Article/Chen Wen, columnist of Sina Financial Opinion Leader Column (WeChat official account kopleader)
After the explosion of P2P, Dawen wrote an article in mid July calling for P2P to return to the value orientation of digital inclusive finance, which attracted some industry and media members. However, what exactly is digital inclusive finance, and whether P2P labeled with digital inclusive finance should be issued with birth permit and encouraged to grow? These issues have not yet been systematically discussed.
In today's article, I share with you what I want to convey: The digital inclusive finance that can truly be loved by the regulators should be the finance that promotes the better realization of the social value of inclusive finance through digital means, while the practical subject urgently needs to solve the problem of how to balance the realization of social value and commercial sustainability.
In September this year, the Report on the Development of Inclusive Finance in China (hereinafter referred to as the "White Paper") issued by the CBRC made a lot of contributions to digital inclusive finance, and made it clear that "digital inclusive finance leading" is the "important way out" for the sustainable development of inclusive finance. However, the interpretation of this position lacks in-depth voice. In the white paper, the CBRC gave the focus of giving play to the leading role of digital inclusive finance and addressing the challenges facing the sustainable development of inclusive finance: building an inclusive financial product service system with efficient operation, mutual assistance and sharing, and simultaneous development of online and offline, to achieve accurate identification, fine management, and accurate service of target customers, Use technological innovation to alleviate outstanding credit, information and power problems in inclusive finance. Whether our leaders of digital inclusive finance should compare and see what they have done right and well, what they have done wrong, or whether they have made great efforts to achieve effective breakthroughs.
To be a "non profit oriented" digital inclusive finance
In Marx's Capital, there is a detailed description of the profit seeking nature of capital: if there is 10% profit, it must be used everywhere; With 20% of the profit, it will become active; With 50% of the profits, it will take risks; For 100% profit, it dares to trample all human laws; With 300% profit, it dares to commit any crime. It is not difficult to promote the issue of providing financial products and services to vulnerable groups as long as the profit incentives far beyond the average of the market are given. The blowout of cash loans in the domestic market in 2017 has fully proved this. difficulty It is about how the provision of financial products and services to vulnerable groups can generate real social value, and how loan institutions can add some content of social value result orientation to their code of conduct.
The current catastrophe is that the market-oriented practice of inclusive finance generally lacks social value orientation. The concept of "inclusive finance" was first proposed by the United Nations in 2005. In 2015, the State Council formulated the Development Plan for Promoting Inclusive Finance (2016-2020), which defined it as: inclusive finance refers to providing appropriate Effective financial services; Small and micro enterprises, farmers, urban low-income groups, the poor, the disabled, the elderly and other special groups are the key service objects of inclusive finance in China. However, "affordable costs" are effectively quantified in differentiated inclusive financial customer groups. Practitioners focus more on providing services to "small and micro enterprises, farmers, low-income urban groups and other vulnerable groups". The pertinence of the target group of service objects has been emphasized, and whether the cost borne by the service objects is "affordable" has not been effectively evaluated; As for whether the status of the service object is better or worse after obtaining the loan, no one pays attention to it.
Our online lending institutions have always emphasized that they are serving microenterprises, vulnerable groups and inclusive finance. However, they intentionally or unintentionally ignored the following questions: whether the group they serve can afford such a high interest rate, where they get the money to repay, and whether their life is better or worse under the debt burden. It is this selective neglect that led to the jump of a college student in Henan in March 2016, which led to the unscrupulous launch of the naked loan model on platforms such as Lengbao, and the rectification of the government and supervision of campus loans and various cash loans.
It is precisely because there is no measurement of affordable costs and no effective assessment of social value that many people, including regulators, scoff at the self proclaimed "digital inclusive finance" and say, "Isn't this the online usury?" For a while, online lending institutions were unable to argue.
Without the constraints of social value assessment, The problem encountered by the domestic inclusive financial industry may not be the problem of too little capital involvement, but the problem of too much capital involvement. There is no commercial interest subject widely involved in the practice of inclusive finance, and the breadth and depth of inclusive financial services will inevitably be insufficient if it is driven by government policies alone; The commercial interest subjects excessively involved in the practice of inclusive finance. Driven by the profit seeking nature of capital, the chaos of inclusive finance has resulted in a series of financial risks and social risks.
The outbreak of India's microfinance crisis in 2010 has proved this: after obtaining venture capital and listing on stock exchanges, microfinance companies with certain public welfare have strengthened their profit seeking characteristics under the incentive of the capital market, and with the financial support from commercial banks and private equity institutions, Ignoring risk control and desperately chasing after borrowers and the growth of lending scale eventually led to borrowers' inability to repay, borrowers' suicide and debt evasion, and local governments' intervention to encourage borrowers to evade debt, which triggered the microfinance crisis in India as a whole. The lesson must be profound.
At present, China's online loan industry is also facing such an embarrassment: since the second half of 2013, after capital intensive entry, it is found that the social value of online loans has not been fully recognized by the government and regulators. When the filing failed, for some platforms purely pursuing commercial interests, they were temporarily in an awkward situation: the expected quasi life certificate was not issued, the borrower was unwilling to pay back the money, new investors declined sharply, and capital pressure increased sharply. Here, the practitioners need to thank the regulators for their tolerance. Some documents and measures have been introduced to crack down on online borrowers' malicious evasion of debt. The situation is not the worst yet.
