Boao Forum for Asia

Lufax plans online platform as part of transformation from P2P to wealth management company

PUBLISHED : Thursday, 23 March, 2017, 3:39pm
UPDATED : Thursday, 23 March, 2017, 10:38pm

Lufax, China’s biggest peer-to-peer (P2P) lender backed by Ping An Insurance, is planning to set up a platform to facilitate global asset allocation for middle income earners in Asia and Chinese investors.

The Singapore-based platform will be launched this year, according to Lufax chief executive Gregory Gibb.

“We target Chinese who have already had an account oversees or have already invested overseas,” Gibb told the South China Morning Post on the sidelines of the Boao Forum.

The company will also target middle class Asian investors in countries such as India and Indonesia, who want to invest internationally with smaller amounts down to US$10,000.

Gibb sees these investors as a big potential growth market. “If you look at the US today, about 20 per cent of the money is invested outside [of the country]. Twenty-five years ago, it was 5 per cent. China today may be 3-5 per cent, but in the next five to 10 years, it could become 20 per cent and that will become a huge opportunity,” Gibb said. “ We want to be in the position to serve that demand.”

The expansion comes as Lufax, originally established as a P2P platform five years ago, aims to transform itself into the largest wealth tech company in China.

Gibb said there are a number of areas to tap under financial technology (fintech), including wealth, credit, payments, insurance, and regulatory tech.

Ping An sees internet business as key to future growth

“Credit tech and wealth tech are our spaces,” said Gibb.

JP Morgan estimates fintech will become a 460 billion yuan (US$66.8 billion) revenue market in China by 2020, a 44 per cent CAGR from 2016.

The core competencies of fintech are data collection and product distribution, JP Morgan said in a report released on March 14.

Lufax provides a platform for customers and third party financial service providers. Customers receive real time investment recommendations based on factors such as their investment choices over the past six to 12 months and how the market is changing, Gibb said.

“Traditionally, you may need to go to a [bank’s] branch, someone brings you all the brochures and contracts and talks to you for 30 minutes,” he said.

We target Chinese who have already had an account oversees or have already invested overseas
Lufax chief executive Gregory Gibb

The challenge for Lufax is how to communicate with customers using standardised information and tell them of investment risks and opportunities via a mobile phone screen – all in 30 seconds to one minute.

“It’s hard,” said Gibb, who added that it made the company spend a lot of time last year on capital market products such as bonds, equities and hedge funds.

Lufax was valued at US$18.5 billion in a January fundraising and is in talks with four investment banks – JP Morgan, Citigroup, Citic Securities and Morgan Stanley – for a planned initial public offering in Hong Kong.

Gibb declined to comment specifically on the IPO but sees a potential public listing as helping the company’s business expand in the future. “In the long term it’s a good thing,” he said.