Maker Cat Note: This article comes from the keynote speech of "Financial Technology Cold Thinking: Dare to Ask Where the Road Is" delivered by GuoKejia and founding partner Wang Ge at the "2018 Lieyun Network Fintech Industry Innovation Summit". The maker cat came to the scene for live graphic broadcasting.
Guokejia and founding partner Wang Ge
In the past two months, the p2p industry has fallen into a wave of platform explosions, and in June alone, there have been 63 p2p problem platforms. In the past two days, the thunderous p2p has finally spread to the field of entrepreneurship. On the evening of August 1, Wang Chuyun of Jilu road indicated in an open letter that due to the payment difficulties issued by the partner i Fortune, the normal business activities of Jilu were greatly affected. At the same time, Weibo broke the news that a total of 168 stores in Beijing Linjia Convenience Store were completely closed, after which Neighborhood Home (Beijing) Trading Co., Ltd. issued a notification letter to suppliers saying that the company would stop the headquarters business from August 1 and stop the store operations one after another.
Obviously, the change in market sentiment has led to a knock-on effect of risk transmission. How long will this wave of thunder last? Wang Ge said that everyone can continue to look forward to it, and now what thunder is not unexpected, until the remaining two or three hundred Chinese Internet finance is almost the same. At present, there are more than a thousand domestic Internet financial platforms.
In the current situation of Internet finance, Wang Ge pointed out that startups should pay attention to three things: first, whether the Banking and Insurance Regulatory Commission or the central bank has new policies; the second is the situation of various local regulators and other thorough investigations; the third is the cash flow of enterprises and continuous explosions, from the asset side to the capital side to see what problems there are.
"I personally think that this wave of downwards is basically not over until the end of 2019. What's next at the core? It is more than compliance than technology than users than cash flow, which is the most critical issue. Although the status quo is pessimistic, Wang Ge still pointed out that the future of financial technology itself is bright. This is mainly based on two facts: the first is China's total GDP and m2 more than two hundred trillion, while personal finance is four or five trillion, users have needs, this part must be satisfied anyway, this is a just need; second, in the context of strict supervision, the final is to rely on the real underlying technology, really understand the needs of users, and finally play their own strength, in order to get a better tomorrow.
The following is the transcript of Wang Ge's speech: (edited by Maker Cat, some deletions)
Wang Ge:
I've been doing it for 28 years, in the industry, what is the concept of 28 years? Industry veteran. I look at the entrepreneurial friends are very young, most people have not experienced the 90s, do you know what was the interest rate of our deposits in the bank in the 90s? Many people do not know that the one-year interest rate on bank deposits in our country is 16%. When the dot-com bubble burst in 2000, our finances went down, and that was when it was all the feeling of falling and stopping. In the past three or four months, hundreds of billions of yuan in the Internet finance industry have been washed away. Just now I asked the conference organizers, how many people are there today? He said two thousand people were registered today. I have two conclusions, the first conclusion is that our industry is big enough, and the second is that we still have so many survivors now, it is not easy.
I would like to take this opportunity today to tell you about our thoughts. It should be said that it is currently a very memorable day for Internet finance in China's financial circles in 2018, in such a situation from far and near from top to bottom, one by one began to blow up. In fact, there is nothing new under the sun, it has been repeatedly verified in history. Let's take a look at a simple historical review.
In the future, there are only two or three hundred Internet finances left
Internet finance, we start from the double creation into financial innovation, and then began to promote, now start to clear the library, start to wash out. At the highest time, there were seven or eight thousand Internet financial platforms, and now there are still one or two thousand left, and I don't know how many are left in the end. I'm only sure of one point, more than a thousand is definitely still too much. I estimate that in China, even in emerging markets, we need one or two hundred Internet platforms. So in such a case, it should probably go 90% again, and now that this thunder has not yet exploded, everyone can continue to look forward to it. Now what thunder is not unexpected, until the remaining two or three hundred Chinese Internet finance is almost the same. This is the big roller coaster we are facing now.
