Finance itself may not directly generate value, but it can be integrated into all industries to indirectly accelerate value generation.
--SinFinance
Roy Hong and Yi Lei
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At the beginning of 2003, Bezos, the founder of Amazon, was obsessed with a book called Creation: Life and How to Make It. How to Make It, by Steve Grand, the developer of a 1990s video game called Creatures.
This game, which resembled the later popular "breeder" games, allowed players to breed their own "intelligent creatures" on the computer. Grande summed up the magic of creating "intelligent creatures" by focusing on designing simple computational building blocks - primitives - and then waiting for the strange behaviors to emerge.
Even though Creation was a bit of a raw deal, it didn't stop it from catching on quickly within Amazon. Because at the time, there was a heated debate within the company about whether or not to make an internet 'infrastructure'.
And according to Grande, even the most complex intelligent systems are built from the ground up with countless small devices and code like building blocks, eventually forming an organic organism that iterates and evolves itself. This view inspired Bezos and drove the development of the Amazon cloud.
We all know the story later, just as Bill Gates seized the dividends of the personal computer revolution, allowing Microsoft to lead the entire PC era. Bezos, on the other hand, foresaw the future of the 'data explosion': every business would need flexible storage and computing power, and the advent of cloud services revolutionized the computing economy.
So the essentials of achieving greatness, beyond extraordinary vision, are to be the infrastructure of business.
And now, the high-speed development of the digital economy is reshaping all industries, along with the development of 5G, the Internet of Things, cloud computing, big data and other technologies will be more and more mature, and deepen the integration with business. So in the future, what else can become an important lubricant and gas pedal for new business?
Perhaps fintech is one of the answers.
Recently, at the first 360 Digital Technology Open Day, Chief Scientist Zhang Jiaxing mentioned that every company needs financial technology services in the future. It can improve the efficiency of the enterprise, enhance user stickiness, and then make the enterprise more competitive in the market.
In fact, fintech has been recognized as a business infrastructure for a long time, especially in the United States, from Walmart, the hypermarket giant, to American Express, the logistics giant, they can provide financial services to users, and with the help of the power of science and technology, the enterprise has crossed the cycle and become the king of the business world.
Looking back at China, in the past few years, with the advent of the mobile Internet era, the application of new technologies has driven the evolution of the new economy and new finance. A number of fintech companies have taken advantage of the situation and experienced the trials of the business market and development cycle, such as those listed and soon to be listed several fintech giants.
If the rise of these industry giants was a result of seizing the opportunity of China's transition from the PC to the mobile Internet, and completing the forging of their business models and core competencies over the past few years, there is no doubt that we are now at a new market 'tipping point'.
Zhangjiaxing mentioned that in the past few years of practice in the 360 digital science felt a huge market gap.
For example, all kinds of scenarios, retail, medical, manufacturing, etc. are accelerating the process of digital transformation and upgrading, whether it is within the B-side itself, or external C-side services in the process of more and more appear in the figure of financial technology.
There are also a large number of financial institutions that have increased the strength and depth of the application of financial technology. It has even been taken as a key driver of the next strategic transformation. Especially after this year's epidemic, "no-touch" finance has become a mainstream trend.
In fact, finance has long been recognized as the "blood" of social and economic life, and the core of fintech is to enhance the efficiency and effectiveness of financial services with technology, which will inevitably become a kind of infrastructure capable of providing more efficient services when it is more closely integrated with business.
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We can also look at it from another angle: why can fintech become the infrastructure of business?
In the past few years, 'entropy reduction' has become a buzzword in business development and management. It stems from a concept in physics - the law of entropy increase, also known as the second law of thermodynamics: All spontaneous processes always develop in the direction of increasing entropy.
"Entropy" is used in physics to calculate the degree of chaos in a system, so we can simply understand that, as large as the universe and the state, and as small as enterprises and individuals, in a closed system, in the process of natural development without interference from the outside world, it will eventually enter into the state of disorder and chaos, and even ultimately to destruction.
Taking enterprise development as an example, 'entropy increase' is considered an inevitable trend.
As the scale of business grows, the complexity of management increases, and the marginal benefits tend to diminish. Coupled with external technological advances, the emergence of new business models, and the law of industrial cycles, these factors pose a constant threat to the enterprise, and ultimately lead to the failure of the enterprise's value-creation function.
This is why this concept has been introduced into modern management and is highly respected by many entrepreneurs.
Ren Zhengfei, the founder of Huawei, has cited this concept many times as the driving force behind Huawei's continuous promotion of open innovation, including optimizing the management of the organizational structure and increasing the structure of R&D investment, which are all aimed at combating entropy increase and achieving entropy reduction in the final analysis.
This is true for a company, but even more so for an industry, as 360 Digital CEO Haisheng Wu mentioned in his speech that the financial industry needs to fight against entropy increase compared to many other traditional industries.
He cited an example to illustrate that the financial industry is a wealth-creating existence, and wealth itself is prone to bring corruption and other problems to the enterprise. Another example is that the financial industry is in possession of massive amounts of data that other companies dare not ask for, and today, when data has become the new 'wealth code', improper management and utilization of data will bring unimaginable catastrophic consequences.
