Research On Risk And Financial Regulatory Of Internet Banking

With the development of electronic commerce, Internet banking which integrates the information technology and network products is playing an increasingly important role in the financial sector. The Internet banking has brought a great change of business model and management, and has promoted the bank's innovation of organization and business. Because of the features of relying on electronic information technology, Internet banking has more risks than traditional banks, and the risks are more subtle and complicated. If we loss financial regulatory of the risks, there may be a threat to the stability of the financial industry and even national economic. In this case, this article research on the risks and financial regulatory issues of Internet banking.This paper introduces definition of Internet banking from international financial institutions and scholars. Internet banking has two levels of meaning: one is the concept of organizational form; the other is the concept of business model.Emergence and development of Internet banking is supported by some economic theory, including economic globalization theory, externalities and economies of scale theory. As a new business model, Internet banking will have the advantages that traditional banks do not have. At present, Internet banking has achieved good results in China in the user scale, industry competition and business expansion.This article divides the risks of Internet banking systems into technology risk, man-made operational risk, banking business risk, credit risk and legal risk. Meanwhile, a detailed analysis of these risks found that the development of Internet banking has been constrained for the variety of risks. Moreover, the risks of Internet banking have the new characteristics which traditional bank do not have, namely, the fast spreading, wide field of spreading and the complex regulatory, etc. we should have a good understanding of them and control the risks properly.The complexity of risks increases the work of the financial regulatory authorities. At present, laws and regulations targeted the Internet banking in China is not enough and loopholes exist in fact. By following the guidelines of the combination of internal controls and external regulatory, China's financial regulators focus on the compliance of internet banking, advanced risk warning and the risk control. Nevertheless, there are still have problem such as lagged idea of the regulatory, lagged level of the regulatory, Inadequate laws and regulations and inadequate internal control on risks, etc.Facing the fierce international competition in the financial sector, China should actively establish a sound Internet banking law and judicial system, which is the basic and most important aspect. China should strengthen the risk prevention from different angles to crack down on Internet crime, strengthen the internal management of the bank to reduce risk, pay more attention to Intellectual property to reduce the law risks. Also China should strengthen international coordination and cooperation to achieve global regulation to control the risks at the lowest level.This paper studies on the risks and financial regulation of internet banking and provides specific recommendations on how to improve and perfect the regulatory system of the Internet banking. Financial crisis has not receded completely and the international economic environment is still not stable. There will be more intense competition in the banking industry in the international financial markets. Internet banks in China should pay more attention on innovation and risk control, so as to achieve the steady development of the internet banking.