The Trend of Internet and E-commerce Development and their Impact on Financial Industry and Responding Strategy 

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Abstract:

The purpose of this project is twofolds. First, to explore the development trend of internet and e-commerce, as well as to summarize the views of various sectors. Second, to propose strategies for government and financial sector to respond to the new trend. Therefore, private sector can create more business opportunities, and at the same time, operate under reasonable risk management and control. The internet development has several impacts on traditional finance industry, which are as follows. First, personalized financial commodity and consumer finance will play more dominant position. Second, the diverse marketing channels can help banks to reach out more new customers. Third, the internet development has affected the traditional banking business model; under such circumstance, re-training personnel, restructuring organizations to create more value-added marketing and related functions are in urgent need. Fourth, internet banking transactions is able to reduce operating costs of the financial sector. Fifth, internet finance may bring down customer loyalty and physical banking branches. In addition to the above influence, the growing popularity of cheaper bandwidth, more powerful smart phones and other portable devices, combined with the massive cloud technology and data analysis capabilities, internet finance will also change the future interactive model between financial industry and consumers. The potential impacts include: First, the big data, cloud computing, broadband transmission and internet spawned a new financial model, changing the bank and customer contact mode. Second, the internet technology and financial business has great need for deep integration, including electronic banking, electronic payments, third party payments, online loans, etc. Therefore, it should be better progressed and planned. Third, customer-centric service philosophy, should be implemented in internet finance. Fourth, in addition to financial risks brought by internet (such as: market, credit and liquidity risk, etc.), technological innovation (such as: big data, cloud computing) triggered by risk management and supervision issue, should also be closely watched by authority. Fifth, through the mobile network, big data, and cloud technology can thus generate business value. The third-party payment regulations is to ensure that the industry has ability to manage problems such as solvency, operational management, money laundering norms, special deposit accounts, the collection of funds, data retention and so forth. Comparing with United States, European Union and Japan, the capital registration amount for Taiwan is relatively higher; however, United States, European Union encourage innovation, coupled with high density regulations, supporting measures, so the capital requirements is relatively lower. Faced with the development of internet finance, third party payment, the reacting strategies of government and the financial industry can be summarized as follows: 1. The role of government First, to become the promoter of market development and transformation. Second, to establish the rules of game in internet finance. Third, to strengthen the transaction security and management practices. Fourth, to manage market by different categories. Fifth, to solve China’s internet blocking problems. Sixth, to establish smooth cross-strait financial cooperation mechanism. Seventh, money laundering, identity authentication and consumer protection are related issues should also be addressed government should address the issue. 2. The role of the financial industry First, to impose positive response to the trend of internet finance. Using bank advantages, combined with different areas of the industry, and opening up new business models, to grab the new business opportunities in the internet. Second, facing the existence of e-commerce, the banking sector should engage in more IT investment and use of social network to expand their business. Third, to build customer loyalty from a single account model, to integrate marketing by linking funds, futures, insurance, and industrial diversification. Fourth, to cooperate with shopping sites, social community platforms, to extend potential customers. Fifth, to build comprehensive information security system to protect consumers, so that consumers have confidence in internet shopping. Sixth, to use cross-border marketing of third party payment industry, or through their own platform to help Taiwan's agricultural products, organic products, specialty products, to enter the mainland China and Southeast Asian market.