The Origin, Status Quo And Development Of Internet Finance

Abstract： Recently， the Internet finance is a very hot topic，and its mode is endless， from Ali small loan， theYuebao， cornucopia， micro-channel pay， micro-channel bank， to the nearest Taobao "Mooncake insurance"， it shows a rapid developing trend.Internet finance relationship with the bank is relatively hot topic， subversion or fusion？Somebody see it as a traditional finance flood and beast， activists even suggested that the tide will impact the organizational structure of traditional financial， making traditional financial break their tails in the near future，banking merger and reorganization may be unusually vicious.Exactly how far can the Internet financial go？ How big is the impact of the Internet financial to bank？ This article discusses from the origin of the Internet financial， the comparison of Chinese and foreign models， etc.

Key words： Internet financial； Origin；Status quo； Development

1 The origin of the Internet financial

Internet financial is not a new term， it is the product of the rapid development of information technology and the Internet financial services，mainly refers to the Internet and mobile communications business through the Internet and other advanced techniques，engaged in financial business relies on the advantages of e-commerce data sets.It originated in the United States in the late 20th century， during which appear in addition to the rapid development of e-commerce environment， the innovation model to third-party payment represented electronic payment， online lending has also been rapid development.In the third party payment， representative is PAYPAL company， it is to pay treasure to prototype， PAYPAL was founded in 1998， set up the account balance of money market funds in its second year， the fund issued to online investors through the PayPal website， for third party fund management through the bond funds in the form of， this is the balance of the the prototype.Funds is managed by third party fund management company in the form of funds linking whcih is the prototype Yuebao.

The origin of the P2P LENDING is an American LENDING CLUB， domestic localization version for all credits， Liu Jin， etc.LENDING CLUB was founded in 2008， its operating mode is： accept the client's loan request through the network platform，after getting the user authorization， access to the user's credit score from the America Experian， Trans Union and Equifax three major credit bureau，a borrower's request whcih is above a certain fraction line will be placed on the platform， then the financing.The size of the fund was $1000000000 in the peak period， equivalent to a medium-sized Monetary Fund on the market at that time， because since 2008 USA maintain low interest rates， the monetary fund is difficult to guarantee the expected rate of return， the service was terminated in July 29， 2011.LENDINGCLUB has been developing rapidly since its establishment five years ago，to the end of 2013 6， total loan of Lending Club reached $2000000000， American market share reached 85%.

In the B2B financing， in 2012， Amazon launched the supply chain financing project - Amazon Lending， processing the loan business by Amazon's capital Service Corporation；In 2013 April， Paypal launched the eBay platform business financial services in the UK test.The two common competitor is Kabbage whcih is a online cross platform businesses financing services to the Venture Company. Kabbage revenue to charge lending businesses， the specific costs as the loan period （maximum 6 months） and repayment risk， rate from 2% to 7%.Kabbage currently supports online merchants from eBay， Amazon， Etsy， Shopify， Magento， Yahoo platforms，business credit data of Kabbage on the one hand comes from trading platform， on the other hand， including customer interaction data on the enterprise Facebook， geographic information sharing data， logistics data，or transformation data through eBay， Amazon or Esty.In 2012， Kabbage is about to lend Loans of $70000000， of which 90% of the financing used to purchase goods.

Most of the applications of Internet Finance in foreign countries is still a new thing， the P2P lending is more controversial.Mainly as follows： the potential risk concerns， P2P conduit company to earn income on fee and management fee， loan losses is beared in full by the borrower.Strictly speaking， P2P lending has actually touch the traditional financial field，but it is not limited by the capital， the ratio of non-performing loans， loan loss reservesand other indicators.Although most of the western countries established a relatively sound social credit system， and the P2P company has system of credit screening， but because the opacity of process and the operation （hiding operation risk）， the operational risk and credit risk also nots allow to ignore.

2.The development of China's Internet Financial

Domestic Internet Financial mainly involved in three aspects： First， third-party payment， representative is Zhifubao etc.； Second， e-commerce involved in finance， representative is Yuebao and Ali small loans， etc.； Third， development spurt P2P platform， representative is Renren credit，pared with other countries， there is a big difference in the country's legal environment， political environment， institutional environment and cultural environment，on the P2P model， since all social credit system has not been established， the People's Bank credit system temporarily not open to non-financial institutions，"Personal Loans Interim Measures，" state： "Lending Survey fieldwork should be based， supplemented by indirect survey， taken on-site verification， telephone inquiries， and information consulting approaches and methods"，Internet analysis techniques can only play a supporting role.The P2P relies mainly on online surveys， and owes transparent operating procedures， the employing varied quality，part of the lending platform stepped bottom line， spend money lenders， maturity mismatches， design to attract deposits and other financial products， company closures and other negative news often heard，for example Zhongdai network， it fails on the line only after one month. Coupled with the financial consumer protection law nor sound. How high is the degree of social recognition to P2P lending model， it still to be seen.

