1. Internet finance has changed the way of value creation and value realization of commercial banks \xd\ In recent ten years, China commercial banks have achieved sustained, rapid and stable development, with an average annual compound growth rate of total assets and total liabilities of nearly 2%. But so far, the development mode and profit mode of commercial banks are basically the traditional extensive growth mode of "emphasizing investment but neglecting benefit, quantity and quality, scale and structure, speed and management", and the intensive management with the connotation of "one high, two low and three excellent" has a long way to go. At present, the spread is still the main source of income for commercial banks in China. In 211, although the proportion of non-interest income in China's banking industry has increased, it only accounted for 19.3%. From the traditional way of value creation and realization of commercial banks, because their customers are mainly large enterprise customers and high-end retail customers with stable demand for loans, safety, stability, low cost and low risk are the basic demands of customers. The value creation and realization of banks mainly provide customers with safe, stable, low-cost and low-risk financial products and services with their professional technology, complex knowledge and cumbersome processes. \xd\ Under the Internet finance mode, the types of target customers have changed, their consumption habits and patterns are different, and their value demand industry has undergone a fundamental change, which has completely subverted the traditional way of value creation and value realization of commercial banks. Market participants are more popular, and small and medium-sized enterprises, entrepreneurs and the general public can participate in various financial transactions through the Internet. Financial products or service providers are emerging financial institutions that focus on providing customers with fast and low-cost services, and their social division of labor and specialization have been greatly diluted. Customers are mainly small and medium-sized enterprise customers and young consumers who pursue diversified, differentiated and personalized services. Convenience, speed, participation and experience are the basic demands of customers. \xd\ The competitive basis of Internet financial institutions is network technology, information technology and data processing technology, and the business processes such as demand response, term matching, risk pricing and management are greatly simplified. Under the Internet finance mode, the products and services provided by financial institutions to customers are modular asset portfolios in data analysis, and the advantages of financial products based on intensive knowledge and complex technology provided by traditional commercial banks have been weakened. According to the theory of destructive innovation, Internet finance has changed the competitive foundation of traditional commercial banks from safety, stability, low cost and low risk to speed, convenience and experience, and then destroyed the core business of banks from the bottom of the pyramid. \xd\2. Internet finance leads to the marginalization of the payment function of commercial banks \xd\ The payment mode under the Internet finance mode is based on mobile payment, which transfers the monetary value through mobile communication equipment and wireless communication technology to pay off the creditor's rights and debts. Internet finance further accelerates financial disintermediation, marginalizes the payment intermediary function of commercial banks and replaces their intermediary business. For example, Alipay, Tenpay, yeepay and Express have been able to provide customers with settlement and payment services such as collection and payment, automatic account distribution, transfer and remittance, air and train ticket purchasing, electricity and insurance payment, which have formed obvious substitution effects for commercial banks. \xd\ Up to now, the central bank has issued payment business licenses to 197 third-party payment enterprises in five batches, including Internet giants such as Alibaba, Tencent, Shanda, Baidu and Ebay. At present, the business scope of third-party payment has covered mobile phone and fixed phone payment, bank card payment, currency exchange, prepaid card issuance and acceptance, Internet payment, digital TV payment, etc. The services provided have penetrated from simple payment and settlement to providing industry solutions for the entire industrial chain, and the regional scope has broken through Beijing, Shanghai and coastal areas and expanded to Henan, Shanxi, Sichuan, Chongqing, Inner Mongolia, Heilongjiang and other central and western regions. \xd\ With the development of Internet and e-commerce, the transaction volume, virtual currency issuance and circulation of Internet third-party payment platforms in China are increasing, involving more and more users, and third-party payment has become a huge industry. According to the data of Analysys think tank, the annual transaction volume of the third-party Internet payment market in China reached 2.16 trillion yuan in 211, an increase of 99% compared with 21. Although it is far from the business processing amount of nearly 2 trillion yuan in the national payment system in that year, the third-party payment organization has extended its hand to the core business of banks and laid a dominant position in the field of electronic payment. Industry insiders predict that its transaction volume will usher in explosive growth in the next few years, and its business proportion will continue to increase. \xd\3. Reconstructing the existing financing pattern by Internet finance \xd\ Under the Internet finance mode, the Internet finance search platform provides a market for both the fund supply and demand sides to find opportunities, and at the same time, modern information technology greatly reduces the information asymmetry and transaction cost, so that both parties can basically understand each other's information, and the fund intermediary will no longer be needed, but will be replaced by the fund information intermediary. \xd\ For example, Zopa, the world's first personal loan company established in March 25, has acted as an information intermediary in the process of capital lending: on the Zopa website, the lender can list the loan amount, interest rate and the time when he wants to lend money; Borrowers can freely find their own loan products without intermediary, and the loan interest rate reached by both borrowers and borrowers mainly depends on the degree of risk preference of lenders. Risk-preference lenders will pursue higher interest rates, while risk-averse