The Influence of Science and Technology on Traditional Industries

Abstract: The rapid development of internet finance has brought more and more influence and impact to the traditional financial industry. In the face of this new change and challenge, how should financial institutions treat and respond? Based on the connotation, forms and latest development of internet finance, this paper analyzes its influence on the development direction, structural transformation and strategic innovation choice of traditional financial industry.

Keywords: Internet finance

Traditional financial influence

With the deepening of China's finance and the acceleration of financial reform, the rise of Internet finance will have a far-reaching impact on traditional financial fields, financial market efficiency, financial transaction structure and even the overall financial structure.

Internet finance promotes the competition between traditional financial institutions and emerging institutions, and the influx of "showstopper" is increasing. In particular, non-bank financial institutions, third-party payment and other internet financial services rob financial services including credit, wealth management, asset management, securities and insurance, which has brought more and more influence and impact to the traditional financial industry. How should financial institutions respond to this new change and challenge? This paper intends to make a superficial discussion on this.

First, the connotation of Internet finance

At present, there are many expressions about the connotation of internet finance, and the definitions are not uniform. Here, the author draws a preliminary conclusion that Internet finance is a kind of mixed finance that intervenes in the traditional financial business process through the Internet, mobile Internet and other tools. From a broad financial point of view, Internet finance includes but is not limited to payment for third parties, sales of online wealth management products, credit evaluation and auditing, financial intermediation, financial e-commerce and other modes. From a narrow financial point of view, internet finance is related to the credit payment of money, that is, the ways and means of financing relying on the internet, which can be called internet finance. The current Internet finance pattern consists of traditional financial institutions and non-financial institutions.

Internet finance of traditional financial institutions mainly includes online banking innovation of traditional financial services and technological innovation of e-commerce. Internet finance of non-financial institutions is mainly composed of e-commerce enterprises with commercial Internet technology, peer-to-peer lending platform with P2P mode, online investment platform with crowdfunding mode, mobile banking APP with wealth management and third-party payment platform. It is based on the system and thinking of the Internet to build financial business, and uses the characteristics of the Internet to complete financial channels, lending, information, sales and customer management. Traditional financiers have a view that traditional banks have adopted digital and internet-based electronic banking management systems, so banks are also internet finance. But in fact, the author believes that the electronic network controlled by banks or the Internet used should be called financial Internet.

Here, this paper focuses on the influence of internet finance composed of non-financial institutions on traditional financial industry.

Second, the development model and manifestations of Internet finance

The first mode is bank online banking,

At present, commercial banks provide services to the public and society through Internet channels, in which the Internet plays a channel role. The second mode uses the platform of e-commerce and obtains credit support based on big data collection and analysis, which is a comprehensive trading mode based on trading parameters.

The third mode is P2P mode, which provides intermediary services and combines the lenders and demanders. The modes of platforms are different, mainly in the following two categories:

The first is the secured transaction mode of the guarantee institution. As an intermediary, such platforms do not absorb deposits or lend, but only provide financial information services, and cooperative small loan companies and guarantee institutions provide double guarantees. For example, the trading mode of such platforms is mostly "1 many-to-many", that is, a loan demand is invested by multiple investors. The second is the creditable mode of "the transfer mode of creditor's rights contract under P2P platform". It can be called "many-to-many" mode, which matches the loan relationship between investors and borrowers through the Internet to realize personal-to-personal loans.

The fourth mode combines traditional marketing channels with online marketing channels through interactive marketing, so that the financial industry can realize the transformation from "product-centered" to "customer-centered" and build an open internet financial platform.

The fifth model is actually the monetary fund model, represented by the balance value-added service Yu 'ebao created by Alipay. Users can pay the money in Alipay to Yu 'ebao at any time, which not only avoids the transfer fee, but also gains income.

Third, the development direction of traditional finance under the influence of Internet finance In the past period of time, with the development of communication technologies such as the Internet and its integration with the financial industry, "Internet finance" has become an important research direction. At the beginning of the research, many scholars such as Allen et al.(2002) and Fight(2002) only regarded the Internet as a new way to realize financial services and transactions, and discussed the influence of the Internet on the financial industry on this basis. Of course, if we only analyze this problem from a technical point of view, compared with the traditional financial business model, the Internet will certainly bring innovation to the traditional financial industry by virtue of its advantages in information collection and processing, product delivery and risk prevention, but in the final analysis, this influence can only be summarized as: faster. With the deepening of research, people pay more and more attention to the influence of the Internet on the traditional financial organization and operation mode, so that some scholars think that Internet finance is the third financial mode after the traditional financial intermediary and capital market.

