Internet banking is booming. What are the 4 types of internet finance?

Alan Li January 8, 2015 2 mins read

Internet banking and finance has recently seen a boom. The use of internet tools such as online payments, cloud computing, social networks and search engines have created a brand new kind of finance, which enables the business goals of financing, payment, information, etc.

Currently internet banking does not have a fixed classification system, and new financial and money-managing mechanisms appear one after the other. Below are the four general groups of Internet finance.

1. P2P (Peer to Peer Lending) and crowd funding

The domestic P2P has the typical characteristics of internet finance, and, essentially, the difference with traditional finance is not large, and you can treat it as an online version of private lending. The two versions are essentially the same both in terms of the source of funds and the customer mix. The Internet here plays the role of the reservoir of funds. The best known P2P mode users in China are lufax.com and ppdai.com.

2. Third party payment

Third-party payment is an important method of internet finance, but it requires a very large investment, and it is difficult to make it profitable. Looking at the overall market picture, competition is homogeneous and intense, and the survival rate very low. If you want to succeed here you need to rely on the scale of your operations. PayPal is the biggest player in this market.

3. Internet sales channels for financial products

This category can be further split into two. In the first one, you use an existing ecosystem and a customer account system, an extra way that might work in practice. Alipay’s Yu’ebao is a typical example. The second category are independent specialized platforms, such as www.fund123.cn, www.howbuy.com, www.tongbanjie.com. The latter’s model of providing platforms and selling financial services perhaps provides a better customer experience.

4. Information matching

Services such as www.rong360.com and  www.haodai.com specialise in matching two parties in the same market. There are several prerequisites regarding the market demands of the two parties. The first one is that the supply and demand must both be extremely high, and the second one is that the two parties must be ultimately able to satisfy each other’s requirements. There is space here for one or two websites, but, the feeling is, not for many. This model has been successful abroad, and there it has not been limited to finance, but also includes many different types of content such as airplane tickets, insurance, holidays and car rental. 

Alan Li's picture
Operations Director | Financial Services, Industrial & Life Science Recruitment
ali@morganmckinley.com