Though the Internet industry has an obvious advantage in technology, traditional banks are not left far behind. The opportunity for traditional financial institutions is coming.
Bairong Yunchuang (百融云创), an intelligent technology application platform in China, joined the TSINGHUA PBCSF GLOBAL FINANCE FORUM (清华五道口全球金融论坛) on May 26. The forum topic is “Financial Supply-side Reform and Opening-up” in 2019.
Founded in March 2014, Bairong Yunchaung is a company that uses advanced technologies such as artificial intelligence, big data and cloud computing to provide customers with full lifecycle management services for financial institutions and recommend appropriate financial products and services for individuals and small and micro enterprises (SMEs).
ZHANG Shaofeng (张韶峰), the CEO of Bairong Yunchuang, gave a keynote speech on the forum.
“Compared with traditional financial institutions, fintech companies do not have absolute traffic advantages,” said ZHANG, “As internet plus finance has entered a more mature stage, the financial attributes have been significantly aggravated. Financial risk control or financial risk management will play an important role in the future, therefore bringing traditional banks new opportunities.”
The earliest trigger of Internet finance is the third-party payment like Alipay and WeChat Pay, followed by consumption Internet, or so-called consumption installment, including cash loans.
Most traditional financial institutions like commercial banks and insurance companies have missed these abovementioned opportunities for two reasons: first, traditional financial institutions do not have strong online traffic and user-friendly access channels. Second, the lack of big data and machine learning technologies stops them from effective risk control in an online environment.
Compared with Ant Financial or Tencent, who try to build a financial ecosystem for their clients, traditional financial institutions are more like retailers towards companies. The relationship is a one-time deal rather than a long-term life-related attachment bonded by the internet.
However, the opportunity for traditional banks is coming. ZHANG said, “Though the Internet industry has an obvious advantage in technology, traditional banks are not left far behind.”
Firstly, the number of SMEs dominated by internet giants such as BATJ (Baidu, Alibaba, Tencent and JD.com)counts only a small fraction than traditional financial institutions. So technically, Internet companies do not have an absolute traffic advantage.
Secondly, traditional banks are gradually mastering the magic of big data. Relative to consumer finance, SMEs financing is more complicated and hard to standardize. For Bairong Yunchuang who provide services for financial institutions and SMEs, it realized that small and medium companies are far more sensitive to capital costs than consumption finance customers. Thus, Internet companies are yet to lead in this area.
Therefore, ZHANG pointed out in his speech that fintech companies should cooperate rather than compete with traditional financial institutions. For example, by empowering traditional banks with technologies like big data and artificial intelligence, it will in return optimize its own business.
At present, Bairong Yunchuang has provided a variety of services and products for thousands of financial institutions including Industrial and Commercial Bank of China, China Construction Bank, Bank of China, Bank of Communications, and Postal Savings Bank of China.