Chinese fintech companies make splash on mainland

Two Chinese companies are hoping to utilize financial technology (fintech) to shake up banking and wealth-management channels in much the same way Airbnb and Uber have altered the hotel and taxi businesses.

China Rapid Finance Ltd, operator of the mainland's largest consumer lending marketplace, and Nuoyuan Technology Development Co Ltd, a risk control management company, on Tuesday attended Lendit USA, a networking event for the emerging fintech industry, in New York.

Zane Wang, the founder and CEO of China Rapid Finance, started the company in 2001 and developed a credit-scoring technology for China that is similar to the FICO or Fair Isaac Corp system in the United States.

"In 2010, we leveraged our technology to start a marketplace lending platform," Wang said.

China Rapid Finance is targeting the estimated 500 million Chinese who are working but do not have access to credit yet, Wang said. Banks in China tend to cater to the well established and affluent clientele, he added.

Wang said China Rapid Finance does not provide the actual financing product to consumers. "We are a facilitator and we don't use our balance sheet to make loans. We match borrowers and lenders," he said.

Wang believes that China's developing middle class provides ample expansion opportunity for his company. To achieve that growth, he needs an expanding middle class, and he believes government policy is promoting that objective.

"The Chinese government is trying to encourage domestic consumption. Younger people are confident about their future earning power, so they want to borrow money to improve their lives," he said.

Shanghai-based China Rapid Finance is a so-called peer-to-peer lending company. In 2015, Internet lender Ezubo allegedly defrauded more than 900,000 people out of the equivalent of $7.6 billion, in what was called China's biggest Ponzi scheme.

Since the scandal, the government has imposed a regulatory framework that Wang believes will eventually protect consumers, lenders and investors.

Reports published last month suggested that China Rapid Finance would seek an initial public offering in the US this year. Wang said no decision has been made yet.

"We need a secure capital base to grow, but we haven't made any announcement yet," he said.

Nuoyuan Technology Development, a unit of Hanfor Holdings, has developed a risk control system designed specifically for the Chinese market.

Guo Lu, the president of Hanfor, who has more than 20 years of financial risk management in both Australia and China, addressed the Lendit conference on the prospects for China's fintech industry.

"In the 'Fintech 100' list published by (auditing and consulting concern) KPMG in 2016, eight of the top 50 are Chinese companies," she said.

Guo said China and the US have taken different paths to fintech growth. The US market is well established and sophisticated, so American fintech companies are focused on financial efficiency via technology.

"China's fintech emerged from a less-mature market (and) aims to reinvent the financial services system," Guo said.

She said that when Chinese tourists visit the US, they usually carry a credit card. In China, however, people are used to shopping with smartphones.

"Over the past several years, several American fintech companies have expanded their business to China. We believe it is irreversible that globalization would stimulate cooperation between Chinese and American fintech companies," Guo said.

paulwelitzkin@chinadailyusa.com