The Difference between Internet Finance and Traditional Financial Risk Management

The differences between internet finance and traditional finance are mainly reflected in five aspects: positioning, driving factors, mode, governance mechanism and advantages:

1. Different positioning

Internet finance is mainly aimed at long-tail customers who are not served by the traditional financial industry or are not paid enough attention. Taking advantage of the scale effect and low marginal cost brought by the information technology revolution, long-tail customers can obtain effective financial services in small transactions, market segments and other fields. At present, there are still few customers who cross the internet finance and traditional finance industries, but in the future, reverse and cross-penetration will definitely increase gradually.

2. The driving factors are different

The traditional financial industry is process-driven and pays attention to direct face-to-face communication with customers. In this process, collect information, control risks and provide services. Internet finance is a data-driven demand, and all kinds of structured information of customers can be the source of marketing and the basis of risk control.

3. Different modes

Traditional financial institutions and internet financial institutions are actively using internet technology, but there are differences in model design. The former has a solid service foundation and expands from offline to online, striving to make full use of the original foundation and improve the convenience of services. Internet finance is mainly based on online services, but also focuses on expanding from online to offline, using convenient service means, and striving to be deep and practical.

4. Different governance mechanisms

Traditional financial institutions are strictly regulated and need mortgage registration and post-loan management. Internet finance companies are more market-oriented. By making transparent rules and establishing public supervision mechanism, they can win trust without guarantee and mortgage. The governance cost of this mechanism is low, but it lacks a unified supervision system and standardized business standards.

5. Different advantages

Traditional financial institutions have obvious advantages in capital, capital, risk management, customers and outlets. The source and application of funds can be directly connected, with large volume and low cost. At the same time, the capital strength is strong, the risk management system is mature, and the network service is irreplaceable in many cases. Internet finance enterprises have the advantages of different customer acquisition channels, good customer experience, fast business promotion, low marginal cost and remarkable economies of scale.