The Modes of Internet Finance

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In recent years, the explosive growth of the Internet is profoundly changing our way of thinking, lifestyle and business form. The financial industry is also suffering from the impact of Internet finance.

Internet finance is a new financial business model in which traditional financial institutions and Internet enterprises use Internet technology and information and communication technology to realize financing, payment, investment and information intermediary services. Internet finance is not only different from the indirect financing of commercial banks, but also from the direct financing of the capital market. It belongs to a new form of financial industry.

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There are six modes of Internet finance, including:

(1) Third-party payment. It refers to an independent institution with certain credit guarantee, through signing contracts with banks, to provide payment and settlement interface trading platforms. Mainly include Internet payment and mobile payment.

(2) Online microfinance. It refers to that Internet enterprises map customer credit data and behavior data accumulated on e-commerce platforms into enterprise and individual credit evaluation, and issue small loans in batches.

(3) Internet financial channels. It refers to the deep combination of financial products and network services by using the huge user base of e-commerce websites to provide financial services to customers through Internet channels. Users can directly purchase financial products such as monetary funds online, and obtain relatively high returns. Meanwhile, this part of the funds can also be used for online shopping, transfer payment, etc.

(4) P2P network credit. P2P companies build online platforms to release and match demand and supply information directly on the Internet. Direct contact between capital supply and demand, bypassing third-party intermediaries such as banks and securities brokers, to provide users with direct investment and financing services. Its essence is a kind of folk lending way.

(5) Internet financial portal. It refers to financial institutions putting financial products on the Internet platform, and users select appropriate financial service products by themselves after screening and comparing the loan purpose, amount and term. In this mode, Internet financial portals mainly play the role of information intermediaries and do not participate in transactions and capital exchanges.

(6) Crowdfunding mode. It refers to the mode in which project sponsors take advantage of the communication characteristics of the Internet and social networks to show their ideas to the public, strive for enough recognition and support, and raise public funds. Crowdfunding projects offer in-kind, service or media content in return, but do not involve capital or equity. Most crowdfunding platforms are public welfare and charitable in nature.

Internet finance has been popularized more and more in modern times. The complexity of the Internet also needs to be supported by information backup before people can have confidence in Internet finance. For example, there are alpha backup solutions in Malaysia for us to backup data.  Therefore, people actively participate in this construction, to achieve social progress and development.

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