Ant costume: How does Internet finance support business in the internet age?

This paper is based on Ant's chief strategy officer Chen in the 2014 China Microfinance Development Forum and the microfinance 50-person forum (Beijing, December 6).

Today I just represent myself. I work in the ant, the most we want to do is micro-finance, host Professor Tangko and I was an old friend, he gave me the topic is to talk about the micro-finance platform strategy.

Let me first discuss my understanding of the nature of Internet finance. Behind the strategy, speaking platform, can be naturally launched.

The composition of financial ecological circle

This is a picture of my understanding of the financial biosphere. It is a business ecosystem, and finance is for business. There are two of them, one for financial institutions and one for commercial services. The other is regulation, which regulates financial institutions for commercial services. Whether financial institutions or supervision, to do well, the core of the factors are three aspects: channels, technology, data. Like cooking, the basic elements are those. You can look at the strengths, weaknesses, and positioning of any financial institution in these three ways.

Understanding Internet finance requires three logic: the first logic needs to know the nature of business and financial relationships. Finance is driven by business as well as business. It's simple to say, but we're going to ask, because business is different in the internet age, what should finance look like? This is a natural extension. The second logic, the essence of finance is the channel, the data, the technology. The third logic is regulation, and financial regulation should follow the nature of finance.

The first ring of the financial Ecology Circle is the business ecosystem. The whole history of finance is to meet the needs of business. The first banks were created in Italy and the Netherlands because they were trading with the Orient and the first banks were for business. China's Shanxi ticket is due to support the trade in salt production. Alibaba does is online trade, so need to finance it online, so there is Alipay. The logic of the relationship between business and finance has been this way and has never been changed.

Then (second ring) is a financial institution. The essence of financial institutions is channel, data and technology. Why say the channel? Financial institutions called financial intermediaries, is actually a bridge, is the investment and financing of both sides, can have a wide range of channels is very important. The second is data. Today, a lot of scholars talk about the role of data in finance. A good example is consumer credit, such as credit cards. Human beings have been pawns in credit for thousands of of years because we are very distrustful of each other. Credit card is a small loan without guarantee, in fact it is very difficult to do, must have the basis of credit. If a credit card is in hand before 70 or 80, the bank will surely go mad. It arises, first of all because of the demand for consumer credit, the middle class, need a lot of consumption, but how to see your risk, there is no way to quantify. In this context, FICO was founded in 1956 and its personal consumption score is now the most authoritative rating. On this basis, the first bank credit card was created in 1958. Real credit card popularity is the late 60 's, when the computer has been used by many organizations, the ability to gather information and processing information greatly improved, credit card clearing system really developed. So, credit card is a very good case of financial innovation driven by business demand and technological progress. The third is technology. Before someone mentioned the technology of payment, today Alipay technology can be done to pay the cost of each payment is more than two cents, later can do 1 cents, or even far less than 1 cents. Technology brings about the decline of cost, the popularization of microfinance is a very necessary prerequisite. Today we talk about Pu-hui finance, micro-finance, if there is no technological development unthinkable. Therefore, the core competitiveness of financial institutions lies in your channels, your data, data collection and processing capabilities, as well as the advantages of technology.

How does Internet finance support business in the internet age?

What does the Internet mean? We say that the Internet is online, interactive and networked, and that all future people and objects are wired at any time and place. In the case of Ma Yun, we have entered the DT era (data age) from the IT age. Yesterday I talked to Ma Yun, Ma Yun talked about how the future history should remember us, the last century may be the era of industrial enterprises, may be in our time, hope to let history remember us, this is a consumer-driven era, and we are one of the most representative company. This is an era of altruism, a time of great importance to consumer experience, a time of transparency and data sharing. The business of the internet age is the business form of collaboration, networking and data sharing, which is a central, small and beautiful organization. So how does finance support it? This is a matter of concern to our financial people.

