ChinaFintech – JD Adds E-lending Solution for Smaller Banks; Ant to Open up its Consumer Lending Products

On top of its own online lending system, JD Finance has developed Beidou Qixing (“The Big Dipper”) for smaller banks. Earlier this month the company launched a cloud services solution for small banks in conjunction with enterprise IT solution developer DCITS.

The Beidou Qixing suite includes solutions in credit assessment and underwriting, big data-based risk management and servicing, identity verification and anti-fraud authentication, and user acquisition and marketing. Partner banks can also use JD’s web-based asset securitization platform.

It has signed up some 30 banks. JD claims its credit risk assessment system, combining data generated from both JD’s e-commerce platform and the bank, can lower the average costs per customer by at least 70% and boost the efficiency of credit approval 1000%.

Beidou Qixing software suite is similar to that of Gamma, rolled out in November 2017 by OneConnect, the finance tech solution developer established by insurer giant Ping An. Gamma has also developed a full-fledged device for physical bank branches. OneConnect had signed up about ten banks at launch.

JD Finance claims Beidou Qixing can reduce the time needed to build a lending system from six months to one month. OneConnected said several months earlier that theirs had cut the time needed to six weeks.

Ant Financial, the fintech arm of Alibaba, will explore possibilities to open the two consumer lending products, Ant Credit Pay (purchase credit) and Ant Cash Now (cash loans), to banks and other third-party financial institutions.

Both JD Finance and OneConnect have also rolled out solutions for other business segments for conventional banking institutions, including mobile banking and robot investing.

JD Finance has reportedly started an RMB 13 billion (US$ 2 bn) round of funding led by China International Capital Corp. and COFCO at a valuation of RMB 165 billion to RMB 190 billion (US$ 26 – 30 bn). New funds raised will be used for obtaining licenses, R&D, and marketing, according to media reports.


ChinaFintech – Tencent’s Mobile Consumer Credit Product Weilidai Exceeds RMB100bn in Loan Balance

The outstanding loans of Weilidai (微粒贷), the short-term cash loan product available on Tencent’s messaging apps, had surpassed RMB100 billion (US$16 billion) as of the end of 2017, according to Tencent Q4 2017 earnings report. The non-performing loan ratio was low, said the company.

Weilidai is operated by WeBank, the direct bank in which Tencent has a 30% stake. Launched in 2015 on Tencent’s two social apps, Mobile QQ and WeChat, it’s available to users who are deemed creditworthy by the company’s own big data-based credit risk scoring engine.

The cumulative originations had surpassed RMB300 billion (US$ 47 billion) and total users exceeded 20 million in the first quarter of 2017, according to Wan Jun, COO of WeBank. Local media estimate that the cumulative volume had reached RMB400 million in 2017. (links in Chinese) An overwhelming majority of the loan capital is from partner banks.

The online consumer credit offerings of Ant Financial, the fintech arm of Alibaba, has surpassed RMB 600 billion (US$95 billion), Bloomberg reported earlier this month.

The major capital source for the two major consumer credit products Ant Financial offers is securitization. The company issued over RMB240 billion (US$ 38 billion) asset-backed securities in 2017.

The revenue growth of Tencent’s payment and financial services business in 2017 was driven by 1) consumer withdrawal fees, 2) fees from commercial transactions, 3) interest income and 4) finance offerings including Weilidai, according to Tencent management. The gross profit margin for this business segment increased in 2017. The company expects to invest aggressively in it in 2018.

Licaitong, Tencent’s online platform for personal investment products, aggregated over RMB300 billion (US$ 47 billion) assets under management as of the end of January 2018.

Offline payment transaction volume more than doubled year-on-year in 2017. The total volume of red envelope gifting, cash gift transfers among accounts on Tencent’s two messaging apps, decreased year-on-year but the overall money transfer volume increased year-on-year.

Baidu’s Video Streaming Business iQIYI Files for US IPO, the on-demand video streaming service majority-owned by Baidu, has filed with the SEC to raise up to US$1.5 billion.

Source: SEC Filing

Revenue growth rate decreased from 113% in 2016 to 54% in 2017.

Advertising is still the biggest revenue source though an increasing portion is from premium subscription sales.

Subscribers were 10.7 million, 30.2 million and 50.8 million in 2015, 2016 and 2017, respectively. Subscriber revenues as a percentage of the total increased from 33% in 2016 to 38% in 2017.

