The triumph of Internet companies in finance

[Guide] in the CBRC March 11 announced the first batch of 5 private banking pilot scheme, Alibaba and Tencent successfully selected as the initiator. The news for today's internet financial sector, may be called the "barbarian" victory, internet companies have not only been standing in the financial sector's doorstep, and even entered the financial hinterland.

It is understood that the CBRC will be the private bank of the audit shareholder eligibility, if qualified to accept the formal application. Tencent said it will lead the establishment of private banks in Shenzhen, the former sea, is still in the qualification review stage, and Alibaba is now in the application of data preparation stage.

Alibaba and Tencent are ready to create private banks, some of the problems must be clear.

1. What is a private bank?

Private banks are the banks that let the private capital control the operation.

In reality, China's banking industry is now not lack of private capital, according to the CBRC statistics, the current private capital of more than 50% of the small and medium-sized banks have reached more than 100, in rural small and medium-sized financial institutions, private capital accounted for more than 90%.

Since July 2013, when the State Council proposed to "try to initiate the establishment of private banks at their own risk", in November, the party's 18-year plenary proposed "to allow qualified private capital to initiate the establishment of financial institutions such as small and medium-sized banks under the premise of strengthening supervision".

The background of this policy is the marketization of interest rate, the promotion of banking competition and the difficulty of financing of small micro-enterprises.

2. Who can establish a private bank?

The declaration process of private banks is as follows: The promoter first to the local Banking Supervision Bureau to declare, if the audit passed, the next step to the general administration of Industry and commerce registration, apply for the CBRC license issued procedures.

The threshold of private banks, last September, a local version of the pilot private banks supervision and management measures (discussion draft) was listed as "model" by the CBRC, the rules listed in the details of the private banks need to come up with a one-time not less than 500 million yuan, not more than 1 billion yuan as registered capital, after the establishment of the development of the gradual increase in funding; There are no more than 20 shareholders in the private banks in principle, and the largest shareholder and its affiliated party shall not exceed 20% of the total share capital; The main sponsor requested continuous profit in the last 3 fiscal years; and so on.

According to statistics, at the end of 2013, the State Administration of Industry and commerce registered the name of the private bank of nearly 100.

The CBRC March 11 announced the first batch of 5 private banking pilot programs and 10 pilot companies: Alibaba, Wanxiang, Tencent, business Source, Juneyao, Fosun, Shang Hui, north China, Chint, Huafeng. The CBRC called for the pilot to adopt a common initiator system, each pilot bank has at least 2 initiators, Alibaba and Tencent's cooperation is the initiator of universal and all sources of business.

The CBRC said 5 pilot programmes were selected from more than 10 programmes. The selection criteria are as follows: First, there is the system arrangement of the residual risk; the second is to run good bank's shareholder qualification condition and the ability to resist risk; Third, there are the specific provisions of the supervision of shareholders, four are differentiated market positioning and specific strategies; there are legitimate and feasible risk management and recovery plans, namely "living wills".

3. Why did Alibaba and Tencent set up banks?

Alibaba and Tencent are both ambitious as the internet financial boom hits. Traditional banks in the three major business deposit, loan, remittance, they have won the two, deposit business also in the form of Money fund financial management, and now just to take advantage of the bank licence.

91 Financial CEO Xu Zewei that, first of all, starting a bank would greatly increase the company's profits, as it is no doubt that the bank is China's most lucrative economy, and second, the banking licence will legitimize and license the financial business, and, again, the creation of banks will greatly increase the credibility of the two, since banking is also the most credible economy.

Interestingly, Tencent has previously admitted to participate in the launch of private banks, but Alibaba has been denied, but we all know Alibaba is "Sima", and has been the most active Su Ning is not in the first list. The CBRC said it had not received a declaration plan from suning. Suning last night issued a notice explained that the declaration of private banks has been submitted to the provincial and municipal government and provincial and municipal finance office, and the Government reported to the State Council and the CBRC. (Is it the subtext of the provincial government?)

4. How do Internet companies run banks?

Alibaba's program design is "small deposit small Loan" mode, limit its business scope, set deposit limit, only accept how much of the following single household deposits, single household loan scale also has restrictions, positioning services small, serving the public. Tencent and all the source of the total program design is "large deposit small loans", limit the deposit limit, as well as the loan ceiling.

Gu Chengwei, president of the mining industry, said that the biggest advantage of Internet companies to start a bank is a channel, a data. Alibaba and Tencent can use their own advantages to provide personalized services different from traditional banks.

As for the challenges facing Alibaba and Tencent's founding banks, Gu Chengwei believes that one is that the initial product is not rich enough, and the second is likely to affect them as an open platform with other banks and partnerships.

5. The triumph of the Barbarians at the doorstep of finance?

If internet companies involved in financial services are seen as "barbarians" at the financial sector's doorstep, would it be a triumph for the "barbarians" that internet companies that run banks will enter the door?

Internet companies are no longer content to do financial products channel, but to directly participate in the financial chain, Alibaba and Tencent private banks will not be the only two, Suning is on the road, Baidu eager. The entry of new entrants will also force traditional banks to enhance efficiency, improve services, and look for differentiated advantages, and the competition in Internet financial markets will be more attractive.