What kind of digital inclusive finance is expected by regulation
The customer base of inclusive finance is inherently directional, but the practice of inclusive finance cannot be sustainable without solving various problems in the service process. From the perspective of regulatory expectations, the key to promoting digital inclusive finance is how to solve various problems existing in the process of promoting inclusive finance by innovative means, so as to achieve sustainable development of inclusive finance. From the practice at home and abroad, valuable digital inclusive finance should make breakthroughs in the following aspects:
First, take care of the weak. We will launch new financial products or services at reasonable prices to make them affordable, reassuring and more frequent for vulnerable groups. The reason why the inclusive financial services launched by some online lending institutions have been questioned by the society is that the lending interest rate is high, and vulnerable groups can not afford to use them or are easy to fall into debt trap after using them. Innovation needs to focus on how to continuously reduce the price of financial products and services. On the one hand, it solves the demand problem of excluded and underserved customers, and on the other hand, it ensures that the promotion of financial products and services can really bring benefits rather than disasters to vulnerable groups.
The second is to add contacts. Solve the problem of distribution channels and the last mile, and cover remote and rural areas with sparse population. Commercial banks and other financial institutions generally choose locations with prosperous commerce and dense population flow. From the commercial perspective of cost and benefit measurement, this is understandable. M-Pesa in Kenya, Alipay and WeChat payment in China have made visible achievements on how to improve the touch point of inclusive finance at a low cost and make it feasible in business considerations. Some of our P2P online loans are targeted at rural groups, which is the first time that many farmers have obtained loan financing.
Third, improve efficiency. Improve the operational efficiency of financial institutions and provide customers with financial products and services with low profits. Tianhong Fund has always been the lowest ranking fund company before its marriage to the Ali system, and has lost money for many years. After its marriage to the Ali system, it launched Yu'ebao products, which has become the largest monetary fund in China and the second largest in the world, turning losses into profits. However, since the second half of 2013, the loan balance of P2P industry, which has been blowout, soon exceeded that of comparable micro loan companies. The fundamental reason is that it is more efficient.
Fourth, balance contradictions. Balance the contradictions in innovation, compliance and risk prevention in the process of promoting inclusive finance, and promote relevant entities to carry out inclusive financial services under the premise of business compliance and risk control. Although the traditional offline private lending has long served the vulnerable groups, there are some problems in its business development, such as the lending interest rate breaking the legal red line, and the repeated prohibition of violent collection. Private lending crisis will break out in areas where private lending is concentrated every few years, threatening regional financial stability. P2P and other new digital inclusive financial innovation formats may become the regulatory focus for regulating the private lending market after their own rectification and standardized development, which is conducive to preventing risks in advance.
"Righteousness" and "benefit" in the practice of digital inclusive finance
In June this year, the Godfather of Inclusive Finance, Professor Yunus, officially released Inclusive Finance Changing the World in the mainland. I am the translator of the Chinese version. In his new book, Professor Yunus mainly focuses on his "view of righteousness and benefit": social enterprises that call for sustainable business and "not only benefit"; These social enterprises aim at solving social problems and promoting public welfare, rather than seeking to maximize their own profits.
Due to the sensitivity of the market in which they enter, the practitioners with the mission of inclusive finance should not be oriented to maximize their own profits from the beginning of their positioning. The challenge for enterprises that deviate from the goal of profit maximization and improve social welfare is how to maintain business sustainability. "Digital inclusive finance" is not simply "inclusive finance" plus the word "digital" as a modifier, but more should be based on "digital" technology to achieve a more effective balance between commercial sustainability and social value orientation of inclusive finance.
Online lending has labeled itself as digital inclusive finance. Whether this model can be finally recognized by domestic regulators and whether it can grow in China depends on two points: First, whether this innovation can bring enough social value; The second is whether this innovation is commercially sustainable. Innovation lacking social value orientation will lead to a large number of profit seeking innovations in the market, which will only lead to various regulatory arbitrage in the name of inclusive finance, resulting in various financial chaos, which will hurt vulnerable groups and generate various social problems; Innovation without commercial sustainability will lead to a large number of "pseudo innovation" in the market. When the capital boom recedes and the innovation story cannot be sustained, it will leave a lot of chicken feathers. Without a clear social value orientation and commercial sustainability, the final financial risks will be wiped out by the supervision and paid by the whole society.
Since September 2018, the Baige New Financial Think Tank led by me has organized experts and scholars from the regulatory institution system and university scientific research institutions to carry out a series of visits to the head platform, including social value assessment and business sustainability assessment. We found in our research and visit that, based on the continuous investment in scientific research and development and the reduction of operating costs, P2P has made remarkable achievements in balancing social value and commercial interests compared with traditional private lending. We will later prepare and launch a social value assessment report on P2P from the perspective of the entire financial market. The material source is not only from the platform's self certification, but also from diversified cooperative institutions including banks, data service providers and cooperative assets, as well as relevant stakeholders including lenders and borrowers.
We believe that The ideal P2P online loan institution must be positioned as a social enterprise. In order to ensure that this position does not deviate, a profound change in corporate governance is required 。 We were surprised to see that some senior executives of online lending institutions have realized that they are not simply seeking commercial interests, but seeking social benefits. They also agree with our suggestions: Establish the Lender Committee and the Borrower Committee and have a dialogue with the platform executives; The lender and borrower can truly participate in the decision-making of the board of directors and the supervision of the board of supervisors of the platform.
The landing mode of digital inclusive finance is not P2P. If P2P does not have significant advantages in these modes, its existence has no solid theoretical support. What are the core advantages of P2P? It is open and transparent. Such openness and transparency can only be ensured through the participation of various stakeholders; Only in this way can the social value orientation of P2P, which was born under the impetus of early capital, not deviate greatly. If the online loan industry solves its own commercial sustainability problem while proving that it creates value for the society, I think the regulation will love this emerging financial industry from the bottom of my heart.
(The author of this article introduces: initiator of Baige Financial Forum, researcher of Peking University New Finance and Venture Capital Research Center)