The business of this era has changed. However, from ancient to present, small micro-enterprises really get financial moisture is very few. Small micro-enterprise financing is difficult since ancient times. But we cannot blame finance itself. Do not have the financial, micro-finance, a big problem is because the technology does not, the cost is too high. Why didn't the bank send everyone credit cards before? Because the cost of credit and investigation is too high, it must be based on the progress of science and technology.

China's financial system is a backward resource system that tilts toward large state-owned enterprises. And the future of business is an important direction of small and beautiful organizations, so Pu-hui finance has a very big future, but also very meaningful, is a social responsibility, a conscience of the financial, can be a lot of people today want to combine the dream. This is also the dream of Ant's golden suit. I am a professor, I think this thing is very meaningful, so I do not teach, I would like to participate in such a process.

Due to the technological progress of this era, traditional finance and the current difference is that the channel has changed, users in the middle, can be anytime, anywhere through a variety of channels to obtain financial services. Traditional finance has personalized service to big enterprises, and the largest 500 companies borrow money easily. Traditional finance is a standardised product for mid-tier enterprises and individuals, while the smallest small micro-enterprises and individuals are not covered because the cost is too high. The internet era, because of technological progress, the midrange and low-end users can also be covered, whether high-end, midrange, low-end, can achieve personalized service, we are entering the DT era of such an exciting situation.

Finance turns out to be separate from consumption and socializing, and now many financial services are combined with living, consuming, social scenes. For example, balance treasure is a good combination of consumer and financial products. For example, micro-credit payment is a social scene plus payment. So the combination of finance and many scenarios becomes very important, the financial boundaries become more blurred, and the species of the biosphere becomes more diverse.

In traditional finance, in many cases, data is collected by manual means, cost is higher, and it is like an island. Now the internet finance, in the commercial and the life scene automatically obtains the data, the data unknowingly accumulates, the cost is very low, and is the flow, is the living data. The transparency of the financial system in this era has greatly improved.

What does Internet finance do? Internet finance does not subvert traditional finance. The traditional finance to the big customer already is the very personalized service, the Internet finance utilizes its channel, the data and the technology superiority, has better to provide the general benefit financial service for the long tail user. This service is not only the change of technology itself, but also a change in the way of thinking, is called the internet thinking, customer-centric. Not only is your technology changing, but the way you do things is also changing, which is very important.

Three platforms for Ant's Golden suit

We are now the platform. First, the platform of the channel. The public is to raise funds, to raise resources, the strength of everyone to raise together, its essence is a channel platform. Channel platform plus data processing capacity, better Representative is peer-to-peer. The channel to connect the two sides of the loan, but only to pick up, not to overcome the other financial challenges, is the challenge of risk. So, you just put the two sides of the borrowing is not enough, to the asset side of the risk assessment and pricing capacity. A more typical example is the lending Club, which provides loans on a data risk rating based on existing credit, but not guarantees, through channel financing. Most of China's peer-to-peer is secured, but there is a guarantee that only transfers the risk assessment capability to the guarantor, without reducing its risk. I think the real platform of Peer-to-peer is a long-term trend, otherwise it will be easy to become a Ponzi scheme.

Then there is the platform for the data. Now because of a lot of data, different channels of data, the data together to play the greatest value of the data, ant gold clothing called this data to create, can produce new financial products. I give an example, Taobao shopping has a freight insurance, very cheap, a few cents, this risk is very important, improve the user experience. The risk of a start to ask the insurance company to do, it is actuarial, lost a lot of money, then our large data team to intervene, our data and their data, through the analysis of data creation, very accurate to find out the risk. In this case, the loss of money quickly earned back. It is an interesting example that people who do big data are no worse than those who do professional insurance. In this example, because your data and the combination of others, you can beat the most professional actuarial companies, this is fun. Why Internet companies can do finance, because it has its strengths, has the ability to analyze data. Ant Gold Clothing hope to have such a platform to share data with you, in respect of users and partners rights and interests of the premise, together to do the data to create the developmental products.