Four. The change of traditional financial structure under the influence of Internet finance and its influence on Internet finance "High Frequency Trading" (hft) and "Algorithm Trading" (at) are increasing continuously. On the one hand, it increases the transaction scale, on the other hand, it also improves the homogeneity of financial products. Take the United States as an example In 2003, the average daily trading volume was 3 billion shares, which rose to 654.38+000 billion shares in 2009. At the same time, the proportion of traditional trading methods dropped significantly, and new york Stock Exchange. The market share of NYSE dropped from 80% in June 2003 to 25.8% in February 25.8%(Angel et al., 20 1 1). Contrary to the sharp increase in trading volume, electronic trading can reduce the average trading scale, thus saving costs more effectively when trading large positions. Traditionally, large-scale transactions need to be hidden by means of exchange transactions. Now, the exposure of instructions can be controlled by the "dark pool" of the electronic trading system, and the transaction can be completed continuously at a lower cost. Electronic transactions are conducted at the speed of light, and the influence of distance on transactions is very important. The empirical study of Garvey & Wu (20 10) found that the cost of electronic transactions has a significant relationship with geographical distance. Traders who are close to the exchange in the stock market can obtain higher instruction execution quality, and the speed limit of data transmission leads to the difference of electronic trading speed. Traders with speed advantage can reduce transaction costs. The change of market structure has a profound impact on the liquidity, volatility and effectiveness of financial markets.

First, intuitively, electronic transactions have expanded the market scale and can provide more liquidity. The empirical research of Henderson et al. (20 1 1) proves that algorithmic trading improves the liquidity of NYSE and the liquidity of the whole market becomes more abundant. When the market fluctuates, algorithmic trading tends to release liquidity more than manual trading. However, electronic transactions not only increase the liquidity supply, but also increase the liquidity demand, and the latter may also reduce the market liquidity, leading to the spread expansion (Kumar et al., 20 1 1).

Second, electronic trading usually closes at the close of the market, and traders will sell a large number of positions at the last minute of the end of the trading day, which may lead to significant price changes, thus increasing market volatility. Moreover, the exchange strategy of high-frequency trading, such as momentum strategy, may also aggravate the short-term fluctuation of the market. The most recent example is the "flash crash" of the Dow Jones index on May 6th, 20 10. Although high-frequency trading is not the cause of the crash, its follow-up reaction has caused huge selling pressure and intensified market volatility (kirilenko et al., 20 1 1). However, the change of observation period will affect the results of empirical test. For example, Chaboud et al. (2009) found that algorithmic trading is negatively correlated with market volatility. Thirdly, the research on market efficiency mainly focuses on the price discovery mechanism of electronic transactions. Henderson Short & Riordan (2009) believes that electronic trading, as a stable speculator, its supply and demand for liquidity make the market price more effective. "Dark pool" trading will damage the effectiveness of price discovery and reduce the volatility of the market (Ye, 20 1 1). After introducing liquidity factor, Zhu's model (20 12) proves that "dark pool" can provide price-related information, which is helpful for price discovery, but it will reduce liquidity.

Verb (abbreviation of verb) The strategic innovation choice of traditional finance under the influence of internet finance

(1) Actively enhance the traditional business advantages of banks and improve the level of financial services. It is undeniable that today's banks still have strong advantages in economic regulation, risk control, social credit reporting, huge offline customers and professional services, but they also have many weaknesses and deficiencies. Therefore, financial institutions should actively innovate, constantly improve the traditional business level of banks, improve basic financial services such as account management, payment and settlement, deposit and loan procedures, and win the market and customers with quality services.

(2) Actively explore electronic, mobile and intelligent banks. Banks should accelerate the pace of transformation, improve the functions of online banking, mobile banking and other payment tools, improve and develop the "home" business of online banking, mobile banking, iPad banking, WeChat banking and other electronic banks, provide customers with remote services, and provide the public with more convenient and efficient modern financial services.

At present, Bank of Beijing has launched a "direct bank", China Everbright Bank has launched a "smart bank exhibition center", and Guangfa Bank has launched a "smart gold account", which has the functions of automatic balance management, automatic subscription and redemption of monetary funds, and automatic repayment of credit cards. These links require banks to open ports and data. At present, Internet financial products are still difficult to achieve.

(3)

Strengthen internet financial cooperation. The huge number of customers on the Internet and the advantages of big data have had a huge impact on the offline mode of traditional financial preferences. Banks should learn from each other's strong points, actively seize the opportunity of cooperation with Internet companies and platforms, make full use of a large amount of data on Internet platforms, master customer credit records, improve the accuracy of customer credit ratings, understand customers' purchasing power and consumption habits, and provide more suitable financial products and service financial solutions. Recently, Minsheng Bank and Ali launched a cooperation strategy in wealth management business, direct banking business, Internet terminal finance, IT technology and other aspects to incite Internet finance with the advantages of traditional basic finance.