Taking advantage of financial technology, can Internet finance change its name to the second half?

A few days ago, the "Sixth Financial Science and Technology Summit Forum" hosted by the Shenzhen Internet Finance Association was held in Shenzhen. The conference focused on the theme of "returning to the essence and decisive battle in the second half", and advocated Internet finance companies to use technological strength to carry out financial innovation.

Predicament

Looking at the development of domestic Internet finance, the industry began to develop in China in 2009, and it entered the so-called crazy first year in 2013, and it entered a very hot stage in 2014. The so-called "God desires its demise, it must first make it crazy." In 2015, the Internet ushered in the year of supervision. With the tightening of regulatory policies and the listing of self-regulatory organizations such as the Internet Finance Association, multiple cities across the country have deployed and launched crackdowns on illegal fundraising and Internet finance risk rectification actions. It can be said that Internet finance has developed into a difficult time. However, people in the industry said that such 2016 can be said to enter the standard, which means that the industry ushered in the real first year. But we don't know if this is the case.

On this forum, Xiao Chonglong, president of Shenzhen Crowdfunding Industry Association and chairman of Chuangzhou Chuangxin, pointed out that since the second half of last year, the Internet finance industry represented by P2P has caused a number of risk events triggered by e-lease, Zhongjin, etc. It is argued that these incidents have caused the outside world to think that the current risk control mechanism in the Internet finance industry is missing, and even the discussion of “Internet Finance is not yet in the second half”. He said that development is a must. As for how to develop, it is to adhere to legal compliance and adhere to the professional attributes of finance.

And under the impact of the new imported product, Fintech Financial Technology, Internet Finance also began to think about how to use the latest technology to carry out financial service innovation. These two points can be regarded as the places where Internet finance has always been criticized. Today, it is also the introspection of the industry to meet the new development environment.

According to sources, the difference from the previous year's fraudulent companies is that the reasons for the company’s exit in this field have become more “mismanaged”. According to Yingcan Consulting's research data, in the first half of this year, the number of online loan platforms showed a downward trend. As of the end of June 2016, the number of normal operating platforms has dropped to 2349. As for the difficulties caused by itself and the impact of Fintech's new things, have you experienced the first half of Internet finance successfully playing the second half?

Embracing Financial Technology: The Limits Brought by the First Half

The forum was titled "finance and technology". Although internet finance companies have used Internet technology, they are not able to compare with financial technology that truly uses big data, blockchain, and artificial intelligence to improve the financial investment industry. At the same time, it can be said that technology changes finance.

Ma Yun, Chairman of Alibaba Group's Board of Directors, said in Beijing on the 18th that currently China's domestic Internet finance is hot, but the future of Internet finance must be continued. It must have big data, a high-tech risk control system, and a data-based credit system. Three elements. "If these three elements are not available, basically I think it is high-risk," Ma said.

Chang Hong, former president of China Science and Technology Innovation Corp. and current president of Xinkai Financial, said that for the industry, everyone in the industry has a consensus and feel that it has reached a new stage of development - just like the theme of the forum is "the second half of the battle." However, what is the legacy that the company left for the second half after the first half? There are several issues worth thinking about here.

Lack of technology, high costs

According to statistics, Credit Suisse listed on the United States last year, and its amount is estimated at RMB 450 million; Hongling Venture Capital raised at least RMB 90 billion last year; for every RMB 100 billion in Hengtian, Lujin is said to be able to reach RMB 10,000 million – This amount is large enough. At the same time, many of Lu Jin's products were spiked on the line, showing that customers have a very strong need for wealth management and financial management. However, the key issue is that Chang Hong pointed out that asset-based companies are plaguing the core issues of all wealth management institutions and Internet finance, and few companies can solve it. Chang Hong explained that the market is now in a state of asset shortage. Banks have increased their benchmark interest rates by 4% and increased by 50%. Less than 7% of the cost can't find a suitable asset and they can't put it out. In 2016, more than 20 companies in the industry defaulted, including 8 central enterprises, and the situation was severe. "Are you so easily able to find assets?"