lenders will set lower interest rates to avoid related risks. Similarly, domestic Rong 36 is also committed to providing customers with professional financing loan search services to realize direct docking between users and business personnel, so that users can obtain more cost-effective financing loan products through search. \xd\ It should be emphasized that Internet finance has unique advantages in serving small and medium-sized enterprises' financing and personal consumption loans, including simple loan approval process, fast lending speed and various product types. For example, Ali Credit, which focuses on financing services for small and micro enterprises, has a Taobao merchant loan process that includes: 3 minutes for application, no manual approval, and 1 second for payment. In recent years, the development of Internet finance has been extremely rapid. Since its establishment in 21, Ali Finance has provided financing services for more than 13, small and medium-sized enterprises, with a total loan of 28 billion. In the first half of 212, 13 billion loans were issued, and 4, new enterprises were granted loans, with a non-performing loan ratio of only .72%. \xd\ It is also reported that some experts even predicted that "if Alibaba gets a banking license, it will not be a problem to surpass Minsheng Bank within three years!" . Therefore, the Internet financial model can not only achieve the same resource allocation efficiency as direct financing and indirect financing, but also greatly reduce transaction costs. Xie Ping, deputy general manager of China Investment Corporation, pointed out that after 2 years, the "Internet direct financing market" or "Internet financial model" may form a third financial operation mechanism which is different from indirect financing of commercial banks and direct financing of capital market. \xd\4. Internet finance challenges the traditional financial intermediation theory of commercial banks \xd\Mishkin(1995) points out that there are two main reasons for the existence of financial intermediation: first, financial intermediation has economies of scale and specialized technology, which can reduce the transaction cost of financing; Second, financial intermediaries have special information processing ability, which can alleviate the information asymmetry between savers and financiers and the adverse selection and moral hazard problems caused by it. Therefore, capital intermediary and information intermediary are the two most basic functions of commercial banks as financial intermediaries, and sharing risks and providing liquidity and information have also become the most important services of banks. The emergence and rise of Internet finance has posed a strong challenge to the traditional financial intermediation theory of commercial banks, which can be analyzed from three aspects: \xd\ First, Internet finance reduces market transaction costs. Although direct financing by banks and indirect financing by stock and bond markets play an important role in promoting resource allocation and economic growth, they also generate great market transaction costs, including loan information collection costs, signing contracts between banks and customers, customer credit rating evaluation costs, post-loan risk management costs and bad debt treatment costs. This can be reflected in the high profits of banks and brokers. For example, according to the report of the third quarter of 212, the net profit of 2471 listed companies from January to September was 1.49 trillion yuan, of which 16 listed banks reached 812.767 billion yuan, accounting for 54.5%. \xd\ Under the Internet financial mode, the operation of the fund supply and demand side depends entirely on the Internet and mobile communication network for communication, and multi-party transactions can be realized at the same time. The evaluation of customer credit rating and risk management are also mainly completed through data analysis, and the cost of information collection, credit rating evaluation of both borrowers and lenders, bilateral signing costs and post-loan risk management costs are extremely small. \xd\ Secondly, Internet finance reduces information asymmetry. Information asymmetry is one of the important foundations of commercial banks. Under the internet financial model, the information communication between the two parties is sufficient, the transaction is transparent, the pricing is completely market-oriented, and the risk management and trust rating are completely digital. For example, a Shanghai customer needs to apply for a consumer loan with a loan term of 12 months and an amount of 1, yuan. When financing through Rong 36 professional loan search platform, he can choose from 27 loan products provided by 1 commercial banks and 9 non-bank financial institutions, and each product has unique product characteristics. \xd\ For another example, when the Zopa platform undertakes the intermediary function of capital lending, it will first make a risk rating for the borrower based on the credit score of Equifax credit rating agency; Secondly, enter the borrower's family situation, loan purpose, loan amount, the highest loan interest rate and credit rating, and arrange it to enter the corresponding market segment; Finally, the lender with a specific credit rating refers to the borrower's credit rating and combines the loan term to participate in the bidding at its own loan interest rate, and the one with the lowest interest rate wins. \xd\ Third, Internet finance accelerates financial disintermediation. The emergence and rise of a large number of third-party payment institutions in Internet finance has greatly accelerated financial disintermediation. In the traditional payment industry chain, e-commerce, third-party payment companies and banks play their respective roles: e-commerce provides users with an online trading platform; Third-party payment establishes a gateway service platform to realize online payment among consumers, merchants and financial institutions, and provide cash flow and capital settlement services; Banks are the providers of final fund settlement services. \xd\ However, with the development of third-party payment institutions, they are not satisfied with being only a gateway payment platform for banks, but begin to directly expand into supply chain financing, credit financing for small and micro enterprises and other fields with the advantages of data accumulation and mining. Although the proportion of credit business derived from third-party payment in Internet finance is still relatively small at present, it has become an important direction for the strategic and business transformation of commercial banks because it provides a direct channel for both borrowers and borrowers.