What Is a Financial Domain?

The financial industry refers to banks and related capital cooperatives, as well as the insurance industry. Except for industrial economic behavior, the other economically related industries are the financial industry.

Financial industry

The financial industry originated in 2000 BC

The financial industry is indicative,

Financial industry development history

The financial industry of the People's Republic of China was founded in a revolutionary base. The earliest financial institutions were rural credit cooperatives in Guangdong, Hunan, Jiangxi, Hubei, and other places during the first domestic revolutionary war, and the First Farmers Bank of Chaishan Special Economic Zone, founded by the Farmers Association in December 1926 in the Chaishan Special Economic Zone of Hengshan, Hunan . With the development of revolutionary wars, rural credit cooperatives and banks have been established in various revolutionary bases. On December 1, 1948, the People's Bank of China was established in Shijiazhuang, Hebei. After the founding of the People's Republic of China, banks in the revolutionary base areas and liberated areas gradually merged into the People's Bank of China. The government confiscated the Kuomintang's bureaucratic capital bank and carried out social ownership of the private financial industry.

Financial industry

Righteous transformation. On this basis, a highly centralized and unified national banking system has been established. At the same time, in the vast rural areas, the government has initiated and organized farmers to establish a large number of collective rural credit cooperatives, and made them play the role of the National Bank in rural grassroots institutions. The combination of a highly centralized unified national banking system with numerous rural credit cooperatives was the most prominent feature of China's financial industry in the 1950s and 1970s. Since 1979, China has begun to reform its financial industry. The People's Bank of China got rid of the specific industrial and commercial credit business and began to exercise the functions of the central bank; the national professional banks were established one by one; insurance companies were re-established and vigorously developed domestic and foreign business; joint-stock comprehensive banks and regional banks began to be established; Development; leasing companies, finance companies, urban credit cooperatives, cooperative banks, securities companies, stock exchanges, credit rating companies, Sino-foreign joint venture banks, foreign banks, etc. have all developed to a certain degree, forming a professional bank as the main body, the central bank At the core, a modern financial system in which various banks and non-bank financial institutions coexist.

12th Five-Year Plan for the Financial Industry

On September 18, 2012, the Central Bank issued the "Twelfth Five-Year Plan" for the development and reform of the financial industry. The key directions for the development and reform of the financial industry during the "12th Five-Year Plan" period were identified in seven areas: improving financial regulation, improving the organizational system, building financial markets, deepening financial reforms, and expanding; opening up, maintaining financial stability, and strengthening infrastructure. . ^[4]

Among them, the plan states that the interest rate liberalization reform will be steadily advanced during the "Twelfth Five-Year Plan" period. Adhering to the reform of key financial areas and key links in accordance with the market orientation, we will continue to improve the financial operating mechanism, stimulate the vitality of market players, and give full play to the fundamental role of the market in the allocation of financial resources. Further clarify the areas and boundaries of government's role and reduce government intervention in microfinance activities.

The plan also pointed out that the construction of the benchmark interest rate system in the financial market was further promoted, and the benchmark role of the Shanghai Interbank Offered Rate was further enhanced to expand its application in market-oriented products. Improve the medium and long-term market yield curve, and provide an effective benchmark for financial institution product pricing. According to the maturity of the conditions, the marketization of interest rates will be promoted in an orderly manner by liberalizing the prices of alternative financial products. Continue to improve the central bank's interest rate regulation system, unblock interest rate transmission channels, guide financial institutions to continuously enhance their risk pricing capabilities, rely on Shanghai interbank interest rates to establish and improve a self-regulatory mechanism for interest rate pricing, and ensure that interest rate marketization reforms are in line with The principle of "successful and successful" has been steadily advanced.

The plan also proposed that the reform of the RMB exchange rate formation mechanism should be steadily promoted in accordance with the principles of initiative, controllability and gradualism. Improve the managed floating exchange rate system based on market supply and demand, adjust with reference to a basket of currencies, enhance the two-way floating flexibility of the RMB exchange rate, and keep the RMB exchange rate basically stable at a reasonable and balanced level. Coordinated development of the foreign exchange market and enriched exchange rate risk management tools. Further study and establish a mechanism for the formation of a bilateral direct exchange rate between the RMB and emerging market currencies, and actively promote the listing of the RMB exchange rate with the currencies of emerging market economies and neighboring countries in the interbank foreign exchange market.