From the development point of the path PAYPAL Monetary Fund， Yuebao vitality depends on financial products such as money market yields whether attractive，capital preservation requirements determine the unity of its products， the domestic interest rate environment is acceptable，but in the long term， there are periodic fluctuations in market interest rates， there is greater uncertainty whether the long-term appeal.For example， the platform increases other options such as equity funds， which involves the sale of financial products online， risks and responsibilities， and other disclosure issues.In the B2B context， "Ali small loan" is a more successful cases， but the essence is still the small loan company's business model， the model on the platform of a transplant with a credit system，based on Alibaba master a large number of merchants and buyers trading behavior data.

The body of the "ali small loans" is the two small loan company located in chongqing and hangzhou， a total registered capital of 1.6 billion yuan，in accordance with the provisions of the financing lever rate of not more than 0.5 times， the highest available lending capital is 2400000000 yuan.As of the second quarter of 2013， "Ali small credit lending financial" accumulated more than 100000000000 yuan， and Taobao Tmall platform and the volume of transactions reached 1.2 trillion in 2012， according to 30% of the volume to calculate， the credit demand of Ali business platform is about 360000000000 yuan， which is far more than Ali "small credit company" business can undertake scale.Ali to absorb the funds through the Yuebao， but it lacks a bridge to provide financial support for the "Ali small credit". In order to break the limitation of funds， Ali financial attempts to seek a breakthrough in the asset securitization， recently， asset management plan whcich cooperates with the East Asset Management Co obtain approval， hoping to expand the financing scale，how is the effect of the cooperation mode， it needs time to witness.

3.Limitations of Internet finance

The Internet financial form a huge amount of data through the network， e-commerce， third party payment， search engine etc.，applying cloud computing technology to mining large data，data security technology can guarantee the payment transaction smoothly，search engine make individuals more likely to obtain information.The development of these advanced technology greatly reduced the transaction cost， expanding the financial service boundary.But the Internet financial has natural limitations in the advantages of large data and low transaction costs. Mainly has two aspects：

1）The Internet Financial applies to product of high degree of standardization， relatively simple structure， obvious market demand， such as fund， insurance， small loans， credit cards etc..In this regard， compared with the traditional banks， it is with great cost advantage； but when the cost difference cannot decide the product sales，for example， a high degree of professionalism， complex structure， long operation flow and no explicit demand product，bBetween man and man， interactive communication and trust relationship is essential， when the experts and professional values is more important， the internet financial can not play its role， and this is precisely the core part of the business and the main function of a modern bank profits source.Such as： Large corporate finance， professional investment， asset management and investment banking.

2）Big data analytics can improve the effectiveness of customized products and services. It is suitable for effective analysis of the past data， but only the past applied to the future， there are deficiencies in terms of innovation and breakthroughs force.Internet financial operation mode also limits the size of its expansion. "Ali small loan" is a more successful example.Mid-way control payment system though Alipay，backend punish acts of bad loans through credit blacklist transaction， withdrawal shops， etc.， whcih formed a perfect loop.But so reliable and complete credit system is only available to customers within the system of long-term transactions，domestic social data are confidential， lack of credit information， in this case，Ali difficult to develop through the U.S. Kabbage model.

4.Conclusion

In summary， I believe that in the current system and mode，internet financial is not possible to overturn the traditional financial sector， more as a financial development pipeline and tools.But the Internet has changed people’s behavior fundamentally， Europe and other developed countries， compared with the data of per capita expenditure information，the growth potential of China’s Internet consumption is huge，State Department spending 320 million yuan in 2015 doubled the birth feast of internet financial.

The Internet is not a separate industry， generating huge linkage effects after the financial sector combined with the Internet， fundamentally changed the traditional financial sector clients accumulate and operating modes， promoting industrial restructuring and upgrading.Facing the Internet tide，banks should actively use the Internet financial big data， and cloud computing technology， with their own financial advantage to build their own B2B， B2C electronic business platform through proprietary or form of cooperation，providing financial， payment， electricity and other related services directly to customers，management and expand its customer base， customer data accumulate resources， China Construction Bank， Bank of Communications， CITIC， China Minsheng Bank of China and other e-commerce platform should be introduced， to improve as soon as possible；In terms of small micro-loans， continue to develop markets， reduce operating costs to borrow network technology， simplify letter-trial processes， improve financing efficiency and product innovation，and using mobile banking， mobile payment as a carrier to achieve different operations， and actively seize the market；With the “micro-channel” and the rise of other third-party platform，in the banking sector， while its cooperation should focus on the design of an open platform for Internet applications， to achieve effective docking with the internet application， first to master the right entrance， get the speed advantage.

References

[1] Jia Dongdong； market financial products segment [D]； North China University； 2012.

[2] Tang Qing； industry in Guangdong Province under the support of the transfer of financial spillovers study [D]； South China University of Technology； 2011.

[3] Xiong Weijie； chain marketing research JSYH bank building enterprise [D]； Southwest University of Finance and Economics； 2011.