Will large data processing subvert the traditional financial sector?

2013 is the first year of internet finance, the Internet tool after entering the financial industry as if in the traditional financial industry this pool of stagnant water into a small stone.

One of the major trends in the future of Internet finance is the application of large data processing, which also changes people's traditional understanding of the nature of finance. Before the academia widely believed that the essence of finance is intermediary, but also some people think that the essence of finance is the control and management of risk, but with the development of internet finance, some people have begun to redefine the financial, finance is big data.

From the perspective of financing model, there are two modes of modern finance, one is Bank model: deposit, loan, payment, and one is the capital market model. The capital market model is direct financing, stock trading through exchanges. Internet finance neither goes to the bank model nor goes to the capital market exchange model, it is likely that all depositors and all borrowers will trade directly through the Internet platform. The future through the Internet to direct financial model, do not need the capital market, nor the need for banks.

From the payment mode look, there are mobile payments and third-party payments. A third party payment in China is typically Alipay. Our present payment model is the Bank payment mode: The individual opens an account in the commercial bank, the commercial bank opens an account in the central bank, solves the interbank liquidation between the banks, and Alipay subverts the model. Now there are some companies that pay employees directly to pay Alipay, employees with Alipay pay, and then transfer to other people's Alipay, in this case, outside the banking system constitutes a payment system. Micro-Letter 5.0 Payment is also this mode. The future of Third-party payments is entirely likely to create a new payment system outside the banking payment system. Bank card payment is replaced by mobile phone payment; The POS machine swipe is replaced by a two-dimensional code.

The so-called total subversion of traditional finance, a very important manifestation is the large data of the credit and network loans: based on the behavior of the company to calculate the probability of default, on the basis of the loan (Business-to-business is typical). The current typical is Ali small loans and so on. The future of large data insurance (assured) is the same: based on the behavior of the data to the insurance differential pricing. For example, future car insurance will be based on the personal life, work, habits of all large data base, give the probability of accident, and then give the rate of insurance. This model completely overturns the present premium rate model. Peer-to-peer network loans, but also the mode of Internet finance. Peer-to-peer Network Loan is the creditor's right, and the public financing is to solve the equity problem. The United States has already stipulated that the model is legal if it solves the problem of small risk investment through the public financing model. The application of large data in securities investment will also be very extensive. Internet finance, especially search engines and cloud computing, has enabled people to gather vast amounts of data that will play a big role in portfolio investment and are now very useful for stock price expectations.

Formally speaking, the internet to the traditional financial completely subversive manifestation is the application of large data, in essence, according to Coase theorem, financial institutions as intermediary value may disappear. Assuming that the entire financial market is internet, the financial intermediation of the current banking institutions, securities institutions and insurance institutions will be weakened or even disappear, and may be replaced by direct financial transactions based on large data.

Suppose that the whole internet of financial market, including payment liquidation system, financial products financial instruments, risk assessment and pricing, matching the number of matches are internet, so the transaction cost will be very low, internet-based technology financial market efficiency is very high. Now we have a large number of financial market transactions exist asymmetric information, a large number of asymmetric information caused transaction costs are very high, but also makes the financial industry is very strong elite industries. Yet the veil of the future financial mystery may be lifted, and ordinary people can easily carry on the seemingly complex financial transactions that now download the use of financial products like downloading an app application. The disappearance of financial outlets can greatly reduce the financial system's human capital and operating capital. Assuming that the Internet supports the financial market, completely internet, the supply and demand side is the direct transaction, transaction costs will be reduced a lot, this is the Coase theorem.

Internet finance in the 2013, the impact of the financial is subversive, it will change people's financial traditions of the partial understanding and ideas. But finance will return to its core nature in the future. The future is not the core definition of finance, but now the contract form of the financial products such as equity, creditor's rights, insurance, trust and so on.