In addition, in accordance with the general principle of outstanding focus, overall advancement, conforming to the market, reducing distortion, actively exploring, and leaving room, we will further relax cross-border capital flow restrictions, improve the balanced management system for capital outflows and inflows, and improve the management of external claims and debts. Orderly advance the convertibility of RMB capital items. Taking direct investment facilitation as the starting point to achieve basic convertibility of direct investment; focusing on opening the domestic capital market and expanding foreign securities investment to further increase the degree of convertibility of securities investment; focusing on facilitating cross-border financing, accelerating the reform of foreign exchange management of credit business To deepen the reform of the external debt management system and standardize the management and monitoring of foreign debts; with the focus on expanding personal autonomy in foreign exchange use, further liberalize cross-border transactions in other capital accounts of individuals.

The plan points out that we will actively explore and expand multi-level use channels and methods of foreign exchange reserves, and improve the foreign exchange reserve management system. Further study and evaluate the risk tolerance of foreign exchange reserve operations, increase research on various investment fields, products and tools, adhere to long-term strategic investment concepts, adhere to a scientific and effective investment benchmark model, and steadily build on the basis of prudent assessment Promote diversified investment, optimize the allocation of currency assets, increase investment income, and achieve the goals of safe, liquid, and value-added foreign exchange reserves. Innovate the use of foreign exchange reserves, better support the national development strategy, and serve the country's sustainable development goals.