Source: SEC Filing

Content costs accounted for 69.5%, 67% and 73% of its total revenues in 2015, 2016, and 2017, respectively. Content costs increased by 104% and 67% in 2016 and 2017, respectively.

Daily average user time spent was 170 million hours, 259 hours and 300 hours in 2015, 2016 and 2017, respectively.

The vast majority of the viewing is through mobile. Mobile daily active users were 126 million and mobile monthly active users 421 million as of the end of 2017.

Baidu acquired a controlling stake in iQIYI in 2012 and later merged it with video service PPS which was acquired by Baidu in 2013. Baidu currently holds 69.6% in iQIYI and Xiaomi, the leading smart device maker, owns 8.4% of it.

iQIYI’s major competitors include Youku-Tudou, acquired by Alibaba Group in late 2015, and Tencent Video. None of these on-demand video streaming services has turned a profit, said Robin Li, CEO of Baidu, on the company’s latest earnings call earlier this month.

China Fintech — Didi Begins Extending Credit to Drivers; First Consumer Credit Reporting License Granted

Didi, the leading ride-hailing service, has begun making short-term loans up to RMB19,000 (US$ 3000) to drivers on its platform.

Didi runs simple credit screenings and recommends creditworthy accounts to third-party lenders, including banks and consumer finance companies. (Source in Chinese)

The company has previously rolled out a variety of financial products and services to drivers, including a car finance product (Yidi Fenqi), a money market fund (Didi Jinjubao), and auto insurance.

Didi registered a loan company in August 2017 and fully acquired digital payment company Gaoyang Jiexun (19Pay) later in December.

China’s central bank, or PBoC, has granted its first license for personal credit reporting to Baihang Zhengxin Limited (百行征信有限公司), according to the PBoC announcement.

The National Internet Finance Association of China (NIFA), a state-backed trade group, holds a 36% stake in it and the eight companies greenlighted by the PBoC to develop their own consumer credit reporting systems in 2015 each holds an 8% stake.

Four of the eight companies are owned by or affiliated with major tech companies. They are Zhima Credit Management Ltd. (芝麻信用管理有限公司) of Ant Financial, Tencent Credit Ltd. (腾讯征信有限公司), Qian Hai Zheng Xin (深圳前海征信中心股份有限公司) and Kaola Zhengxin (考拉征信有限公司), formerly with Lakala. Each of them launched their own big data-based credit scoring system in the last couple of years and are offering consumer credit to their users through their mobile apps and websites.

Baihang Zhengxin is registered in Shenzhen. Zhu Huanqi, the chairman and president of the company, is the chairman of the state-owned Huida Asset Management and formerly a mid-level official at the central bank.

China Fintech — JD Finance Turns First Quarterly Profit

JD Finance has turned its first quarterly profit, Richard Qiangdong Liu, founder and CEO of JD, said in an internal email in January. (Source in Chinese)

95% of work activities of its financial services operations have been automated. The company claims to have had 360 million users.

JD Shanfu, the NFC-based mobile payment service JD launched in July 2017, claims to has the biggest market share in NFC payments. JD Shanfu was the first third-party payment service to get integrated into QuickPass, the internet-based payment platform of China UnionPay which is the leading player in NFC-based payments. The mobile devices that support the China UnionPay’s NFC payment platform include iPhone, Apple Watch, Huawei phones and Xiaomi phones.

Baitiao (白条), the virtual revolving credit line available to JD shoppers, has begun turning profits. JD Finance’s big data-based credit assessment system has scored more than 300 million shoppers.

Baitiao Shanfu, a credit line for bank accounts that support the China UnionPay payment program, has been available with more than 19 million POS machines at over 8 million physical businesses across China.

The co-branded credit card program of Baitiao has launched 15 products in conjunction with several local commercial banks. The total applications have surpassed 10 million. JD Finance provides data and technologies to help banks improve decisioning process. These banks have seen approval rates increased by ten times and costs lowered by 70%, according to the JD founder. (Source in Chinese)

Xiaomi’s Smart Wearable Affiliate Huami Lists in the US

Huami Corp., the supplier of Xiaomi smart wearables, has just got listed on the NYSE.

Xiaomi and Shunwei, the venture capital firm co-founded by Xiaomi founder Lei Jun, currently hold 19.3% and 20.4% of the total outstanding shares of Huami, respectively, according to its filing.

The sales of Xiaomi-branded wearable products contributed 97.1%, 92.1% and 82.4% of Huami’s total revenues in 2015 and 2016 and the first nine months of 2017, respectively. Huami depends on Xiaomi’s online and offline channels to sell both Xiaomi-branded and its self-branded products.