Finally, the technology platform. Now Alipay's processing capacity, the entire cloud computing, large data processing capabilities, we are the world's most first-class level. Some people think that your payment may be more risky than the traditional bank, the probability of the plane fall one out of 10,000, meteorite fell one out of 10,000, the risk of Alipay and meteorite fall close to the probability, is one out of 10,000, now is the Internet financial security benchmark, is the world's leading level. I went to the ant service soon, just experience a double 11 process, the first more than 10 minutes, we have to deal with 38,000 of the payment per second, this is the world's leading level, we are still a significant increase every year. We were also very dependent on foreign IOE systems (Note: IBM servers, Oracle databases, and EMC storage), and later found that as the volume increased, the cost increased synchronously, we counted in a few years before Alibaba went bankrupt, so, a few years ago, determined to go to IoE, Be determined to invest in cloud computing and big data. We have seen good results in recent years and some of our technologies are the best in the world.

The essence of finance is the channel, the data, the technology, these can be done platform. Can be the channel platform, build a platform, we come up to buy things, sell things, such as financial products, can do channels platform. Can do data platform, can do data creation, we add data in, do a good job of privacy protection, add up to create new financial products. Can do the platform of Technology. Not every financial institution needs to do its own it, we invest a lot of money, already is the world's first-class level, can help many financial institutions to do technology. We believe that cloud computing, big data and finance are the future of all finance. When we talk about Internet finance, in fact, the relative strengths of various institutions are different. Some relatively strong internet, and some relatively strong financial. So, maybe you can let others to do the technology, you do finance, or together to do, I do your bottom, together with the development of finance, positioning is not the same, there will be a wide range of platforms.

In short: platform positioning, and do not want to be one of the largest financial institutions

Why do you want to be a platform? Because in the DT era, in the age of data, altruism, experience, transparency is its spirit, and the platform to realize this spirit, the platform is the first to create value for partners, transparent, efficient, reduce costs, user experience, so that consumers meet for the purpose. This platform coincides with the spirit of the times and is just one of the interesting business models of the time.

Who can do the platform? You have the advantage of data, channel and technology, and their advantages are different. Why are there so many Internet companies doing finance now? Because they are the natural platform, they have a lot of business scene, in doing its business, there are channels, already have data, and then the financial added is very natural things. Therefore, the essence of finance is channel, data, technology. With this advantage, you can do this platform.

We ants are called "ants", because the first thing we want to do is micro-finance, we grew up, because this is the era of micro-finance. Our positioning is a technology driven data company. Technology, data, channels are our strengths. We are also a platform for positioning. I went into the ant service one months experience, the internet finance and financial Internet is really different. Some people say that the so-called Internet finance is the internet companies to do finance, financial Internet is financial enterprises to the Internet, the same way. But it's really different. Why not? Because the relative strengths are different. Internet finance is a big data, cloud computing plus finance, is the future of finance. But the former is different from the relative strength of finance, and they should be differentiated.

We are a platform for positioning, we do not want to be one of the largest financial institutions, this is not our intention. We want to build a platform because the spirit of the platform is just the spirit of Alibaba, Alibaba is the largest electric business platform, ant gold clothing also want to do a financial platform, this platform includes the channel platform, can help a variety of financial institutions to sell products; Data platform, we own data, Combined with data from a variety of sources, we combine to create new financial innovations, as well as technology platforms, and we help many financial institutions, their IT workers, to help them achieve first-class levels and are very, very safe. Sometimes we talk about Internet finance is not safe, we are now the benchmark of safety in this industry, in the security of the world's most first-class level.

In order to promote the development of Internet finance, we must also embrace regulation. We are open to regulation and we need to help regulators develop a real-time, future-oriented, process-regulated system.

Business is moving towards a small and beautiful era of prosperity, and finance is also moving towards a time of micro-financial prosperity. Now many people talk about micro-finance, including the public, peer-to-peer, in fact, is a platform model. Why do platform mode? Because the platform model is the experience of the core, is altruistic, is transparent, this is exactly in line with the future of this era. But the choice of platform, based on your channel, technology and data differentiation, also will be different.