internet finance. The application of financial technology in these different fields will produce different effects. Only from the bank's point of view, it can be divided into account and payment settlement, wealth management, investment and financing. The path analysis of cutting into traditional finance from the Internet has basically gone through the process from payment to wealth management, to financing, and from basic finance to core financial hinterland. However, the impact and influence of Internet finance in different fields are obviously different. In the field of payment and financial management, due to the application of Internet technology, the traditional business pattern has been subverted with efficient service and good experience, especially the traditional 2/8 customer stratification law of finance has been broken. For the general public, the investment threshold is no longer distinguished, and they can participate in payment and wealth investment independently, and share the benefits, which has made inclusive finance in a sense. But in the field of investment and financing, it is very different. The field of investment and financing has also experienced an internet business model that attaches importance to customer experience and adopts pure online operation. However, with the exposure of Internet financing risks represented by P2P, Internet companies began to reflect. In fact, the "one-click loan" model of automatic customer acquisition, independent operation, automatic approval and automatic lending cannot effectively solve the most critical pain points. The so-called pure online, focusing on the ultimate customer experience, is precisely at the expense of losing many risk control links. On the contrary, this is exactly the culture that traditional banks have always adhered to, that is, under the premise of controllable risks, some service efficiency can be sacrificed for risk management, and efforts can be made to find an optimal balance between the two. Therefore, in practice, the key areas of risk decision-making are generally involved. The application of financial technology is mainly in precision marketing and risk monitoring. Although many financial institutions are trying to use it to establish new risk decision-making models and manage credit decisions, it is still in the stage of exploration and trial and error, and has not yet formed a relatively clear, mature and batch operation mode.

Further analysis will find that the successful and subversive areas of Internet finance are basically financial businesses with short business processing chain and no need for users to make too many experiences and decisions. For example, the purchase of wealth management products mainly depends on the expected income, amount and term of the customer after price comparison. In fact, financial institutions or internet companies only provide a trading platform or channel and do not participate in the decision-making process of users. Of course, banks and other institutions need to protect customer information, identify customers and ensure safety. Operational risk is the primary risk of such financial institutions. Due to the complexity of the investment and financing field, professional risk decision-making is very important, which requires more experience and even intuition, supplemented by model decision-making, and the decision-making process is relatively long. For example, online lending involves several operational details such as loan application, due diligence, business approval, legal contract signing, lending, and collection. In this kind of business, it is not entirely by customers' simple decision-making to reach a deal, but by investors and banks and other institutions to make interactive decisions and decide whether to invest or lend. Credit risk is the main risk they bear. Therefore, in the field of financing, although we are trying to design products and provide services in combination with customer experience to enhance customers' awareness of independent participation and business transparency, we still fail to meet the expectations of the outside world as a whole. The core is that financial activities such as decision-making, risk responsibility and payment are completely different, which leads to great differences in the response of standardized business and specialized business to Internet technology. The author believes that the simpler the standardized business and the simpler the decision, the easier it is to subvert the existing service model from the customer experience; The more complex, professional and personalized financial services are, the decision and judgment should be made from a professional perspective, and the customer experience should not be the highest standard.

One of the main reasons for the current problems in Internet finance is excessive standardization and insufficient specialization. The standardized design of loans or credit-like businesses that are not easy to standardize will make risk management a mere formality. Nowadays, many Internet finance companies are trying to establish offline risk control management methods such as institutions and personnel teams, or highlight specific scenario financing methods, which are actually correcting this over-standardization. The author believes that the future of financial technology may have a subversive impact on bank payment and settlement, wealth management and other fields, reshaping the financial format; However, in financing-related fields, it is difficult to produce subversive forces at present, but it is organically integrated with traditional experience and means. This involves the positioning of financial technology enterprises in China, which may develop in two directions in the future: one is to make great achievements in the financial field where customers make simple decisions and innovate the existing service model and business pattern; On the other hand, in the complex field where the two sides need deep interaction, it is more likely to cooperate closely with financial institutions such as traditional commercial banks, complement each other's advantages, form a joint force, and share a new financial blueprint.