Commercial Bank Innovation Under The Internet Financial Model

The development of the new Internet technology has proven to be a catalyst for a new financial format-------- The Internet Finance. The Internet financial innovations have been well-received in society and brought the attention and win the support on the national-level. As the core of the financial department in our country, commercial banks have accumulated the experience from decades of financial business operation, set up a rather sound risk management system and have talents who are familiar with not only finance, but also the application of the internet technology as well. They also have saved a large quantity of ‘Big data’ within their system and have an advantage in terms of funds and clients. They are destined to be more than an outsider under the new wave of internet financial innovation.Judging from the existed documents, the research on the innovation of internet financial business bank is rather lagging behind: firstly, the internet finance and the innovation of business bank are often separately studied, and there are few research that combines the two together; secondly, the mechanism studies on the function between innovation of internet finance and that of the business bank;thirdly, the research is more of qualitative review and lack of the index system and theory confirmation, fourthly, the countermeasures and suggestions are not systematic enough to take all the risks into consideration. More focus on the studies of the innovation of the business bank under the mode of internet finance will fasten the deep reforms in the tradition service pattern of business bank, promote the transformation and innovation in the operation management pattern, business development pattern, product service pattern, talent management pattern, and risk management pattern, which is of great theoretical and practical significance.This paper will take the literature review as the logic starting point to do the quantitative analysis based on the existed documents and discuss the network and trend of development of related research in chapter one. Chapter two brings up the definition of the internet finance in this paper and classifies the already-existed internet finance pattern briefly. It then analyze the related core basic theory of internet finance, including network economics, platform economics, Long Tail theory,information economics, theory of financial medium, transaction cost theory and theory of financial deepening, etc. Chapter three starts the current internet finance and analyze the inner and external mechanism that are created by theinnovation of internet finance, and the operating mechanism of innovation of internet finance. It argues that operating mechanism of the internet financial innovation is based on the theory of transaction cost, financial Medias, financial deepening, etc. And the financial industry should be combined with the internet industry which takes credits as premise, information as core, technology as basicsand legality as guarantees. Then, through empirical analysis, it discusses how technology plays its part in promoting the innovation and development of the internet finance from the perspective of technology. It argues to further the development of finance and other industries which rely on information technology,the government should give its priority to the public facilities. To make a further research on the influences that are brought by internet finance on the business,chapter four elaborates these influences, through their reasons, basic ways,procedures and results. It takes profitability, the ability of business innovation and product innovation, technology innovation capacity level, human resource innovation level and innovation risk control ability, these five aspects, as the basic indicators. And it sets up an index that could be used to reflect its innovation capability with the method of principle components analysis. It also makes an empirical study on the relations between the capability of internet financial innovation and bank innovation of every province in China, by using the data analyzing model of panel data of all the provinces. The empirical result shows that the internet financial innovation, no matter the in its current period of the first order of time lag, has remarkable influence on business bank innovation. Chapter five uses SWOT Analysis to analyze the advantages, disadvantages, opportunities and challenges of business bank innovation from macro-perspective. It also generalize the internet financial innovation on business bank, and compare it to that of the international one from the perspective of channel innovation, product innovation,asset innovation and risk control innovation. Chapter deepens the content in chapter five with case studies. The cases are about the direct banks of China Minsheng Bank,the “Xin Jin Bao” of China Citic Bank, the “Small business E House”of China Merchants bank, and the “Online Financial Supply Chain “of Ping An Bank. Through the cases, it analyzes innovative new experience and inspiration of the business bank. Based on research of first six chapters, chapter seven brings up strategies and methods for the internet financial innovation of business bank from the aspects of system innovation, organization innovation, product innovation, channelinnovation, technology innovation and risk control innovation. Under the internet finance, the legal risk, information technology risk, mixing risk, long tail risk of business banking are pretty outstanding. The eighth chapter comes up with suggestions that we should improve the related legal system, build up the supervision and coordinationmechanism, establish the statistical monitoring platform,strengthen the information technological risk prevention system and strengthen the protections customers’ rights, through the analysis of the current supervising and controlling status and the conclusions of that of the U.S.A, The European Union and Japan, etc.