In addition, financial institutions have a huge number of offline outlets and teams, and a large financial institution can easily have tens of thousands of employees, which is also prone to management inefficiencies, redundancy, and even business distortion and other issues. The newest addition to the list is the newest addition to the list, the newest addition to the list, the newest addition to the list, the newest addition to the list.
A typical case is the US retail king Wells Fargo, which had a "fake account" scandal in 2016 - it opened accounts without users' permission and charged fees in violation of the law, and was ultimately fined by the regulator, and its retail business suffered a great blow.
A review of the events reveals the entropy challenge facing financial firms - the once 'cross-selling' strategy is no longer working, margins are starting to erode, and employees are being pressured by KPIs to become disorganized and chaotic.
So, looking at the financial industry today, how do we fight entropy and realize entropy reduction?
Wu Haisheng summarized several key points in his sharing:
One of them is "openness". He believes that the more open a company is, the more able it is to bring in new perspectives and get itself more organized. This is also the reason why Ren Zhengfei and Bezos repeatedly mentioned "entropy reduction", companies must break the closed system, constantly review themselves, and promote evolution and iteration.
Take the most important application of artificial intelligence in financial technology as an example, data, algorithms, plus the platform itself constitutes a rolling "flywheel", data derived from algorithms, algorithms to empower the platform, the platform has a better ability to attract more users, and then produce more data.
In this process, the accumulation of data, the evolution of algorithms and the ability to **** enjoy is difficult to be completed by a company independently, especially in the mobile Internet era. As data grows and technology evolves faster and faster, enterprises need to collaborate and cooperate more fully to make the "flywheel" turn faster and realize the evolution of capabilities.
The second is "technology". Enterprises can become stronger through continuous technology investment and open forms.
We can also see that right now, whether it's traditional financial institutions or fintech companies, the percentage of their investment in R&D is increasing, and this is an irreversible development trend for the whole industry.
In fact, the two keywords of technology and openness are the key to making the FinTech industry viable, expanding its reach, improving its service efficiency, and breaking the closed business ecosystem from the start, while the nature of connectivity and ************************************************************************.
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So, in practice, how effective is FinTech against "entropy increase"?
As we all know, over the past few years, fintech has brought about a nearly disruptive change to the payment industry.
Data from the Ministry of Industry and Information Technology (MIIT) shows that as of the end of September 2019, the total number of mobile Internet users in China was about 1.598 billion, and the number of users who used cell phones to access the Internet was 1.304 billion. And according to previous Ipsos calculations, the penetration rate of third-party mobile payment among Internet users is as high as 96.9%.
Undoubtedly, mobile payment has become the infrastructure of China's business, which greatly improves the payment efficiency, accelerates the process of financial online, gives rise to a large number of new business models, and accumulates a huge amount of data to further deepen the breadth and depth of the application of financial technology.
Internet lending is another typical case. Through the application of artificial intelligence, big data and other technologies, the development of Internet lending has allowed the service group to further 'sink', and the lending crowd, scene, and product form have all undergone considerable changes.
In the case of 360 Digital, for example, over the past four years, it has served more than 150 million users, with a core staff of 1,000 people to pry up the GMV scale of more than 200 billion per year, the growth rate of the fastest, reaching a wide range of people is the traditional way of financial services is unimaginable.
The core of reaching this goal is to gradually apply AI technology to the whole process of pre-lending, lending and post-lending.
For example, the Argus wind control engine independently developed by 360 Digital, through the complex wind control calculations of the background data, can do automatic filtering and monitoring of risky people, intelligent decision-making, and real-time monitoring of risky changes in the loan, assessing changes in the user's qualifications, and realizing the intelligent collection, intelligent customer service, etc.
The data show that the user's qualifications are not the same as those of the user.
The data show that Argus for the 360 digital intercept the number of new risk more than 1 million people, the automatic over-test rate of more than 99%, to protect the assets of more than 70 billion, the average daily loss recovery of 10 million, the platform fraud loss rate of less than 0.2%.
On top of the continuous maturation of AI capabilities, 360 Numerology opens these capabilities to financial institutions, providing them with five solutions: digital marketing solutions, digital operation solutions, digital risk control solutions, digital post-loan solutions, and intelligent financial all-link solutions.
The second quarterly report of 360 Numerology 2020 shows that the proportion of platform technology business has increased to 26.9%, and the proportion of comprehensive technology service revenue is close to 50%. Combined with the AI "flywheel" mentioned earlier, the accumulation of transactions and data under its open strategy makes the platform's "flywheel" run at high speed automatically.
In a future where digitization is the norm, every enterprise is striving to become a technology company, and every technology company has an AI brain. Financial technology companies' accumulation of data and technology, and their ability to forge in the course of business development, also make them a bigger stage in the AI era.
Although the development of financial technology has been accompanied by a lot of controversy and challenges, but today, in this matter of finance, the majority of people enjoy a more convenient, efficient, flexible, and even low-cost services, which also proves that financial technology has the potential to change the entire business landscape.
Regardless of how the future develops, financial technology has left the most profound mark on the digital age.