Ba Shusong: The future innovation and development of Internet finance will show five major trends

"The current P2P industry is in a state of polarization. The exit of unqualified entities is irreversible, and it is the people's wish to bring them under supervision. Internet finance itself is a field that changes very quickly and iterates very quickly, and its boundaries are also constantly changing. In the future, the innovative development of Internet finance will show five major trends." On July 9, Ba Shusong, chief economist of the China Banking Association, said at the first Zijin Summit with the theme of "New Financial Standards, Innovation and Development". The summit was co-organized by Zhejiang University and Tairan Group.

Regulation is what the people want. The current P2P industry is in a state of polarization. On the one hand, a large number of newly established companies have entered the Internet finance industry, with the number of companies exceeding 4,000. Compared with the beginning of the year, the scale of online loan funds has increased exponentially at the end of 2015. Compared with the beginning of the year, the number of investors increased by 3 times. On the other hand, running away, illegal fundraising, and dishonesty are prevalent. In 2015, the number of newly added problematic platforms reached 843, which is 3 times that of 2014, and more than half of them were runaway platforms. Incidents such as Ezubao and Dada Group have seriously affected the image of the industry. Data shows that as of June 2016, there were 4,127 platforms, and 1,778 platforms were closed or had problems. "Most of these unqualified entities were established relatively recently, with no financial background, no brand, and no financial strength. After experiencing overspeed development, they have experienced a concentrated outbreak of problems in the past year, causing economic losses to a large number of investors and seriously damaging the reputation and image of the Internet financial industry. It is the people's wish to bring them under supervision," said Ba Shusong. It is reported that the Internet finance industry is strengthening supervision in five aspects, including tightening registration, screening advertisements, handling violations, regulating business and industry self-discipline. For example, at the beginning of 2016, the industrial and commercial departments in Beijing, Shanghai, Shenzhen and other regions successively stopped the registration of "investment" and "Internet finance" companies; in February 2016, the State Council issued the "Opinions on Further Improving the Prevention and Disposal of Illegal Fund Raising", and listed the P2P online lending industry as a key prevention and control area for illegal fundraising, and recommended the introduction of regulatory rules such as online lending and equity crowdfunding as soon as possible to promote the standardized development of Internet finance; starting from March 2016, affected by the first-tier cities' macro-policy regulation on real estate, some first-tier cities have stopped the " down payment loan" business or conducted a survey on the "down payment loan" business. Ba Shusong pointed out that in the future, the innovative development of Internet finance will present five major trends . First, from the perspective of the main participants, large traditional enterprises have begun to join and become the fresh blood of the industry. In recent years, the main players of Internet finance are mainly concentrated in these five types of institutions: traditional financial Internet companies, emerging Internet financial companies, communication companies, Internet companies, and financial infrastructure. They are entering the Internet field from different links. Second, smart investment advisors are seen as a new outlet for Internet finance. The asset management structure of China's financial market is undergoing drastic changes. Globally, the existing asset management market is a potential market for smart investment advisors. The latest research report by PricewaterhouseCoopers predicts that the global asset management scale will reach 102 trillion US dollars in 2020 , while the Asia-Pacific region will increase to 16.2 trillion US dollars. The current mainstream models are the tool-based investment advisory model and the fool-proof automatic asset allocation model. Third, blockchain technology is reconstructing the underlying architecture of the entire Internet finance. Blockchain is a billing system and a decentralized system. Its advantages are that it reduces credit risk, has a flexible architecture, reduces the operating costs of financial institutions, and is a very important tool for realizing shared finance. From 2012 to 2015, the total amount of venture capital received by the blockchain field has been rising steadily, and in the first quarter of 2016, the amount of venture capital received was 160 million US dollars. Various venture capital funds have invested in blockchain companies, betting on the development prospects of blockchain. Goldman Sachs' research believes that Bitcoin is only a prelude to the entire application of blockchain, and it will gradually penetrate and change the way the entire financial system operates. Fourth, the application of big data in the field of Internet finance has been expanded in depth. Typical application areas of big data include online loan services, consumer finance, Internet credit reporting, and risk management. Fifth, the development of Internet finance has shown two typical evolutionary directions. One is ecologicalization and the other is specialization. The so-called ecologicalization means the integration of various financial businesses such as payment funds, insurance, banking, securities, trusts, and credit reporting to form an ecological value service product chain. The so-called specialization means focusing on a certain segmented field, such as crowdfunding for venture capital, P2P, credit reporting, and installment payment for consumption. Ba Shusong believes that the two business strategies of ecologicalization and specialization in Internet finance will continue to coexist. "For example, Internet financial companies that adopt ecological business strategies may also eliminate competitors and expand their product chains by acquiring specialized Internet financial companies. These Internet financial companies that adopt specialized business strategies will also expand their scale through diversified development to avoid being acquired and integrated." Ba Shusong said.