P2P boom has ended and will consolidate more - Sara Hsu

Sara Hsu

P2P lending used to be one of the darlings of the financial industry in China, but those days are over, describes financial analyst Sara Hsu in a thorough overview of the developments at SupChina. More consolidation of the industry is expected, she adds.

Sara Hsu:

In 2018, the growth of China’s peer-to-peer (P2P) lending sector dramatically reversed: 1,407 internet platforms that offered P2P lending services shut down due to increased regulation between July 2017 and June 2018. This year, the government has continued to lead a reorganization of the industry:

• More companies will die: As of February 17, only 60 percent of online lending institutions had disclosed their operational information for January 2019, including five problematic platforms.

• However, the current asset quality of the online lending industry has improved significantly according the data from firms that did report.

• As of the end of January 2019, the accumulated amount of the online P2P online loan industry was about 7.78 trillion yuan ($1.16 trillion). The total loan amount in January was 91.4 billion yuan ($13.61 billion), down 55.1 percent year-on-year and down 1.3 percent from the previous month.

• Further consolidation of industry players is certain. Some experts quoted in media reports predict that the scale of future online loans will continue to shrink because of regulation.

• Some listed companies, such as Aoma Electric and Panda Financial Companies, have abandoned their P2P businesses.

More at SupChina.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more financial analysts at the China Speakers Bureau? Do check out this list.  

What to expect in China's fintech industry? - Sara Hsu

Sara Hsu

Financial authorities have been cracking down on protest caused by financial scandals, especially in P2P lending. Financial analyst  Sara Hsu looks at her weblog at the expectations for China's fintech industry in the near future during a slowing economy.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more fintech experts at the China Speakers Bureau? Do check out this list. 

The good and the bad among P2P platforms - Sara Hsu

Sara Hsu

P2P service Yirendai tries to move up in the financial food chain by turning to wealth management. Most P2P platforms are not able to do so, says financial analyst Sara Hsu to the South China Morning Post. But Yirendai could be the exception, she adds.

The South China Morning Post:

“Most Chinese P2P companies are ill-equipped to expand into other financial services such as wealth management services,” said Sara Hsu associate professor at the State University of New York. 

“However Creditease and its subsidiary Yirendai are better positioned to expand into other areas since they have very carefully developed, strong risk control practises already in place,” said Hsu. 

“Similar to other large e-commerce players in China, such as Alibaba and Tencent, Creditease collects large amounts of data that it uses to analyse customer credit worthiness.” 

Of course, wealth management is quickly turning into one of the most competitive areas of China’s finance industry, so as well as larger P2Ps, a number of other investment platforms, challenger banks, and international private banks are already targeting this space, as well as China’s traditional banks.

More in the South China Morning Post.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more fintech experts at the China Speakers Bureau? Do check out this list.  

P2P in China, a huge opportunity, also for criminals - Sara Hsu

Sara Hsu

Peer-to-peer lending got quite some coverage in China´s media, both as a huge business opportunity, and as an attractive criminal operation ground, says financial analyst Sara Hsu in the Diplomat. Authorities have tried to crack down on crime, but are also afraid to kill a good business.

Sara Hsu:

In general, regulatory crackdowns have centered around reducing risk. The landmark Guidelines Concerning the Promotion of Healthy Development of Online Finance, published in July 2015, emphasize risk control, and encourage industry self-discipline. Regulations put forth in December 2015 require P2P firms to register with local financial authorities and to publicly disclose loan performance. Regulations on non-bank providers of online payment services were issued in the same month to specify how funds would be treated. Many banks shut down P2P third-party payment services at the beginning of 2016 in order to control risks, but these payments have been gradually resumed. Regulatory supervision of individual P2P companies has also tightened in the past year. 

The P2P lending sector remains popular due to funding shortages for micro- and small and medium-sized enterprises, and for lenders, for its relatively high rate of return. P2P sector interest rates reflect those obtained on the curb market (i.e., outside of the formal banking system) and are higher than those associated with bank loans, weighing in on average at 15-18 percent. As on the curb market, many borrowers lack credit history of collateral. Participating in the P2P sector allows borrowers to obtain loans where they otherwise would not. 

Still, P2P sector participants are potentially exposed to business collapse due to liquidity shortages or fraud, both of which are relatively common. Unlike the formal financial sector, the P2P lending sector suffers from a lack of self-discipline. It is not uncommon for business owners to flee when a loan fails. Therefore, even as the P2P sector continues to grow, many such businesses fail, and regulators are attempting to discipline the sector in fits and starts. Addressing all potential pitfalls is a challenge, as is implementing specific financial requirements. Given the pace of regulation, however, one may expect tighter rules to emerge in the near future.

More in the Diplomat.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more financial experts at the China Speakers Bureau? Do check out this list.    

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