Internet platform deposit business urgently needs to be regulated
Internet platform deposits are born with the development of Internet finance and platform economy, and are an attempt by banks to develop debt business.
The new business model of this type of traditional finance involves the public and deposits, and must be studied in depth, improved rules and systems, and strengthened supervision according to law.
Recently, after the regulatory authorities defined third-party Internet platform deposits as illegal financial activities of "driving without a license", many Internet financial platforms have removed related products.
The so-called Internet platform deposits refer to deposit products sold by banks through third-party Internet financial platforms. Products and services are provided by the bank. The platform provides information display and purchase interfaces for deposit products (the relationship between creditor's rights and debts is between the depositor and the bank).
The deposit products sold through the platform are all personal time deposits, mainly with 3-year and 5-year maturities. The highest interest rate for 3-year maturity is 4.125% and 5-year maturity is 4.875%, which are close to or reach the upper limit of the national self-regulatory pricing mechanism.
Nearly half of the products have an initial deposit of only RMB 50, and they can be withdrawn at any time in advance.
It is not difficult to find that such products have low thresholds, high returns, and convenient operation. They have become the choice of many financial consumers. They have also become an important means for some small and medium banks to absorb deposits and relieve liquidity pressure.
However, the Internet financial platform to carry out such financial services is a "drive without a license" and should be included in the scope of financial supervision.
First of all, the Internet platform itself does not have a financial license for related businesses, and is outside of financial supervision.
This model breaks through the geographical restrictions of local corporate banks, and some local banks can absorb deposits from across the country through the Internet financial platform.
From the perspective of liability business, it has become a national bank, which is deviated from the local market positioning of serving small, medium and micro enterprises. The scale of deposits absorbed by some banks through Internet platforms has exceeded their risk management capabilities.
This not only deviates from the business development positioning, but also brings challenges to the liquidity management of small and medium banks.
Secondly, some banks have increased the interest rate of deposit products on Internet platforms in disguise by shortening the interest payment cycle or issuing interest rate coupons and cash rewards, which directly reached the upper limit of the interest rate self-regulating pricing mechanism, disrupting the deposit interest rate market mechanism.
For example, a bank's 5-year time deposit product has an interest payment cycle every 3 months, with an interest rate as high as 4.1%, while the 3-month time deposit benchmark interest rate is only 1.1%.
Finally, some banks will inevitably pursue high-yield assets and match high-risk projects, leading to increased asset-side risks.
Some small and medium-sized banks collect deposits on Internet platforms at high interest rates and pay “diversion fees” to the platforms, which will further increase their debt-side funding costs, which will stimulate banks to seek high-yield assets and invest funds in high-risk areas.
In the long run, small and medium-sized banks that rely heavily on Internet platform deposits will also face challenges in their asset quality.
Internet platform deposits are born with the development of Internet finance and platform economy, and are an attempt by banks to develop debt business.
The new business model of this type of traditional finance involves the public and deposits, and must be studied in depth, improved rules and systems, and strengthened supervision according to law.
For example, clarify bank access qualifications and standards, study and promulgate relevant laws and regulations for high-risk banks' deposit-taking behavior, strictly regulate various behaviors involving financial products and services on digital platforms such as the Internet and APP, and improve deposit insurance payment rules to avoid financial Institutions abuse the legal reimbursement standards of deposit insurance and engage in capital price competition.
Under the premise of controllable risks, lowering the barriers to entry, promoting effective competition and stable financial innovation are the proper meanings of supervision.
It is necessary to balance the relationship between Internet financial supervision and financial technology innovation, tolerate reasonable innovation, lower market entry barriers, promote full and effective market competition, and provide financial consumers with more convenient, high-quality, and safe financial services.