i. Tightened regulations

China's securities regulator said on Friday that it would work with other agencies to issue a set of rules to govern the burgeoning Internet finance industry.

Despite being "generally supportive" of Internet finance, the China Securities Regulatory Commission said the nascent sector still needs proper regulation and guidance (more).

ii. Capital safety

As Internet finance relies on the Web, online personal information and safety will always be a concern. Adding to this worry is the fact that people's online accounts can be hacked via malicious viruses and their money stolen.

iii. Declining yields

Yields on all Internet financial products mentioned above are declining, narrowing their advantages over wealth management products offered by banks.