On Differentiation Strategy Of Internet Financial Platform Based On The Theory Of Two-Sided Market

Internet finance is an organic combination of Internet and finance, is a new type of financing mode based on Internet platform, mainly including Internet payment, P2P lending, Crowdfunding, sales of Internet currency funds. Based on advanced network communication technology, Internet finance alleviates the information asymmetry problem effectively, saves transaction costs of both sides greatly, and promotes the traditional financial business to online trading successfully. Internet finance has many features such as low cost, high efficiency, flexible and convenient, developing rapidly.At present stage, the development of the Internet finance is not perfect enough, and the research is also not comprehensive enough, the existing literature mainly discussed major business form of Internet finance, technological innovation of its business model, major impact and influence to the traditional finance, potential risks and possible regulation direction. Based on the research status of Internet finance, this thesis tries to start a research on Internet finance based on the theory of two-sided market.Internet financial platform attracts users with joint needs, user increase of one side often influence the utility of the other side, users of both sides based on the platform to realize different purpose, such as online payment, project financing, investing and financing. The vigorous development of Internet finance has injected with different fresh elements for market competition, in order to expand trading amount by increasing user base, platform-based enterprises are taking all kinds of competition strategy, such as free pricing strategy, differentiation strategy and dynamic innovation strategy. However, Internet financial industry has obvious network effect, it is critical to take differentiation competitive strategy, as it plays a decisive role in establishing a large user base, enhancing network effects, keeping lots of consumers, even determines the survival of enterprises to a certain extent.Research idea of this thesis are as follows:firstly, introduce research background and research significance of this article, summarize previous classic literature related to the research object of this essay; Secondly, based on the theory of two-sided market, study the differentiation competitive strategy of Internet financial firms from the perspective of platform, and make comparison analysis between Yu’ebao and Licaitong. Finally, comes to the research conclusion and provide feasible policy suggestions for the Internet financial regulation from two-sided perspective.This thesis consists of six chapters, specific research framework is as follows:The first chapter is introduction. This chapter mainly includes research background, research significance, research methods, research contents, framework, the possible innovation points and insufficiency of this article.The second chapter is literature review. This chapter summarized previous relevant literatures. Review contents include the definition of two-sided market, pricing mechanism of two-sided market, platform competition strategy of two-sided market and relevant research about Internet finance.The third chapter is Internet finance under the perspective of two-sided platform. The first part of this chapter introduces the developing situation of the Internet financial industry, including the operation mode of Internet third-party payment platforms, P2P network credit platforms, Crowdfunding platforms and Internet currency funds platforms; the second part in this chapter introduces bilateral attributes of Internet finance, such as asymmetric pricing and user multi-homing.The fourth chapter is the study of differentiation competitive strategy of the Internet financial platforms. The first part of this chapter introduced the theoretical foundation of differentiation competitive strategy by using industrial organization theory and Potter’s " five-force model "; The second part elaborated differentiation motive of Internet financial platform from the perspectives of Internet economy, dynamic competition, network effects and user multi-homing; The third part introduced the present situation of the Internet financial platforms’differentiated competition from horizontal dimension and vertical dimension.The fifth chapter is comparison analysis between Yu’ebao and Licaitong on differentiated competitive strategy. This chapter described the specific differentiation between Yu’ebao and Licaitong, mainly including their horizontal differentiation and the performance of their differentiated measures.The sixth chapter is conclusion and prospect. Mainly summarized the research conclusion of this thesis, and discussed the future development direction of Internet finance.Research contributions in this thesis are as follows, explored the differentiation competitive strategy of Internet financial platform from two-sided market perspective, reveled reasons for differentiation strategy used by Internet financial platforms, cleared the mechanism of differentiation strategy of Internet financial platforms, highlighted the importance of differentiation competitive strategy to the Internet financial platform enterprises; analyzed differentiated characteristics between Yu’ebao and Licaitong as case study. Research conclusion of this paper are: the Internet financial platforms have obvious two-sided features; crossover network externalities and differentiation is the key factors to platform to accumulate customer base; differentiation competitive strategy is significantly important to enterprises with high network effect, as it’s the determinant factor of survival.