China Rapid Finance to triple number of users on its consumer lending platform
Firm committed to grow lending business in accordance with Chinese regulations, says founder
China Rapid Finance (CRF), the mainland’s largest online consumer lending platform in terms of the number of loans transacted, is looking to triple the number of users this year as it looks to create a business on par with a major commercial bank’s credit-card division.
Zane Wang Zhengyu, founder and chief executive of CRF, told the South China Morning Post that the company would be impervious to the challenges facing other peer-to-peer (P2P) operators on the mainland, and would continue to bolster its online consumer lending businesses in accordance with Beijing’s financial reforms.
“We have been trying to nurture the growth of the online consumer lending business in China,” he said. “High frequency of small-loan borrowings is the key to our success.”
CRF, founded in 2010, has 1.2 million borrowers on its platform at present. Wang , however, has set his sights high and wants the firm to have about 3 million borrowers.
CRF would also continue to augment its capital resources and recently bolstered its finances with a US$70 million funding from a clutch of investors including China United SME Guarantee Corp, known as Sino Guarantee, and Broadline Capital, he added.
On the mainland, a commercial bank’s credit-card unit normally has 8 million to 10 million cardholders more than half of whom would repay the loans before the credit holiday expires, crimping interest income for credit card issuers.
“We expect our platform to grow to 10 million borrowers in two to three years so that we can become a giant online consumer lending platform,” Wang said. “Our business model will be an ideal example of how China’s financial reforms can benefit the masses.”
About 70 million start-ups and 270 million blue-collar workers are not adequately served by the country’s banking system, and often find their requests for business loans and credit cards rejected, according to Ping An Puhui, the micro-credit unit of Ping An Insurance.
Chinese policymakers are looking to revamp the country’s financial system by promoting wider and better use of internet technologies to offer small loans to needy people and firms.
A series of scandals involving fraud and collapses of P2P platforms, however, prompted the regulators to step up policing of the sector.
P2P companies will have to appoint a commercial bank as a custodian to clear a regulatory review procedure in the coming months, a move that is likely to force hundreds of players into liquidation.
In a typical case, a P2P operator collects a large sum of funds from the lenders before granting multi-million-yuan loans to developers or manufactures at a lofty interest rates, hugely distorting the definition of peer-to-peer lending.
On the CRF platform, a matchmaker for borrower and lenders, loans valued at between several hundred yuan and 100,000 yuan (HK$112,021) are extended to borrowers to support their purchase of consumer goods. CRF charges a service fee ranging from 5 to 10 yuan per transaction.
Last year, more than 6 million loans were facilitated on the CRF platform. Wang expects transactions to cross 30 million this year.
“Loans can’t be just a one-off deal,” he said. “As borrowers’ demand for credit continues to rise, a healthy business with sufficient risk-management is needed to serve the 500 million mainland residents.”
CRF currently sports a tag of “unicorn” - unlisted technology firms valued at more than US$1 billion.
The founder wouldn’t disclose details of its further financing plans including the potential listing venue and the targeted fund size in the next round of fund-raising.
Wang, 60, who worked as a senior financial analyst and senior manager at big consumer-credit companies in the US, returned to the mainland in 2001 to help the domestic credit-assessment sector.