Internet financial product operation: four dimensions to analyze the inherent characteristics of financial users

This article is organized as follows:

• Redefine products and operations
• Analyze the inherent characteristics of financial users from four dimensions
• The definition of "user" in the context of Internet finance

This series consists of three articles, which will analyze from the perspectives of Internet financial user attributes, user life cycle management, and user behavior management. This article is the first one.

Redefine: Products and Operations

• Internet products: tools used by people in specific scenarios
• Internet operation : People use tools in scenarios according to set modes

In ancient times, Lu Ban, China's first product manager , provided the product "saw" to solve the problems of low logging efficiency and excessive physical exertion of lumberjacks. This product greatly improved production efficiency and the product's life cycle lasted for more than 2,000 years.

In modern times, with the help of the Internet, many excellent products have been produced:

• Baidu : By providing a search engine , it solves the problem of users quickly finding the required information in the absence of necessary information.
• Didi : By providing a taxi-hailing app, it solves the problem of users getting from point A to point B quickly in the absence of convenient transportation.

As an operator, the greatest success is to establish a one-to-one correspondence between user needs and your own products in a specific scenario:

• Baidu : When users have a search need, their inner thoughts are: "If you want to find information, search Baidu"
• Didi : When users have travel needs, their inner thoughts are: “I’m going out, I’ll take a Didi.”

Under this mindset, other search engines or taxi-hailing apps will have no chance of turning around. From this we can see that users are the fulcrum for leveraging products and scenarios, and are also the starting point for product development and operations - this is the so-called original intention.

Four dimensions of the intrinsic characteristics of financial users

1. The Poor-Rich Dimension

From the perspective of being rich or poor, we can easily divide the people around us into two categories: “poor people” and “rich people”. The services that finance provides to them are:

• Manage the wealth of the rich so that their money can grow
• Provide financing for people who are short of money, so that they can find the money they need

If we take "having money - having no money" as the horizontal axis and "borrowing - lending" as the vertical axis, we can divide it into four quadrants, and the financial behaviors of different types of users can fall into the corresponding quadrants:

Lend money from the rich to the poor

A typical case is charity . Whether it is Bill Gates or Buffett, they lend their money or even donate it free of charge to poor areas such as Africa to solve their problems of food, clothing, medical care, etc. In this process, what they seek is not financial returns, but the realization of life value or spiritual pursuit.

Since this model does not pursue capital appreciation, it is not within the scope of this article.

Lend money to the rich

Traditional financial institutions, such as private/public funds, trusts, securities asset management, fund special accounts, and other asset management institutions, are all included in this category. Taking trust as an example, the minimum purchase amount is usually 1 million. Only when the asset scale reaches this level, the user will be eligible to enter the market and obtain returns that exceed the market average.

Lend money to the rich

The most representative traditional financial institution is the bank. Many middle-aged and elderly people in China deposit their life income into banks, which then lend the funds to factories or real estate developers to expand their operations and obtain returns on their industrial assets. In this process, all excess profits belong to the banks, the returns to individual customers are very small, and the interest income is almost unable to resist inflation.

In the field of Internet finance, it is very typical to package and sell debt transfer products through SPV. The financial products purchased by individual customers are eventually transferred to real estate companies or other large institutions through the platform, helping the latter to realize capital appreciation. Since there is no intermediary role like a bank, channel costs are greatly reduced and the income of financial management users has increased by a certain percentage. But in the final analysis, compared with the companies that receive capital investment, these small investors can only be regarded as "poor people" in quotation marks.

Lend money to the poor

This category falls entirely within Internet finance, with the most typical example being P2P companies. Some college students want to buy a red iPhone 7 and some white-collar workers want to buy a house, so they send a request for borrowing money on the platform, and then other college students and white-collar workers lend them the money. P2P companies created this round of Internet finance myth by building such a platform to allow poor people to lend money to other poor people.

Another branch of this category is crowdfunding, which is "lending" money from the poor to other poor people, or "lending" money from the poor to "poor companies" ( startups ). Due to my limited knowledge of this field, I will not elaborate on it here.

2. Dimension of asset size of financial management users

From the perspective of traditional financial institutions (taking ICBC’s customer stratification principle as an example):

General customers (<50,000)

The financial services that banks provide to this group of customers are very basic deposits, loans and fund investments.

Financial management customers (50,000-500,000)

In this range, the services users receive have expanded from deposits, loans and funds to bank wealth management products. When financial management clients arrive at the bank, they can go into the financial management room and have a one-on-one conversation with the financial manager. They do not have to queue up in the bank lobby and enjoy convenience and comfort.

