Article/Hong Ruoxin, columnist of Sina Financial Opinion Leader Column (WeChat official account kopleader)
With the rise of the Internet in the whole industry, Big Tech has embedded various scenarios through financial technology business, playing an increasingly important role in both the B end and the C end. However, how to manage and control risks while upgrading the industry and experience has also become another topic worthy of consideration.
Last Friday, when we wrote about the industrial Internet, we mentioned an important development background: as the flow dividend of the consumer Internet fades, new technologies such as artificial intelligence, big data, cloud computing, and the Internet of Things are maturing and entering the commercial stage, the position of the Internet, a general technology, in various industrial value chains is constantly improving.
In fact, this change is particularly prominent in the traditional financial industry.
From the early days, when we talked about FinTech, we focused on the change of C-end products and user experience. Later, with the deepening of its integration with the industry, financial institutions, financial markets and even financial supervision are also changing. Of course, this kind of industrial transformation not only gives birth to new opportunities, but also accompanies many challenges.
On November 17, at the 2018 Global Financial Technology (Beijing) Summit jointly held by the China Financial Forty Forum and the Financial City, Xu Zhong, Director of the Research Bureau of the People's Bank of China, mentioned that financial technology has become a universal development trend in the world.
This process also reflects the impact of mobile communication, cloud computing, big data, artificial intelligence and blockchain technology on the financial industry. The impact of FinTech has started from the fields of financial facilities such as payment, identity management, credit investigation and information security, and has gone deep into core business links such as risk management and financial resource allocation.
As an industry subject to strict supervision, the financial industry Internet (more accurately, financial technology) is a more complex challenge that needs to be faced carefully. Among them, Big Tech (large technology companies) who have the opportunity and the ability to participate in this process in depth have naturally received more attention.
At Saturday's summit on the theme of "innovation and regulation", many regulators mentioned Big Tech And the challenges of the opportunities it brings.
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Efficiency, Opportunity and Industrial Internet
From the development of financial technology in the past few years, we can deeply feel its important value for the financial industry in improving efficiency, optimizing experience, and financial inclusion.
Xu Zhong mentioned in his speech that information asymmetry has always been one of the core issues that financial intermediaries need to deal with. Technological innovation has introduced new information forms, such as non-financial information about clients collected by the Internet platform, and new information processing methods, such as artificial intelligence algorithms, into the activities of financial intermediaries.
Technological progress has turned some soft information originally belonging to enterprises into hard information, that is, quantitative qualitative information. Decentralized information is collected and disseminated centrally on the Internet, and collected and analyzed through technical means. The original scenario of relationship loans can be transformed into transactional loans.
Huang Yiping, director of the Digital Finance Research Center of Peking University, mentioned the important role of financial technology when talking about solving the financing difficulties of private enterprises. He cited the example of online banking, where 377 employees served 5 million small and micro enterprises a year.
In his opinion, offline relies on soft information, online relies on big data, and online and offline combine. Technology can reduce costs, improve efficiency, and more effectively alleviate the plight of private enterprise financing. It is necessary to optimize the allocation of financial resources by means of marketization rather than simply administrative means.
In addition to the changes brought by FinTech in user financial services (including individuals and enterprises) mentioned above, with its integration and deepening with the traditional financial industry, FinTech has also had a huge impact on financial institutions and financial markets.
Xu Zhong mentioned that from 2016 to 2017, there was a loan aid mode of cooperation between Fintech companies and small and medium-sized banks. Some Fintech companies contacted customers through Internet channels and learned their repayment ability through big data analysis, but they were not qualified to lend. Some small and medium-sized banks have loanable funds, but lack high-quality loan customers, so financial technology companies can recommend their own customer resources to small and medium-sized banks.
Therefore, some large technology companies can rely on their own customer resources, capital strength and technical ability to form scale effects and strong market dominance when penetrating into the financial field. Through cooperation with banks, they can promote the development of inclusive finance.
Zhu Jun, Director of the International Department of the Central Bank, also said in his speech, Large technology companies and traditional banks are not mutually exclusive. In fact, their development also provides a rare opportunity for the financial industry to improve efficiency:
"Large technology companies have natural advantages in businesses with higher technology and data requirements and services that consume less capital. For example, retail businesses can also launch their own business platforms and business products based on user portraits, and many large technology companies have successfully launched products similar to money market funds, allowing customers to increase the collection of idle funds Yield.
In the face of Big Tech's competition, traditional banks can combine their own comparative advantages and focus more on capital intensive businesses with relatively high risks and returns, such as wholesale financing, after the market is re divided. Big Tech can also help promote the financing of the financial industry and provide customers with better financial services to cope with the competition of Big Tech.