Let's look at the funds, from the perspective of investors, we can see that the funds are undoubtedly flowing to the head enterprises, the head enterprises can get the money, and the bottom and long tail are not thought. If we look at any field of Internet finance or fintech, first look at the background of shareholders. First, is there a red hat? Second, is there any major shareholder endorsement? If not, go home, according to this order. It is not necessarily that the long tail technology behind is not good, but in the case of continuous bursts, everyone will be nervous. In fact, the assets may still be there, and the assets themselves are not too much of a problem, but now there is no liquidity, that is, there is no credit, all shrunk together, how long will it take? It will take quite a long time. So you don't have to be particularly optimistic, but I'll talk about why I'm not pessimistic later.
Private financial control into the supervision pilot, we see this phenomenon is very interesting, with the siege of the city at that time, everything has been obtained or there are already diversified financial controls, in this case everyone every time they say that I am not a financial institution, and then quickly sell and sell, and then buy a financial license and then go in. This is a particularly interesting phenomenon. Now it is a strong supervision, from the first encouragement to the top, from the first up to the chaos, once the chaos to collect, as soon as the harvest is dead, China has never got rid of this circle. We have been in the industry for thirty years, it has always been like this, it has never changed, but it is said that the subject matter is different every time.
For example, new finance, what is new finance? There is no strict definition now, but where exactly is it updated? How new? We also need to keep thinking and exploring. This is everyone's task. So what is a big change in the logic of financial investment? As we all know, this session of the State Council has broken the division of labor in the past few decades. We know that Premier Liu is in charge of finance, I have been working in the Chinese Academy of Sciences for 28 years, has been mixed in science, education, culture and health, are reporting to the vice premier of science and technology culture and health, now it is not, now we first go to the Banking and Insurance Regulatory Commission to list, he manages the real economy + innovative technology + innovative finance. So the state council's new division of labor, the real economy and science and technology closely combined, we finally found that it is actually a brother unit with the Banking and Insurance Regulatory Commission, so this economy + science and technology + finance, this is the future of an export.
We used to do some regulatory arbitrage, but now we can see the focus on efficiency and differentiation. In fact, the essence of finance is risk, what is the financial industry? The financial industry is the risk difference, that is, in the continuous risk assessment and risk pricing, you earn the difference in risk pricing, which is finance. So when it comes to finance, we first talk about risk, which is the origin of regulation.
How to break the game: artificial intelligence + finance
What do you say Is the situation facing China? Do you know how much m2 there is now? More than two hundred trillion, what concept? What is our national GDP? More than 70 trillion, less than 80 trillion. So between 3 times, which is the highest release of water ever in human history. Therefore, it is not possible to supervise, it is not possible to do not leverage, and the entire society is 220% in debt, and 160% of the leveraged debt in the residential sector and the enterprise sector. The laws of history can only be known and never created, and objective laws are only known and never created. Every time I hear a sentence, "This time is really different, certainly not this time", in fact, the same, there is nothing new under the sun, round after round is the same.
What's next? It is nothing more than new technologies and new methods to further reduce costs and improve efficiency, so let's talk about artificial intelligence + finance. Artificial intelligence this outlet is basically to the end, at the end of last year there was a venue speech is also a thousand people, I said at the time that everyone did not raise money to quickly melt, by July 2018 when basically no one looked, now everyone sees a continuous decline.
The support of artificial intelligence is data, one is algorithm, one computing power, one is application scenarios, and now the algorithm itself is becoming more and more worthless, and everyone feels that there is no technical content in face recognition now, in this case, so-and-so can continuously raise funds, which is also a skill. In itself, the final algorithm is going to open source, if you are based on the algorithm, specializing in algorithms, this thing will definitely be valuable. But how valuable is it in the long run? There is no value, that is the basic view. Because the Academy of Sciences engages in these things every day, the two core ends are the first data sources, especially structured data and quality, can they be labeled? How are the labels playing? What is the logic of the label itself? The second is the application scenario, is there a deeply applied scene? Without the intervention of the scene, AI can not land, in the banking, securities, insurance, investment and other fields, we have about 600 billion market is the application of AI, this is what we can see.