Wealth management clients (500,000-5 million)

Customers in this range enjoy services including financial consulting, trust, wealth planning, and asset management. In addition to one-on-one services, customers can also enjoy asset allocation advice and market change notifications from financial managers. Generally, each bank financial manager’s mobile phone address book contains about 150 customer information, and the first 20 or so of them belong to this type of customers.

Private banking customers (>5 million)

This group of customers enjoy the most advanced financial management services, such as loan financing, estate planning, real estate investment, global asset allocation, retirement and insurance planning, study abroad plans, etc. Financial managers provide customers with a full range of wealth management services

If we look at it from a simpler and more crude perspective, there are two more common dividing points: financial products and trusts .

Financial products

The minimum purchase threshold for bank wealth management products is 50,000 yuan. This cutting point divides customers into those with less than 50,000 yuan and those with more than 50,000 yuan. Those with less than 50,000 yuan can only make deposits and loans, and make small fund investments, which are outside the scope of the bank's traditional financial management services; those with more than 50,000 yuan have just stepped into the threshold of financial management services, and banks will provide more standardized services for these users.

Trust Products

The minimum purchase threshold for trust products is 1 million (the common standard, some may be lower), which divides financial management customers into low-end and mid-end customers and high-end customers. The so-called asset allocation and wealth management are aimed at this group of people.

At this point, we can see that the level of service enjoyed by customers of traditional financial institutions is closely related to the size of their assets.

Based on the above framework, we can observe the relationship between users and institutions providing financial services through the two dimensions of "price" and "number of users":

The figure above is a very typical power-law distribution curve. The head on the left is the living space of traditional financial institutions, which serve users with larger assets and stronger willingness to manage and invest. In the long-tail shadow part, users hold smaller amounts of assets, and their willingness and ability to manage finances are not particularly strong. Traditional financial institutions do not think highly of this part of users, but this happens to be the living space of Internet finance, and these are the users that Internet finance products and operations compete for.

3. Investor risk tolerance dimension

From the perspective of security, liquidity, and rate of return, users can be divided into the following three categories according to their risk tolerance:

Conservative : Safety > Liquidity > Yield

The investment goal of conservative users is to maintain investment stability and preserve the value of assets. The primary consideration for these people is safety, that is, not losing money; secondly, they want strong cash conversion capabilities, so they can take the money away whenever they want; as for the requirement for returns, generally it is best to have some, but none is also fine. In terms of demands, the goal before June 2013 was to outperform bank fixed deposit rates, and the basic goal now is to outperform Yu'e Bao.

The products purchased by such users are generally baby products or pension insurance plan products, such as "Ping An Huiying" in Ping An One Wallet. Its yield can outperform most money market funds, and its liquidity can be redeemed on T+1 day, so it is very popular among such users.

Stable type : yield = safety > liquidity

The investment goal of conservative users is to achieve asset appreciation while maintaining a balance between investment risk and asset appreciation. This group of people have the need to make money, but they want to make money without losing money. It can be said that they attach equal importance to returns and safety, and can tolerate poor liquidity to a certain extent.

The products they purchase generally include fixed-income products, with a basically fixed rate of return over a certain period of time and repayment of principal and interest upon maturity; there are also bond funds, Ant Financial 's Zhaocaibao, Lufax's Rainbow Plan, etc.

Active : Yield > Safety > Liquidity

The primary investment goal of active users is to obtain excess returns. They have a certain amount of spare money, so even if they suffer a relatively large loss, it will not affect their normal life.

In Internet finance, the products they purchase are generally stocks, mixed funds, stock funds and P2P products.

4. Do you understand? Do you want to understand the dimension?

The first three dimensions are user segmentation based on the user's objective situation, and the fourth dimension is segmentation based on the user's subjective perspective. Internet financial companies can find the quadrant that best suits their characteristics.

Don’t understand & don’t want to understand: Yu’ebao, Licaitong

This group of customers accounts for the largest proportion. They don't understand the market well enough, nor do they want to understand it. They only have the desire to make money, but are unwilling to pay any costs other than money. Their entry into the financial management market is generally triggered by other basic needs. For example, they enter WeChat or Alipay due to social and payment needs, and under the influence of the platform's operating strategies, various baby-type financial management functions with "yields that outperform bank deposits" are triggered. What they enjoy is just the convenient financial management service on the big platform, which is essentially no different from other services they get on the same platform: such as payment of water, electricity and gas bills, payment of phone bills, credit card repayments and so on.

Due to the advantage of huge user base of such platforms, more and more financial management users are converted . They become the first wave of users introduced into the scope of Internet financial management, complete the first round of market education, and cultivate the first batch of users of Internet finance. This enables other financial management platforms to carry out secondary development and secondary guidance for these users and convert these users into their own users. This is a very typical process of food chain evolution, from Yu'e Bao's "yield outperforming bank deposits" to other back-end platforms' "yield outperforming Yu'e Bao".

