Internet finance in which aspects of the traditional financial dominance

The difference between Internet finance and traditional finance is mainly reflected in five aspects:

First, 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 given enough attention, and utilizes the scale effect and lower marginal cost brought about by the information technology revolution, so that the long-tail customers can obtain effective financial services in the areas of small transactions and market segments. At present, the customer crossover between Internet finance and the traditional financial industry is still relatively small, but the future of the opposite direction, cross-penetration will certainly increase gradually.

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, Internet finance is a data-driven demand, a variety of structured information about the customer 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 has a deep foundation of physical services, offline to online expansion, and efforts to more fully utilize the original foundation to enhance the convenience of services. And most of the Internet finance is mainly online services, but also focus on expanding from online to offline, the use of convenient means of service, and strive to make the business deeper and more practical.

Fourth, the governance mechanism is different.

Traditional financial institutions are subject to more stringent regulation, the need for security collateral registration, post-loan management, etc., the Internet financial enterprises have a higher degree of marketization, through the development of transparent rules, the establishment of a public monitoring mechanism to win the trust, without the need for guarantees and collateral. This mechanism has lower governance costs, but lacks a unified regulatory system and standardized business standards.

Fifth, the advantages are different.

Traditional financial institutions have significant advantages in terms of funds, capital, risk management, customers and outlets, the source and use of funds can be directly docked volume, low cost, while strong capital strength, risk management system is mature, network services are also the Internet in many cases can not be replaced. Internet financial enterprises, on the other hand, have different channels of customer acquisition, good customer experience, fast business promotion, low marginal cost, significant economies of scale and other advantages.

Overall, there is something to learn from each other, the development of Internet technology and the financial market, driven by the diverse demands of customers, Internet finance gradually challenge the traditional banking business. The increasingly obvious advantages of Internet finance, the traditional banks in the field of payment, microfinance and intermediate business areas have impact. Along with the innovation and change of Internet finance, traditional banks also have corresponding opportunities, banks have a wealth of products and experience in the field, as well as a set of perfect risk management system. Banks through the development of more than a decade of Internet applications have also accumulated a group of talent, they are familiar with the development of financial applications at the same time also have an in-depth understanding of the development of Internet applications, these are also Internet financial institutions in a short period of time is difficult to reach the advantage.