Study On The Impacts Of Third-party Payment Platform On Commercial Banks And Corresponding Solutions

With the rapid development of Internet technology in China in recent years,a large number of Internet enterprises,such as Baidu,Alibaba,and Tencent(the“BAT”),have being growing up very quickly.In particular,third-party payment platforms,such as Alipay,Yu’e Bao,Tenpay,etc.,are even launching the change of market pattern in China’s payment business.Mobile and online payment already takes major market share in current payment industry in China,heavily impacting business development of those traditional commercial banks.The innovation of third-party payment platform has certainly brought up significant prosperity as long as great opportunities to financial industry.Meanwhile,the original regulatory rules and risk management system in financial industry are facing inevitable challenges and consequent necessity of revolution.Hence,under this background,it is worth for us to study and analyze the following issues: business model and potential risk of the current third-party payment products;impacts and challenges to commercial banks;and corresponding solutions.This study begins with a retrospective review of relevant study works both at home and abroad by adopting literature research methodology.We review the concept and history regarding Internet finance industry and the third-party payment business,along with their influence and impact on commercial banks,and then summarize the current research findings about developing strategy of commercial banks under the background of Internet finance.This paper then elaborates the development history and current situation of the third-party payment platform both at home and abroad.Taking Alipay,Tenpay and 99 bill as the representative examples in the third-party payment industry,we illustrate the characteristics,operation process and market share of these products,then conclude their advantages compared with traditional payment products of commercial banks.We also analyze the challenges and impacts resulted from the third-party payment platforms on commercial bank businesses,especially on the aspects of on-balance sheet business,off-balance sheet business,investment activities,and bank clients,etc.Next,this paper takes Industrial and Commercial Bank of China(“ICBC”)as the example of traditional commercial banks,illustrating its representative payment & settlement products.On such basis,we generalize the operating process and product model of banks,and come up with a conclusion that there are three payment models of commercial banks,i.e.,direct payment,escrowed payment,and guarantee payment.With the method of SWOT analysis,we then discuss in detail the strength,weakness,opportunity and threat that commercial banks possess compared with the third-party payment platform.In conclusion,this paper proposes to commercial banks the corresponding developing strategies against the impact from the third-party payment platform,and further goes on to present five concrete suggestions which include creating multi-bank payment platform,integrating payment and financing system,enlarging corporate payment business,developing online-offline integrated platform for financial services,and expanding mobile payment business,respectively.We believe the above mentioned five suggestions have strong practical significance for they all originate from accordingly analysis on the actual status of current commercial banks.