Source: Huami Corp.

Mi Band, a low-cost activity tracker launched in July 2014, is Huami’s signature product. Out of the total 45.3 million wearable devices Huami had shipped as of September 2017, 40 million were Mi Bands.

Activity tracking bands, including Mi Bands and those under Huami’s own brand, were the main revenue generator that contributed 81.7%, 85.8% and 73.2% of the total revenues in 2015, 2016 and the first nine months of 2017, respectively.

Xiaomi Mi Band (Image: Xiaomi)

Other products Huami makes include smartwatches, smart body scales, and accessories.

The total shipments in 2015, 2016 and the first nine months of 2017 were 14.4 million, 17.8 million and 11.6 million, respectively.

Image: Amazfit

Its own brand, Amazfit, is positioned as a premium brand as compared to Xiaomi’s Mi brand and has had a higher gross margin than that of Xiaomi-branded products since 2016. In the first nine months of 2017 Amazfit products accounted for only 4% of the total shipments but generated 17.6% of the total revenue for the company.

The accompanying mobile apps of all the hardware products claimed 49.6 million registered users as of September 2017. Huami hardware and software products collect over 10 dimensions of measurement, including heart rate, ECG, weight, body fat compositions, GPS running track, steps and sleeping duration.

The company doesn’t maintain its own manufacturing facilities but relies on a number of contract manufacturers.

China Fintech – Ant Financial: All Major Business Lines are Profitable

All three major business lines of Ant Financial, including consumer credit, SME loans, and personal investment products, are profitable, said Alibaba management on the latest earnings call.

Ant Financial shared a total of more than RMB4.9 billion to Alibaba in 2017. According to the profit sharing system where Ant Financial shares 37.5% of pre-tax profits to Alibaba, the total pre-tax profits Ant Financial earned in 2017 is more than RMB13 billion.

Alibaba is taking a 33% equity stake in Ant Financial that will terminate profit sharing.


Daily active users of Alipay more than doubled year-on-year in the fourth quarter of 2017The total number of users was 520 million in 2017, up from 450 million a year ago. (link in Chinese)

Mobile payment transactions as a percentage of the total increased to 82%, compared with 65% and 71% in 2015 and 2016, respectively, according to Alipay 2017 annual report. (link in Chinese) The ratio was higher than 90% in 11 provincial regions (out of a total of 30+), most in less-developed areas. In the previous year, only Tibet saw the ratio higher than 90%.

Alipay transactions from outside of mainland China increased 306% year-over-year. The payment service has been adopted by merchants in 36 foreign countries and overseas regions.

Souqianma (收钱码), the QR code payment service for small-and-micro businesses launched in February 2017, had signed up over 40 million customers as of the end of 2017.

More than 40 million Alipay users ever made payments for hotel stays or rental services through the deposit exemption program provided by Zhima Credit, the credit scoring service of Ant Financial. The program had had about 2600 merchants offering more than 20 categories of rental and leasing services as of December 2017, according to Li Congshan, vice president of Zhima Credit. (link in Chinese)

Public transport services, buses, subways or boats, in more than 30 Chinese cities have begun accepting Alipay. More than 200 million users ever used the City Service, which provides more than 100 services in healthcare, public and private transport, and public sector.

Consumer Credit

Users of Ant Credit Pay (花呗, formerly Ant Check Later), a revolving line of credit available to Alipay users, spent RMB700 per month on average as of November 2017. The average personal loan of Ant Cash Now (借呗), a personal cash loan product, was for about RMB3000, with ARPs of 14.6% on average. Both saw the delinquency rate below 1% in the last three years since their launch, according to Ant Financial. (link in Chinese)

86% of the Ant Credit Pay users were Post-80s and Post-90s, people born between 1980 and 1999, as of November 2017. The credit limits for these young users were between RMB1000 to RMB1600 and the average monthly spending was RMB349, generally spent on online shopping, mobile top-up, purchases at convenience stores or restaurants, and bike rentals. (link in Chinese)

The total ABS issuance of the two small loan companies behind the two consumer loan products in 2017 were RMB159.5 billion and RMB132.6 billion, respectively, up from RMB47.8 billion and RMB16.5 billion in 2016, respectively. (via China Securitization Analytics)

Ant Financial announced in December 2017 to increase the total registered capital of the two companies to RMB12 billion, up from RMB3.8 billion. (In China a company’s borrowing quota is pegged to the amount of the registered capital.)