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What is the impact of overnight internet deposits on banks, platforms and investors?
Author: Duchuan
[ 通过平台销售的存款产品，全部为个人定期存款，以3年、5年期为主，3年期利率最高为4.125%，5年期最高为4.875%，均已接近或达到全国自律定价机制上限。 ]
In recent days, popular Internet depository products have been removed from the shelves of major Internet platforms one after another, which the market sees as a further rectification of the Internet financial chaos by the central bank.
In the last two years, many banks have launched deposit products on Internet financial platforms to increase the demand for deposits and expand customer acquisition channels, but the corresponding risks have also raised the vigilance of regulatory authorities.
In two public speeches in November and December, Sun Tianqi, director of the Financial Stability Office of the People’s Bank of China, mentioned the risks of Internet deposits. On November 7, Sun Tianqi revealed that the total of 11 banks currently displayed on the main platform involved more than 50 banks with deposits for sale, most of which were small and medium banks. The single account deposit amount is mostly less than 500,000 yuan (inclusive). “Some small and medium-sized banks opened the Internet platform deposit business in April this year. They have absorbed more than 20 billion yuan in deposits in just a few months, and the share of their deposits has rapidly increased to 25%. A bank has absorbed the total of deposits through the Internet platform. It even represents 70% of its deposits. “
Regarding this round of phase-out of the related depository products platform, CBN reporters learned that most of them were “active” shares of Internet platforms, and the platform has yet to receive regulatory guidance or notices. from regulatory authorities.
At the same time, all parties are paying attention to the impact the product will have on banks, investors and third-party internet platforms.
All products are removed
At press time, Internet financial platforms such as Alipay, Tencent Licaitong, Duxiaoman Finance, JD Finance, Lufax, Didi Finance, and Ctrip Finance APP have removed all depository products from the Internet.
In reality, the model for issuing depository products over the Internet is not complicated. Banks sell deposit products through third-party Internet financial platforms. Banks provide products and services. The platform provides information viewing and purchasing interfaces for deposit products (the relationship between creditor rights and debts is between depositors and banks).
The deposit products sold through the platform are all personal time deposits, mainly with maturities of 3 and 5 years. The highest interest rate for the 3-year maturity is 4.125% and the highest for the 5-year maturity is 4.875%, which are close to or reach the upper limit of the national self-regulatory pricing mechanism. . Almost half of the products have an initial deposit of only RMB 50 and can be withdrawn at any time in advance.
In terms of the types of banks displayed on the platform, most of them are small and medium-sized banks, for example, BeijingZhongguancunBank, China Development Bank, Huatong Bank, Huarui Bank, Jincheng Bank, Yingkou Coastal Bank, etc.
Some days ago,Group of antsIn accordance with the regulatory requirements for the internet deposit industry, Ant is currently taking the initiative to remove all internet deposit products on the platform, which are only visible to users who have purchased the product, and users who have the product are not affected.
Since then, many Internet platforms such as JD.com and Baidu have successively removed all depository products from the Internet.
Breaking geographical restrictions, altering the market mechanism of deposit interest rates, increasing the cost of debt and increasing risks on the asset side have become the rationale for this round of online deposit rectification .
For example, most Internet platforms showcase the deposit products of various banks with high and low interest rates. High interest rates occupy the first place, which generates differences in traffic and intensifies the behavior of interbank bidding for deposits.
Everbright ValuesWang Yifeng, the Institute’s chief banking analyst, said the tender model has raised the costs of debt for many small and medium-sized banks, forcing them to develop high-risk businesses. In addition to liquidity risks, pressure of credit risk has also increased to some extent.
In addition, this business has also overcome the geographical restrictions of the points of sale, and some small and medium banks have achieved trans-regional operations. In the previous speech, Sun Tianqi listed a number of problems with deposits on Internet platforms.
