The arrogance and prejudice of traditional finance to Internet

Last Monday, a small gathering of financial circles was held in a place, and Internet finance was a topic discussed at the meeting. the statements of a friend of the two-bit from a traditional financial enterprise and the article by Mr. Zhanghua in the South China Morning Post appear to have shrunk slightly: for example, internet companies do not own financial licences, have no expertise, finance is given to professional financial institutions, and so on. If I stand in the position of a professional, these views are also right, to actually say, whether it is Li Jia Wang or Zhang home Jiangshan, are still need to do things, internet finance also need to rely on professionals to help manage funds. However, from an investment perspective, these views are a big mistake. Investors in traditional financial institutions should be wary of Jinrongjie, such as Alipay, who enter the market and change the pattern of the industry. In terms of data, only more than 230 days, the balance of treasure on the scale from 0 jump up to more than 400 billion, the number of users reached 61 million, from a little unknown to the small fund company turned into the industry's eldest, it is not all this can shake our long time to enjoy the financial big guy? As for the qualification issue, is Ali Holdings Tianhong fund NOT a hint of the traditional financial industry ?

China's financial sector is the most tightly regulated industry, and China's internet industry is the most market-oriented industry. The collision of these two industries is bound to lead to spectacular scenes of Mars crashing into the earth. The financial industry has strict rules of the game, towering barriers to entry and limited competitors, while the Internet industry pursues natural selection, the survival of the fittest jungle law, who can participate in the game, competition is extremely fierce. Judging from recent statements by some financial industry people, the financial sector, enjoying special protection, is unfamiliar with the market-wide competition rules: they can't understand why some internet companies have to pay their own money to send high income wealth management products, and can not understand the way the Internet barbaric growth, and no internet companies generally jittery, Treading on thin ice, abyss management mentality.

The Master of Management, Drucker, has a famous saying, "The sole purpose of the enterprise is to create customers", this sentence by the Internet industry to the extreme, in order to obtain users, they can unscrupulous, such as enduring long-term losses, provide a free foundation, everyone is indispensable tools (such as news, e-mail, search, instant messaging, anti-virus, Video and so on), attack and slander each other, and so on extreme practices abound. It is also a concrete manifestation of this kind of thinking that the above-mentioned sticker-money-rich product is the only way to get the maximum amount of user resources. China's internet industry was born at the end of the last century, so far only about 15 years of history, and today's internet industry's most cattle companies have not experienced a long-term loss, long time to nurture the market only today, they have a deep understanding of the user is the root of all business models, user experience is essential, And they see too many winners and all, so highly sensitive to competition.

On the other hand, we look at our financial industry, why do they get their own users and status? Word: License.

The main reason why big financial institutions have today's status is to obtain licences earlier and more fully. The interesting phenomenon is that, as long as the license plate, basically can live, they work hard still live very nourishing, this and the Internet industry winners take all the situation is very different. The example of our banking industry, not only five major days live well, the national joint-stock banks also have a good time, springing up in recent years, the city's banks have been booming business, therefore, it is no wonder that private banks open a hole, enterprises flock to. Here, I (Micro-signal: abilitycircle) is absolutely not to negate the progress of China's financial industry over the past few decades (such as the independence of commercial banks, listing, more transparent regulation, and gradually liberalize industry access, etc. are obvious progress), but if it compared with the internet industry, the contrast is strong.

Lei the internet thinking summed up as "focus, Ultimate, Word-of-mouth, fast" These seven words, if we look at the "Balance treasure" this product, also fully in line with the seven-word tactic. Focus: Although there is a huge user resources, but initially only to do a demand products; the ultimate: the user as long as with Alipay deal, completely regardless of what is behind the fund to help you take care of, and this cast money can be used at any time; Word of mouth: Update the rate of return every day, and even send the daily rate of return to the user's phone, Use high yield to attract users; fast: 230 days, from 0 to 400 billion of the size of the fund, from 0 to 61 million of the user size, this speed is really amazing! In addition to the surface of the data, quickly more reflected in the balance treasure from planning to the birth of the process, and excerpts of the Economic news Weekly Report as follows:

December 22, 2012, Zhou Xiaoming to Ali small micro-gold service group of domestic business President Genming introduction of the Treasure Balance treasure model of the prototype. Know Genming more busy, he intends to use 3-5 minutes to make things clear, but did not think just said a minute, Genming interrupted him, said the matter is feasible, greatly to his surprise. ...... Add the Treasure Balance Treasure Project cooperation is very smooth, Alipay's legal director has said that the Tianhong fund and Alipay Cooperation, signed 6 agreements with only 4 mail, Zhou Xiaoming as the project leader of Tianhong fund, in the mail only appeared once ... As a partner, Alipay invested a huge amount of resources, using more than 200 people's technical team.

