Financial Trends｜Financial Technology has entered "strict supervision", how should the giants respond?
2020 is a year of vigorous development of financial technology, and also a year of strong financial technology supervision.
As one of the financial technology giants, JD Digital has expanded its business in many ways during the year and launched a sci-tech innovation board listing. It has also been caught in a whirlpool of public opinion, and now it has adjusted its bow to belong to JD Technology Group.
Fintech: Participate in the construction of the digital RMB ecosystem, participate in the establishment of credit reporting companies and independent legal person direct banks
JD Digital was formerly known as JD Finance. In 2017, JD Group (9618.HK) independently split its financial business into Beijing JD Financial Technology Holdings Co., Ltd. (ie JD Finance) and obtained 40% of the profit sharing rights.
In December 2018, JD Finance Corporation changed its name to JD Digital Technology Holdings Co., Ltd.
In June 2020, before the launch of the listing, JD Digital Technology Holdings Co., Ltd. was changed to JD Digital Technology Holdings Co., Ltd. (JD Digital for short).
In the introduction on its official website, JD Digital claims to be a new technology company dedicated to AI-driven industry digitization. It has a layout in AI technology, robotics, digital marketing, smart cities, and financial technology.
In 2020, JD Digital's business in the field of financial technology continues to expand.
On September 21, The Paper reporter learned from JD Digital that recently, the Digital Currency Research Institute of the People's Bank of China has formally reached a strategic cooperation with JD Digital.
JD Digital said that the two parties will jointly promote the development and construction of mobile basic technology platforms and blockchain technology platforms based on the digital renminbi project; and combine the existing scenarios of JD Group to jointly promote the innovation of digital renminbi mobile application functions and online , Landing application of offline scenarios, and promote the ecological construction of digital RMB wallet.
Nearly two months later, JD Digits participated in the Suzhou Double Twelve Digital RMB red envelope pilot program. The six state-owned banks of China Construction Industry and Agriculture and Postal Savings Bank of China can connect to JD APP.
"In the digital renminbi pilot, JD.com and JD.com provided technology + services + scenarios." Peng Fei, the person in charge of the JD.com digital renminbi project, said that at the technical level, JD.com can complete security and stability in a short time. At the service level, JD Digital helps merchants upgrade and upgrade their cash registers, providing a digital RMB payment experience consistent with existing payment methods.
At the scene level, JD.com has more than 440 million active purchase users, and the large- and medium-sized logistics network has achieved 100% coverage in the mainland administrative region. The rich online and offline consumption scenarios and user service capabilities will help the digital RMB wallet ecological construction.
JD Digital also participated in the second digital RMB red packet pilot in Suzhou on February 5th and the Beijing Digital People's Bar red packet pilot on February 7th.
It is worth noting that the capital of 30 million issued by Suzhou's second digital RMB red envelope pilot program was all provided by Jingdong Group.
On December 11, 2020, China Merchants Bank issued the "Announcement on Approval of the Establishment of an Independent Legal Person Direct Bank" stating that the bank received approval from the China Banking Regulatory Commission on the same day and was approved to establish China Merchants Topology Bank Co., Ltd. (hereinafter referred to as China Merchants Topology Bank).
China Merchants Bank and Online Banking respectively subscribed for 1.4 billion and 600 million common shares of China Merchants Topology Bank, with the shareholding ratios being 70% and 30% respectively.
Online Banking Online is a 100% wholly-owned subsidiary of JD Digital.
In addition, according to the announcement on the official website of the People's Bank of China on December 25, Park Road Credit Information Co., Ltd.'s personal credit information business license was approved, of which JD Digital holds 25%.
The pace of listing slows down
Starting from June 2020, JD Digits will prepare to go public.
On June 26, JD.com announced that it had reached an agreement with JD.com to convert the profit sharing rights into a 35.9% stake in JD.com. At the same time, it increased its capital by 1.78 billion yuan in cash to acquire equity in JD.com, thereby holding JD.com. Digital Science has 36.8% equity and approximately 18.7% voting rights.
At that time, JD Digital's valuation was close to 200 billion yuan.
Only 5 days later, on July 1st, the Beijing Securities Regulatory Bureau disclosed the "Basic Information on the Initial Public Offering of Shares of JD Digital Technology Holdings Co., Ltd. and the Guidance of Listing on the Sci-tech Innovation Board", which officially opened the way for the JD Digital Sci-tech Innovation Board.
On the evening of September 11, according to the official website of the Shanghai Stock Exchange, the Shanghai Stock Exchange indicated that it had accepted the issuance and listing of JD Digital Technology Innovation Board.
And on October 16, the Shanghai Stock Exchange disclosed the "Response to the Inquiry Letter Regarding JD Digital Technology Holdings Co., Ltd.'s Initial Public Offering of Stocks and the Review of the Application Documents for Listing on the Science and Technology Innovation Board."
However, after Ant Group, also a financial technology giant, announced the suspension of listing on November 3, financial technology regulatory issues were put on the table, and JD Digital's listing has also stalled.
According to JD Digital's prospectus, JD Digital's operating income can be divided into digital solutions for financial institutions, digital solutions for merchants and enterprises, digital solutions for governments and other customers, and others.
In the first half of 2020, the three major business revenues accounted for 52.37%, 41.68%, and 5.57% respectively.
Half of its operating income comes from financial services.