For example, some sub-prime banks use seemingly stable and unstable sources of funding to maintain their high-risk asset operations, further compounding their own risks. At the same time, the interregional nature of the platform’s deposits has increased the contagion effects of risk and has increased the difficulty of disposal; Furthermore, some small and medium banks charge deposits on Internet platforms at high interest rates and pay “diversion fees” to the platform, further increasing their liabilities. This will stimulate banks to seek high-yielding assets and invest funds in high-risk areas. In the long term, the asset quality of small and medium-sized banks that rely heavily on Internet platform deposits will also face tests, etc.
Small and medium banks have changed their liabilities
In fact, the development of deposit products on Internet platforms by some small and medium-sized banks has compensated for the problem of insufficient deposits. From a data point of view, after absorbing deposits through the Internet platform, the deposit scale of some small and medium banks has increased rapidly and the deposit scale of some of the aforementioned small and medium banks has shot up.
A China Business News reporter found that at the end of 2019, Huatong Bank’s customer deposit scale was about 7.077 billion yuan, while its customer deposits at the end of 2018 were only 1.43 billion yuan; Huarui Bank’s personal time savings deposit balance at the end of 2019 was about 60.61.1 billion yuan, only 88.313 million yuan in 2018.
However, increasing the scale of deposits will also bring corresponding risks. Sun Tianqi noted that small and medium-sized banks will inevitably seek high-yield assets and match high-risk projects, leading to higher risk on the asset side.
“Because the cost is too high, only a small number of banks with relatively weak customer bases, fewer branches and the drive to develop rapidly will use this method,” said Zeng Gang, deputy director of the National Finance and Development Laboratory. In the long term, excessive reliance on online deposits is not conducive to the development of banks. In the short term, rapid scale expansion through this method will lead to higher capital costs and high risk of asset preference, which is not conducive to the stable operation of banks.
Additionally, Internet platforms have high sensitivity to deposit interest rates, low client rigidity, and much lower deposit stability than offline establishments.
“The client recognizes the platform, not the bank, which means that if other banks have higher returns on this platform, the deposits can be transferred to other banks. Therefore, this type of deposit does not have savings deposits like central deposits. Zeng Gang said that the short-term expansion of online deposits actually accumulates many liquidity risks. If a large-scale deposit relocation occurs on the Internet, it can affect the bank’s long-term stability.
It is a big problem that the asset side cannot be reversed
At present, the removal of depository products from the Internet has little effect on ordinary users who have already handled related services and can still operate according to the normal process. However, users who have not handled the related services can no longer use those services.
From the perspective of the cooperation model, some small and medium banks collect deposits on the Internet platform at high interest rates and pay a “diversion fee” to the platform. Generally, banks pay the platform based on two to three thousandths of the platform’s average daily deposit balance. Rates are settled monthly or quarterly.
After the elimination of deposit products from the Internet, what impact will it have on small and medium-sized banks and relevant Internet platforms?
In general, although the deposit products launched by Internet financial platforms have made it easier for consumers to enjoy deposit services, Internet deposits are not a model for sustainable development. The rigidity of the clients that these products bring to the banks is not high, although in the short term the strengthening of supervision will restrict the development of these banks, in the long term it is conducive to the stable and sustainable operation of the banks.
Wang Yifeng believes that Internet depository products exist as a third-party platform product system. After the third-party platform is removed, there will be no longer-term products on the third-party platform, which will have some impact on the wealth of product shelves. However, customer stickiness has not disappeared and third-party platforms may not be too affected; In the case of individual banks, banks with low market recognition and weak customer base systems will be really hit hard and their speed of development will slow down, but they may Reducing the bank’s own operational risks will help to control the cost of liabilities, stabilize funds and reduce liquidity risks.
Zeng Gang suggested that these small and medium-sized banks should correct their development concepts and explore long-term sustainable growth pathways within the existing financial framework. They should reduce their preference for scale and consolidate their customer base, and improve their overall income through diversified services. , Improve customer adherence.
“At present, some banks have high interest rates for deposits, but whether the asset side can be used is a big problem. If the asset side does not have a corresponding good return, it will have a negative impact on the bank profitability. In fact, most small and medium-sized Banks cannot invest if they have a lot of money. Some banks have begun to actively downscale medium and long-term deposits, “Zeng Gang said.
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Editor in charge: Qi Qiqi