The traditional financiers see the balance treasure as high as 6%-year rate of return is only two words: worry. How does such a high rate of return continue? And it's a current account! In fact, internet companies are using profitability as a marketing tool. High or low yield is the market decision, taking advantage of high time, vigorously propaganda, this is not the traditional fund of the usual marketing strategy? As for Mr Zhanghua, the balance treasure loses its meaning after the deposit rate has been liberalized. Yes, but does the balance treasure promote the deposit interest rate marketization? More critical is, Alipay to cultivate their own huge wealth of financial user resources, and is no longer a simple payment company, with this resource, Alipay can do the fund, with user resources, Alipay to do the bank is not not. Of course, the premise is to get the licence first.

But banking licences are not an unattainable barrier to Alipay: First, private banks have now been allowed; second, in addition to the big banks, there are hundreds of cities or rural commercial banks in China, so acquisitions are a viable strategy. The key to the above logic and Mr Zhanghua's view is that, whether it is a fund or a bank, there are users sticky, not to say that the balance treasure is finished, do balance treasure Company also became martyrs. Therefore, even if the "balance treasure" this product after the deposit interest rate market will lose the core value of the existence-I feel the name of this product will have a long-term existence value, but the value of Alipay instead of upgrading, rather than cut.

A recent hot spot is that CCTV's commentator wrote a proposal to outlaw the balance of treasure, that the balance treasure pushed up the social financing costs. First of all, the commentator's proposal in the legal aspects of a very big problem, if the balance is not the rules, long been shouted stopped, where he would need to tell the regulators? The commentator's article has a "character" meaning. Second, the cost of raising social financing is not consistent with the fact that there is a dual track in China's credit market: large state-owned enterprises that borrow on the basis of benchmark lending rates, and small and medium-sized enterprises that borrow heavily at a much higher rate than the benchmark. Due to deposit rate restrictions, the lending rate is market-oriented, the bank lightly from the deposit and loan interest rate difference to make money. More deformed is that large enterprises get low-cost bank loans, but also can be put to small and medium-sized enterprises, profit margin. The balance treasure does raise the capital cost of the bank to some extent, but it is only possible to raise the financing cost of a few large enterprises (whether it depends on the ability of the banks to transfer costs), but it has little impact on the financing cost of large enterprises. At the same time, the exceptionally low cost of capital that banks enjoy is unreasonable, and it is clearly unreasonable for China to have a long time deposit rate below the consumer price index (CPI). Obviously, the interest rate marketization is the set right direction, the balance treasure only speeds up in this direction the speed.

As I pointed out in the "bad bank" why, the balance treasure is now a high return to the bank's own speculation, because the balance treasure is the main direction of investment in the short-term agreement with the interbank deposit. China's commercial banks always have to do business, so often use the money to the limit, and as long as there are conditions to continue to finance supplementary capital. Let's look at the loan-to-deposit ratio of China's listed banks in the three quarter ending 2013:

China's requirement for commercial banks to deposit and loan ratio is less than 75%, but among the 16 listed banks, merchants Bank broke through this red line during the three-quarter reporting period, while other banks were also more than 70%. Banks themselves to make money so nervous, it is no wonder that the "balance treasure" hit a surprise. However, after more than half a year, many commercial banks also launched their own similar "balance treasure" products-I think this marks the Chinese deposit rate market really started, the bank's previous expansion of the balance sheet, profit margin of the business model will be challenged, commercial banks may be more rational, Curb their unbridled desire to enlarge their balance sheets.

Of course, the "balance treasure" problem is not no: First, many people have pointed out the challenge of liquidity management, in the case of net inflow of funds, there is no such problem, once the net outflow, it means that Alipay may have to cushion the fund; second, the return on the balance treasure can not be maintained in the current high, once down User acceptance will be a test; once again, if banks offer similar products – in fact the banks are already offering them, the attractiveness of the "balance treasure" will be greatly reduced.

Back at the party at the beginning of the article, a friend from the Chicago Mercantile Exchange shared the secret of the rise of the cheese: it used to be a humble exchange, but it quickly became an industry leader because it seized the opportunity of electronic trading and worked closely with emerging forces like Bloomberg. The growing history of the cheese business suggests that technology and innovation do change the industry. Will America's history repeat itself in China?