Digital solutions for financial institutions are similar to Ant Group's digital financial technology services. It refers to that JD Digital provides financial institutions with business and technology digital solutions to help financial institutions broaden customer acquisition channels, optimize product operation strategies, and improve risk identification capabilities. Enhance the agility of information systems.
The main products include credit technology, credit card technology, insurance technology, and asset management technology.
From 2017 to 2019, and then to the first half of 2020, in each period of the reporting period, the compound annual growth rate of the revenue of the digital solutions of JD Digital's financial institutions reached 100.51%.
It is worth noting that only Lufax Holdings of the three fintech giants will be listed in the United States on October 30, 2020.
Fintech regulatory constraints are strengthened
While financial technology is booming, financial technology has also ushered in a series of regulatory policies.
On July 17, 2020, the China Banking and Insurance Regulatory Commission announced the Interim Measures for the Administration of Internet Loans by Commercial Banks (hereinafter referred to as the “Measures”), which put forward corresponding regulatory requirements for joint loans and loan assistance businesses.
The joint loan is a common mode for financial technology giants such as Ant Group and JD Digital to do financial business.
In August 2020, the Supreme People’s Court issued the “Decision on Amending the Regulations on Several Issues Concerning the Application of Laws in the Trial of Private Lending Cases”, adjusting the upper limit of judicial protection for private lending rates, and the People’s Bank of China authorized the National Interbank Funding Center to The one-year loan market quote rate (LPR) announced on the 20th was 4 times the standard, replacing the original "two-tier three-zone based on 24% and 36%."
Taking the calculation of 4 times the quoted rate of 3.85% of the 1-year loan market published on August 20, 2020 as an example, the upper limit of judicial protection for private lending rates is 15.40%, which is a significant drop compared to the past.
Jingdong Digital Technology pointed out the possible risks of this policy in the prospectus: Although the new regulations clarify that financial institutions and their branches that are established with the approval of financial regulatory authorities to engage in loan business, disputes arising from the issuance of loans and other related financial businesses will not This provision applies, but the Supreme People’s Court’s change in the upper limit policy of the judicial protection of private lending interest rates may also have an impact on the customer groups of financial institutions, the interest rate range, and the scale of financial institutions’ credit business, which in turn will affect the company and its development. Related business cooperation has a negative impact.
In addition, JD.com said that some of its subsidiaries are engaged in self-operated financial services, which may also be affected in terms of business pricing and business models.
On November 2, the China Banking and Insurance Regulatory Commission and the People’s Bank of China issued the “Interim Measures for the Administration of Online Microfinance Business (Draft for Solicitation of Comments)” (hereinafter referred to as the “Measures”), requiring online microfinance to conduct joint loan business with no single capital contribution ratio. Less than 30%, which limits the loan scale that online small loan companies can enlarge through joint loans.
Su Xiaorui, a senior researcher at the Sack Research Institute, previously pointed out that the restriction on the proportion of investment has a major lethal effect, and has imposed strong restrictions on the behavior of some large technology companies to leverage their own capital to expand the scale of joint loans with a small proportion of their own capital.
On January 15, the China Banking Regulatory Commission’s website announced that the General Office of the China Banking Regulatory Commission and the General Office of the People’s Bank of China have recently jointly issued the "Notice on Regulating Commercial Banks to Conduct Personal Deposit Business Through the Internet" (hereinafter referred to as the "Notice"). Commercial banks conduct deposit business through the Internet in compliance with laws and regulations, and must not use the Internet or other means to violate or circumvent regulatory regulations, and commercial banks must not conduct fixed deposits and fixed-activity deposits through non-self-operated online platforms.
Previously, on December 20, JD Digits stated that the JD Finance APP had stopped adding new online deposit products, stopped new users from purchasing related products, and had made steady and orderly adjustments to existing customers and businesses.
"For these Internet platforms, they have been blocked in terms of traffic monetization," said Chen Wen, director of the Digital Economy Research Center of the School of Finance, Southwest University of Finance and Economics.
However, some practitioners in the mutual gold industry said that the profit margin of the Internet deposit business is not the highest for these platforms, nor is it their main source of profit. After the Internet deposit products protected by the deposit insurance system are removed from the shelves, Indeed, there may be a slight drop in operating profits, but it is not particularly fatal.
Included in Jingdong Technology Group
Nowadays, under the environment of stricter financial technology supervision, JD Digital is trying to further downplay the financial attributes.
On December 21, 2020, the reporter learned from JD.com that, upon the proposal of JD.com’s management, it was proposed to be approved by JD’s board of directors: Chen Shengqiang, JD’s CEO, was appointed as JD’s vice chairman and chief of staff of JD’s. Li Yayun, Chief Compliance Officer of JD.com, is the CEO of JD Digital.
On December 30th, JD.com announced its plan to integrate its cloud and AI businesses into JD Digital to achieve integrated collaboration in the technology sector.
On January 11, JD.com announced that it would integrate its cloud and AI business with JD.com, and formally established JD.com Technology Subgroup (JD.com for short). Former JD.com CEO Li Yayun will become the CEO of JD.com.
JD.com stated that JD.com is positioned as a digital partner and is committed to providing products and technical solutions to customers such as enterprises, financial institutions, and governments.
JD Technology Group has more than 10,000 employees, more than 70% of whom are R&D and professionals.
According to reports, Jingdong Technology will become the starting point for the entire Jingdong to provide technical services to the outside world.
The Paper, News Reporter Ye Yinghe