From the big logic can be seen, this point we can see service intelligence, cognitive intelligence, decision-making intelligence, constantly refined on big data, through continuous refinement we can see that financial technology in two aspects of strength, the first is to improve efficiency, whether it is to prevent risks or improve customer satisfaction, the second is to reduce costs, the original is telephone customer service, is now manual customer service to replace. Robo-advisors are doing more now, because from the perspective of the future, artificial intelligence is deployed on a large scale, whether it is Google or others, in the layout of the hash rate to computing power, algorithm to algorithm. If the data on the front end and the information sources on the front end have been digitally managed, these things are already a game between the algorithm and the algorithm and the computing power. You see that Google has launched 50-bit quantum computing, our Academy of Sciences has invested heavily in quantum computing layouts, in this case maybe ten years after the completion of quantum computers, there will be a lot of new developments in this part, which may change all the laws.
Let's talk about infrastructure. Infrastructure in general, this is what regulation needs to do. Including transaction management, liquidation management, we are now carrying out a lot of calculations, in this regard, tens of trillions of transactions, tens of trillions of transactions, in fact, we are now running on the basis of the dollar, how can this be controlled autonomously? Import substitution, this is a big outbreak in the next three to five years. In the past, we knew that a lot of infrastructure has been carried out abroad, the Americans have been playing for a long time, China is currently especially in the past few years we have introduced, digested, absorbed and recreated, I think in the next three or five years this part is still a lot of space, will trigger a lot of opportunities. Because this opportunity didn't exist before, it's something that is universal. Now the logic is different, a lot of business logic has become technical logic, this part will appear a lot of opportunities for new companies to better understand Chinese applications, including the heavy vertical application scenarios of the physical runway just mentioned.
This wave of financial downturn is not at the end of 2019, and it is basically not over
Everyone knows that the next ten years are infinitely beautiful, and the only question is how to survive this year, which is a very important topic. In this case, the core of these trends, the first is the tightening of policy supervision, the original these companies are every quarter to hold an annual meeting, recently a monthly meeting, has been supervising three things. The first is whether the Banking and Insurance Regulatory Commission or the central bank has new policies; the second is the situation of various local regulators and other thorough investigations; the third is the cash flow of enterprises and continuous explosions, from the asset side to the capital side to see what problems there are. This is what everyone should pay attention to recently, especially the cash flow of enterprises, which is very important.
Before the end of this year, there will be another big wave, especially p2p blow-ups, people say why don't banks shoot? I said no shot when. Finally all finance, all that does finance must be licensed. So far this year, a big idea of the entire State Council is to avoid systemic financial risks, why do they repeatedly mention it? Because there is really a risk. So in this case this is very important orientation. Cash flow, how to cover the quilt thicker in this case, this wave really has to recover. Before you look forward to the good, you have to live. I personally think that this wave of downwards is basically not over until the end of 2019. So I think everyone is fully prepared, what is the next core? It is more than compliance than technology than users than cash flow, which is the most critical issue.
The future of fintech itself is bright, why is that? Because there are two basic facts. The first basic fact is that as a whole, China's own total GDP is now more than two hundred trillion yuan, personal finance is four or five trillion yuan, users have needs, this part must be satisfied anyway, either by Zhang San or by Li Si, so this is a huge huge market, this is a just need. In the context of the second strict supervision, it is ultimately the real underlying technology, truly understand the needs of users, and finally exert their own strength, in order to obtain a better tomorrow. The future is infinitely bright, we must do our own core competitiveness at the moment, remember a sentence to live is really good, thank you!
(The above is the maker cat on-site manuscript, please indicate the source when reprinting)