According to the Long Tail Theory, the biggest feature of the Internet is to reduce the cost to 0, which is also its greatest charm. However, "Our reality is that the cost of Internet finance remains high. This is a departure from the Internet tradition and it is unsustainable." Chang Hong said, "The interest rates of science and technology finance and Internet finance should not be reduced to zero, but even Whether it is equivalent to the bank loan interest rate?” The issue of cost is precisely the advantage of financial technology as a new thing. For example, some US Internet finance companies rely on big data and lower interest rates to be lower than bank interest rates. "This is what we lack. It is the challenge we face."

Lack of wealth management core capabilities

Regardless of whether it is Internet finance or technology finance, its ultimate goal is to do asset management. And where are the core capabilities of Internet finance asset management and wealth management? If it is the ability to raise funds, the amount of Internet finance in the first half has made considerable progress.

“What about the professional team quality of wealth management companies and internet finance companies, the ability of data mining, and the professionalism of databases? I think it needs to be improved,” Chang Hong pointed out. The core ability to do asset management lies not in financing, but in how much. But asset management capabilities are the ability to use quantitative techniques for portfolio and asset allocation. " So the revelation to us from the first half is that our asset management capabilities will help to improve. We rely on big data mining to make financial models and tools that adapt to the development of the times."

There is a huge difference between Internet finance and the Internet: In the Internet, as the number of customers increases, the risk will decline, and when it comes to Internet finance, when the number of customers increases, the risk rises sharply. Therefore, it is not necessarily a good thing for internet finance to simply make it bigger. "We must have core competences, and doing a good job of managing credit and managing risks is our top priority."

Xu Xiaonian, a former senior economist at Merrill Lynch in Asia Pacific, said today that to solve the fundamental problems of finance and use the Internet to improve the efficiency of traditional finances, it is necessary to control risk from the bottom of assets. Strictly speaking, Internet finance is using new technologies to improve financial efficiency.

One of the tasks of finance is to overcome the asymmetry of information at a low cost and with high efficiency. The problem caused by information asymmetry in the financial industry is risk, and it is the most important issue that finance must solve. To succeed in an industry, you must follow the most basic rules of the industry. The Internet is indeed a very effective tool that can help you overcome problems in the industry, but it is impossible to rewrite financial laws. If a financial institution cannot help the fund provider in this respect, it will not create value and it will not be able to survive in the market for a long time.

Ma Yun said that big data is currently misunderstood. The "big" big data actually does not refer to the large amount of data, but refers to the large computing power. Second, the risk control system for Internet finance should be artificial intelligence. How to use artificial intelligence in the Internet era to solve all kinds of illegal and money-laundering problems, which is the charm of Internet finance that distinguishes it from traditional finance.

Chang Hong, for example, said that the cooperation between Alibaba, Tencent and Ping An Insurance reflected the essence of returning to finance. “Because big data can work, scene customization, big data platform, cloud computing, etc. have been ranked as the first financial innovation in 2015 in Australia, I think this is a gratifying step. However, banks are still far away from this step. Tencent This is the same with Ali.” Chang Hong said, “For example, if the user submits all the agreements on the Internet, the final financial institution still relies on the faction team to investigate the company for half a month. This is not called internet finance. The so-called Internet finance is not the risk control director who has the final say. It is the computer that has the final say.” For example, Wells Fargo Bank of America, 40% trust decision based on artificial intelligence based on computers to determine the Internet information decision.

The future is a long way to go

According to previous industry experts, technically, poverty-stricken and weak Internet finance must continue to be technically stable in order to continue its decisive battle in the second half. Ironically, Mr. Chang Hong’s remarks in front of him have been raised since 2014 to warn the industry.

Some time ago, quite a number of media disclosed that many smart P2P platforms took advantage of this trend, and they packaged themselves into an intelligent search company. The standard and operating methods provided by the P2P platform still used online loan services. Mainly.

Chang Hong said: " I believe that one day the Internet will affect the subversion of the entire financial industry, but we still have a long way to go. We have a long way to go. " Is Internet finance ready for science, technology, finance and financial technology to lay the second half? Let us observe for the time being. It is hoped that in the new period of development, a number of truly innovative financial and scientific and technological forces can be born.