Strict risk control key to survival for booming internet financing newcomers
Experts expect to see more traditional lenders being given the impetus to develop into the consumer financing segment, while the dedicated internet finance players are likely to be tamed and face tougher regulation
Regulatory conditions and tight risk controls hold the keys to the successful future of China’s burgeoning consumer financing industry, leading financiers have told a two-day forum in Shanghai.
China’s consumer finance sector is growing rapidly with people increasingly buying goods on credit, especially the tech-savvy younger generation, leading to the creation of more online lenders offering financing.
“The [government’s] regulatory stance is of decisive significance to the growth of consumer financing in China,” said Gao Qiao, general manager of consumer finance of Zhejiang Tailong Commercial Bank at the China Consumer Finance Development Conference, which wraps up on Friday.
Beijing has been playing up the idea of what it is calling “inclusive finance” – helping more people, especially rural residents and low-income workers, gain access to funds – in the hope that this could help spur economic activity by boosting rural consumer spending, and reduce poverty.
Yet the sizzling growth of internet-based lending is also being eclipsed by irregularities such as unreasonably high interest rates and problematic overdue loans, that triggered a regulatory clampdown on the sector earlier this year.
Gao said he expected regulators to push traditional commercial banks harder to improve their levels of consumer financing, while maintaining a watchful eye and tighter controls on internet consumer financing to keep its rampant growth in check.