Don’t understand & want to understand : Tonghuashun Love Fund

The level of specialization of this group of users is not particularly high, but they are willing to improve their investment level through learning. The products targeting this group of users include "Tonghuashun Love Fund", Stock Investor School, K-line Xueba, etc. These products can provide users with basic investment education, market analysis, and investment strategies, etc., to help users gain a certain amount of growth space. This group of users still has a certain size. After all, in order to make money, some people are still able to overcome the laziness in their bodies.

Understand & Want to Understand (More) : Snowball, Egg Roll Fund

In the non-financial field, Zhihu is a typical platform that serves this type of people. In the field of finance and investment, the more typical ones are Snowball, and its later subsidiaries Egg Roll Fund and TradeHero.

On such platforms, there are some god-level users who share their analysis of financial products and markets, show off their investment portfolios, and attract fans to follow them. At the same time, many of these fans are top experts, and they learn and observe each other's market analysis and portfolio management methods.

Recently, many companies have slowly grown and developed in this quadrant, but the number of people in this quadrant is very small, and competing in such a small customer base, the companies have little room for imagination to gain returns.

Understand & Don’t Want to Understand : Wind Mobile Financial Terminal

The "I don't want to understand" here actually mainly means that this group of people do not need a platform to educate and guide them, they just want to quickly understand some simple information.

This group of users is the most professional in the market and is at the top of the pyramid . Their roles are often fund managers, researchers, etc. Their needs are concentrated on querying data, announcements, or managing their own investment portfolios. A typical product serving this group is the financial terminal of "Wind Information".

However, this market is relatively small, and the technical and professional thresholds are relatively high, which cannot accommodate too many competitors, so it can be seen that this market has not achieved vigorous development.

So, who are the users?

The above mentioned four classification methods for financial users. So, as practitioners of Internet finance, which method should we follow? This requires us to return to the word "user" itself.

Standard definition of "user"

• Surface meaning : XX people using XX product in XX scenario
• Intrinsic meaning : A set of XX requirements that are met in XX scenarios and by XX methods

For example, Didi Taxi , according to the superficial meaning, users are mobile phone users who use Didi Taxi when they need to travel.

If you follow this definition to develop products and operations, you will focus on the following two points:

1. Short-distance travel scenarios : commuting to work, going to the airport or train station, picking up children from school... the list is endless and cannot be exhausted
2. Mobile phone users : provide users with mobile apps, mobile phone registration, send SMS/ push coupons, etc. Do what other mobile apps do. When I saw the car icon in Uber turn into a boat on a rainy day, I wanted to copy it right away.

This is the typical behavior of the "product feature manager" and "product feature operation manager " that I mentioned in my previous article, who continuously add more and more features, and then add more operation strategies on top of these increasingly bloated features (OMG...).

If we look at it from the intrinsic meaning, the users of Didi Chuxing are a group of people who want to quickly reach another place through a convenient payment method when time is limited . By grasping these three points and continuously optimizing products and operations, you can get better returns. In addition to the money-spending activities during the market cultivation period, Didi's subsequent series of operational activities basically focused on these three points.

The definition of "user" in the context of Internet finance

• Financial users : The need to exchange value across time and space under uncertain conditions.
• Internet financial users: financial needs that arise in the "Internet + XX scenario". Internet financial users are essentially financial users, except that the initiation and response of user needs are all completed on the Internet.

From a purely financial perspective, user types can be divided into the following categories:

• Spend money today : Pay users - in the consumption scenario , use their own funds to meet the needs of spending money today
• Save/invest users - satisfy the need to spend money today tomorrow by giving up the current right to use funds in exchange for future returns.
• Want to spend tomorrow's money today : Credit/financing users - in consumption or investment scenarios , by providing future expected returns in exchange for the current right to use funds, the need to spend tomorrow's money today is met.

It should be noted here that user needs are not equal to the user, and user needs cannot be solidified into the user himself. The user's role may change at any time, which will lead to changes in user needs. The same user will have different financial life events , such as marriage, buying a house, having children, serious illness, retirement, death of spouse, divorce, etc. If users are solidified through user profiling or user segmentation, it is very likely to cause a mismatch between operational methods and actual user needs.

Therefore, we must always be in awe of our users and must admit that we do not really understand them. Only by accepting this premise can all user growth strategies make sense. As Michelangelo said, "...I saw in that block of rock a statue exactly like this one, so the work I did was minimal. I simply removed the excess from the stone, and Jesus and Mary were freed from their chains."

Michelangelo did not create the statue, and we did not create a great operating strategy. We just discovered the user's xx needs in xx scenarios, and helped them achieve them through the paths and tools we set.

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