Financial industry advances into the financial industry

The blueprint for the integration of industry and finance, the hardships of the industry and the high returns of the financial industry, and the gradually opening doors of the financial industry, more and more private enterprises are vying for the "big cake" of the financial industry. Since 2012, Internet companies have also aggressively extended their tentacles to the depths of the financial industry, and they may become a subversive force in this industry.
Private enterprises vying for the "big cake" of the financial industry
Compared with the hardships of the industry, the high profits of the financial industry have a natural appeal to funds. The original intention of industrial capital to enter the financial industry was to reduce financial risks, obtain stable investment income, and also facilitate its own financing. However, the entry of private capital into the financial industry has also brought the worry of hollowing out the industry and may cause chaos in the financial order. Therefore, China still implements strict license controls on the entry of private capital into the financial industry.
Nevertheless, "industrial-financial integration" has gradually become a favored development path for Chinese enterprises, and an earlier group of private entrepreneurs who obtained financial licenses have thus shared the excess profits of the industry and harvested enviable wealth, including people's livelihood. The bank's private shareholders include Liu Yonghao, Lu Zhiqiang, Zhang Hongwei and Shi Yuzhu; the major shareholders of Taikang Life: Chen Dongsheng and Kong Dongmei; the major shareholders of Guohua Life and Tianping Motor Insurance; Liu Yiqian; the controllers of Zhongrong Trust;
Although license control has always existed, there are still more and more private enterprises competing for the "big cake" of the financial industry through various channels. The Pearl River Department at the helm of the Zhu Mengyi family has successively taken shares in Beijing Rural Commercial Bank and Guangzhou Rural Commercial Bank. Zhujiang Life Insurance has opened low-key, and its three pillar industry strategies of finance, investment and construction have begun to take shape. Established in 1990, Xiangjiang Group, which started from home building materials, has also invested in financial institutions such as Guangdong Development Bank, Guangfa Securities and many other enterprises.
On April 8, 2013, Shi Yuzhu resigned as CEO of Giant Network, causing a lot of shock. Many people speculated that the true intention of her retirement was to shift to financial investment, and Shi Yuzhu denied that he would hold Minsheng Bank shares for a long time, not speculation. By. Regardless of the true intention of "retirement", Shi Yuzhu's move to finance is an indisputable fact. Since March 2011, Shi Yuzhu has increased his holdings of Minsheng Bank through Shanghai Jiante more than 80 times, holding a 2.85% stake. In addition, it also holds 1.31% of Hua Xia Bank and shares of a dozen other listed companies.
In the financial city-state, there are still a lot of wealthy second-generation figures. They have high education and try capital operations on the wealth platform built by their parents. Lu Weiding, president of Wanxiang Group, who studied MBA at Harvard Business School in the United States, made financial investments with the two platforms of Wanxiang Finance Company and Tonglian Capital; graduated from Warwick University, Vice President of Sany Group, Lieutenant General Sany Investment (Gao Heng Investment) as its experimental field; Li Zhaohui, chairman of Haixin Group, ended his studies abroad and returned to China when his father Li Haicang was killed. Although he made some mistakes in the investment in the financial field, he also made frequent moves and leaped forward.
The Internet changes the way cakes are produced?
Private enterprises compete for the "big cake" of the financial industry and share the market of the traditional financial industry. As the tentacles of the Internet become deeper and deeper in the financial industry, it may become a subversive force in this industry.
From payments to borrowing to intermediaries, Alibaba has continued to expand its financial landscape with Alipay as a starting point. From 2007 to 2010, Alibaba had cooperated with CCB in the field of Internet lending, but it was terminated due to inconsistent goals and styles. In this cooperation, Alibaba saw the opportunity of small loans and accumulated a certain amount of money. experience. Ali platforms are mostly small businesses, and their weak position in traditional financing channels has indirectly affected the development of Ali platforms. During the financial crisis in 2008, Jack Ma said that if the bank does not change, then we change the bank.
In June 2010, Zhejiang Alibaba Microfinance Company, which was jointly invested by Alibaba, Fosun, Wanxiang, and Yintai, was established. Its products are divided into "Taobao small loans" for B2C platform customers and "Ali small loans" for B2B platform customers. It has the characteristics of "small amount, short term, and repayment on loan". Using big data, Alibaba Microfinance Company evaluates the company's credit based on the credit and behavior data accumulated by the company on the platform. In 2011, Ali once again established Chongqing Alibaba Microfinance Co., Ltd.
At the same time, Ali actively expanded its funding sources for small loans. In June and September 2012, Chongqing Ali Microfinance Company issued trust products through Shandong Trust twice, and raised a total of 300 million yuan. In early 2013, Oriental Securities issued the "Alibaba No. 1" special asset management plan to submit application materials, and Ali Financial began to try corporate asset securitization financing. Ali Micro Loan plans to sell a 5 billion yuan loan portfolio to Orient Securities' "Special Asset Management Plan" and use this as a basis to issue 5 billion securities to investors.
Microfinance business is only part of Ali's financial landscape. In 2012, Ali Mayun, Ping An Insurance Ma Mingzhe and Tencent Ma Huateng announced the joint establishment of Zhongan Online Property Insurance Company, which mainly targets Internet products and Internet of Things products. In February 2013, the China Insurance Regulatory Commission issued a reply agreeing to Zhongan's online preparation for the piloting of a professional online property insurance company. In addition to the "Three Horses", six companies including Beijing Ctrip International Travel Agency Co., Ltd. participated in the investment.
Previously, on April 16, 2012, Alipay announced that it was fast payment (without the need to open online banking to enable online payment with multiple verifications). Users were free to insure. In the event of a capital theft accident, Ping An Property & Casualty Insurance will pay 100%. This is the first time that domestic third-party payment has introduced an insurance mechanism. This move is also seen as a way for the Three Horses to form an online insurance company.
In September 2012, Jack Ma announced at the Online Business Conference that Ali will start a comprehensive transformation from 2013, focusing on the three major businesses of platform, finance and data. In March 2013, Ali stated that it would launch a virtual credit card and plans to cover major cities across the country by the end of September. Both merchants and consumers can get corresponding credit payment based on different ratings. Consumers can get up to 5,000 yuan in spending and enjoy an interest-free period of up to 38 days.
Internet giant Tencent is also building a financial city state, and its actions go far beyond participating in the establishment of Zhongan Online. In 2012, Tencent's wealth management channel launched a fund supermarket, where users can purchase funds online. Cooperating fund companies include Boshi Fund and Penghua Fund. On January 16, 2013, CITIC Bank announced that it would cooperate with Tencent, a subsidiary of Tencent, in areas such as online credit and financing, co-branded cards, and financial links. During the two sessions in 2013, Ma Huateng said that Tencent was considering applying for more financial business licenses.
JD Mall launched Supply Chain Financial Services at the end of 2012, serving suppliers, manufacturers, distributors, retailers, and end users. It can provide accounts receivable financing, order financing, and entrusted loan financing to upstream suppliers. . JD.com's role is to act as an intermediary, using its size and credit to help suppliers obtain funds from banks. The supplier submits an application for financing to JD. JD reviews its order, warehouse receipt, etc. and submits it to the bank after approval. The bank then lends. JD.com also stated that it will use its own funds to provide partial financing for enterprises.
In fact, financial institutions such as banks, securities firms, and fund companies are building their own online sales platforms, but Ali has made it clear that he does not want to do financial Internet where financial products are sold online and the Internet is used as a channel, but to be firm Do internet finance based on internet thinking, use innovative technical methods to mine data, and seamlessly connect customer needs with products.
Breaking information boundaries, reducing transaction costs, and supporting big data are the advantages of Internet finance, but they also inevitably face technical and policy risks. Relevant laws in China are formulated for traditional finance, and the development of Internet finance may present new and unique problems. The bottom line of Internet finance is not yet clear, and Internet companies need to be alert to "cross-border" risks.
Whether Internet finance will upend the traditional financial industry is unknown, but its impact has begun to show. The Internet has changed the rules of the game in many industries, and finance may be the next. ^[1]