China Rapid Finance targets 3 million new users by year’s end
China Rapid Finance has set an ambitious target of rapidly growing its user base, targeting those whose credit demands are not met by traditional banks
China Rapid Finance (CRF), the Chinese financial technology business that recently listed in New York, expects to add up to 3 million users on its lending platform this year despite the government’s push to tighten restrictions on the burgeoning online lending sector.
One of the mainland’s largest online consumer lending platform in terms of number of loans transacted, CRF raised US$69 million on the New York Stock Exchange in late April, putting it on a fast track to tap the mainland’s underdeveloped consumer finance businesses.
An additional 3 million consumers will likely secure credit on its platform in 2017, more than triple the number at the end of last year, according to Kerry Shen Junqing, chief financial officer of CRF.
In the first quarter of this year, the company attracted 545,000 new borrowers who obtained credit ranging from 500 yuan to 6,000 yuan (US$73.50 to US$882.50) per transaction.
The proceeds from the New York listing will be utilised to help CRF acquire more mainland customers whose credit demands have yet to be met by the country’s banking system.
In recent times, Chinese authorities have stepped-up monitoring of online lending platforms. These include new rules that require the appointment of custodian banks to oversee clients’ deposits and full disclosure of information about their operations.
“We believe the rules and regulations are well founded,” said Zane Wang Zhengyu, founder and chief executive of CRF. “The rules aimed at safeguarding the interest of both borrowers and lenders are in line with our growth strategy which is to make loans affordable to people underserved by the existing financial system.”
During the past three years, dozens of scams have arisen in the online lending sector, known as the peer-to-peer (P2P) lending business, resulting in losses of more than 100 billion yuan.
In a typical case, the unscrupulous P2P operators collected deposits from thousands of individuals before re-lending the money to cash-hungry businesses such as developers at a lofty interest rate.
“CRF stresses the importance of repeated loans by clients, and our model is similar to the credit-card business,” said Wang. “Borrowers are charged reasonable rates while lenders rake in satisfactory returns with the frequent use of their money.”
Last year, more than 6 million loans were facilitated on the CRF platform.
In the first quarter, 4 million lending deals were conducted on the platform.
As a matchmaker for borrowers and lenders, CRF charges a service fee of between 1 to 2 per cent on each transaction.