Peer-to-Peer Lending in China – A success story?

Person who wrote the post admin Mar 09, 2018
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At the China-Swiss Fintech Forum in Zurich, Crowd4Cash had the opportunity to listen to Carl Yeung’s presentation of CFO of the second-largest peer-to-peer platform in China called Qudian. This platform is listed on the Nasdaq with over $ 5.3 billion in stock market capitalization. The Chinese market, with 1.4 billion potential customers, seems to be an optimal place for Peer-to-Peer Lending. But already the number of credit card owners is a little lower at 200 million. Considering that the working-class of more than 600 million people in China earns less than $ 600 a month, this is not particularly surprising.

The triumph of Peer-to-Peer Lending
Why could they enforce the peer-to-peer lending platforms in the Middle Kingdom against a strong and diverse banking system? The key for success is the efficiency and development of new customer groups. While it is not worthwhile for Chinese banks to lend out more than 100 – 150 USD, the Fintech companies can use a high level of efficiency and innovative business models to make loans cheap. For example Qudian costs less than $ 2 to generate and run a loan on average.

Banks and Fintechs
The peer-to-peer companies and banks in China are co-existing next to each other. To add peer-to-peer companies to the existing system will allow access to credits for a broad segment of the population in China. This leads to an expansion of the credit amount and thus not to a displacement of one of the two models.

Peer-to-peer lending is an important part of Chinese FinTech (R)evolution. The fintechs in China are very innovative and have a big advantage with the home market of 1.4 billion people. Therefore, it is not surprising that the majority of the 10 most valuable Fintech companies are from China. FinTech in China: definitely a success story!