While traditional banks consolidate their own advantages, they also mostly increase investment in technology. Taking Goldman Sachs as an example, in recent years, Goldman Sachs has continuously increased investment in science and technology, launched an online consumer loan platform through independent research and development, and provided personalized online loan deposits and services for retail customers.
At the same time, it also developed an institutional client platform to provide market analysis, risk management and trading services to institutional clients. It also increased its investment in technology companies and continuously acquired financial technology companies to provide more technical support. The traditional financial industry can also cooperate with Big Tech to provide innovative services and achieve mutual benefit and win-win results.
for instance Both parties can set up a joint venture to integrate business processes by combining their comparative advantages, Traditional financial institutions focus on the financial content of products and expand customer channels with the help of technology companies, while Big Tech focuses on analyzing customer needs and creating a segmented user interface. At present, the four major branches of China Construction Bank for Industry and Agriculture have reached strategic cooperation with Baidu, Ali, Tencent and Jingdong respectively, which is an example of cooperation between the two sides. "
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Boundary, challenge and market stability
Of course, like two sides of a coin, opportunities are always accompanied by challenges.
In the development process of industrial Internet, the most common dispute is the boundary. For example, when talking about the Internet model, there are often keywords such as "Matthew effect" (that is, the stronger the stronger), platform model, economies of scale, etc., so the Internet is always easy to be linked with the expansion, subversion, and even monopoly without borders.
This point falls in the financial field of strong supervision, and the disputes and contradictions are even more prominent. With the deep integration and development of science and technology and finance in recent years, the entire financial market and financial supervision are faced with many new topics, and the adjustment of these two often requires a longer cycle.
At the summit, many regulators mentioned in their speeches that with the deepening of financial technology reform, user privacy, network security, market competition, social distribution, regulatory arbitrage, financial stability and other issues deserve continuous attention and improvement. This challenge is not only for those market participants, but also for regulators.
Taking market competition as an example, Zhu Jun said that this problem may arise during the development of Fintech, Although it also provides term conversion, credit conversion and other services like traditional financial institutions, it does not need to meet regulatory requirements such as capital adequacy ratio like traditional banking.
This year, the regulations on opening up the banking industry were introduced in Europe, requiring banks to share financial data. This requirement does not apply to Big Tech, which makes the latter enjoy unequal regulatory treatment with banks in terms of obtaining and sharing data, thus generating regulatory arbitrage and gaining competitive advantage. In the long run, if the development of FinTech cannot be properly guided, it will reduce efficiency and exacerbate the problem of inequality.
For another example, several guests mentioned the word "herd effect", which is also an unavoidable problem caused by the combination of the development characteristics of the Internet and the financial industry. Excessive market concentration, convergence of business models and algorithms may bring some potential risks to the financial industry.
In Zhu Jun's view, typical companies such as Big Tech have implemented mixed operation, and individual companies already have the characteristics of holding groups, increasing the possibility of cross risk, cross market and cross domain communication. In particular, cooperation with financial institutions is also deepening. If risk management is not in place, herding may occur when facing market shocks, amplifying the periodicity of the financial system.
When Xu Zhong talked about this problem, he cited the example of bond trading. In recent years, more and more electronic trading platforms have emerged, and the financial market has become flat. On the one hand, the efficiency has been improved, and the interest margin between transactions has narrowed. In times of crisis, the profit margin will suddenly expand greatly.
In addition, Zhu Jun also mentioned the impact of financial technology development on the formulation and implementation of monetary policy. She believes that in terms of monetary policy transmission, the development of financial technology will intensify the competition in the financial industry, make the market more responsive to interest rates, and thus improve the effectiveness of monetary policy.
However, with technological progress, the proportion of intangible assets in the company's assets continues to rise, which may weaken the implementation effect of monetary policy. In terms of monetary policy objectives, Fintech may also adjust the prices of goods and services in a timely manner through algorithmic technology, so that prices change more frequently, thus having a certain impact on inflation.
After carefully watching the speeches of many guests at the summit, there are many inspirations. On the rise, subversion and risks of FinTech, many financial professionals and regulators have very in-depth thinking, which is another dimension of our concern for the development of this industry.
I think that the application of any new technology and every industrial upgrading will inevitably lead to many problems, but the process of solving and overcoming these problems is part of the transformation itself, right?
(The author of this article introduces: Hong Ruoxin, a senior financial reporter and host, and the founder of We Media "Xin Finance".)
