ChinaFintech – China’s First Licensed Consumer Credit Reporting Agency Opens for Business

Baihang Zhengxin Limited (百行征信有限公司), the state-backed consumer credit reporting agency officially opened for business on May 23rd. It is the first to obtain a license to operate a personal credit reporting business in China.

It will be mainly targeted at alternative lenders, particularly online lenders. Previously only China’s central bank maintained a credit information database, the Credit Reference Center, that has mainly been serving established traditional financial institutions while most of the online lenders don’t have access to.

The National Internet Finance Association of China (NIFA), a state-backed industry trade group, holds a 36% stake in Baihang. The eight companies that were approved by the central bank in 2015 to develop their own consumer credit scoring services, including tech giants such as Tencent and Alibaba’s fintech arm, each holds an 8% stake in it.

The eight member companies will reportedly share their data, technologies and other resources with Baihang.

Four of the eight backed by tech companies, Zhima Credit Management Ltd.Tencent Credit Ltd., Qian Hai Zheng Xin, and Kaola Zhengxin, had previously developed their own consumer credit scoring services based on to different extents alternative data generated from their own online services. It’s unknown to what extent they’d share their own data with Baihang.

The products and services provided by Baihang will include consumer credit reports, credit scores, and anti-fraud services.


ChinaFintech — Baidu’s FinTech Business Raises US$1.9bn

Baidu’s financial services business has secured US$1.9 billion in Series A round of funding led by TPG and The Carlyle Group and joined by investors including Taikang Group and ABC International Holdings. Baidu’s stake in it will be reduced to 42%. The business has been rebranded as Du Xiaoman (度小满).

Established in December 2015, Baidu’s finance arm offers installment payment options to consumers and online investment services to investors. Gross interest income and interest costs in 2017 were RMB3.5 billion (US$543 million) and RMB1.9 billion (US$288 million), respectively. The total assets and total liabilities were RMB 47.0 billion ($7.5 billion) and RMB 41.2 billion ($6.6 billion) as of March 31, 2018, respectively.

Baidu’s online consumer loan business is operated through two companies, Chongqing Baidu Small Loans Co., Ltd.(not official translation), established in October 2015, and Shanghai Baidu Small Loans Co., Ltd.(not official translation), with the bulk of the total loan volume originated by the former.

 (as of June 2017)


Chinese Fintech Startups Flock to Hong Kong for a Listing

JIMU Group Ltd. and  Dafy Holdings Ltd., have recently got listed in Hong Kong through a reverse merger.

VCredit Holdings Ltd., 51 Credit Card Inc., VTeam Financial Service Group and Huifu Payment Ltd., have filed with the Hong Kong Stock Exchange.

JIMU Group businesses include

  •, an online peer-to-peer lending platform established in 2013. The cumulative loan volume reached RMB 40 billion in November 2017, according to the company.
  • Jimu Xiaodai, which provides balance sheet loans to consumers and small businesses.
  • Jimu Times, a small business lender with loan capital currently mainly from Its customers are primarily acquired through Jimu Group’s physical stores.
  • 76Hui, a big data-based corporate credit rating service.

The company generated HKD 241 million (US$31mn) and HKD 237 million (US$30mn) in revenue in 2016 and 2017, respectively, and hadn’t turned a profit as of 2017.

VCredit provides a variety of consumer finance options, including personal loans for credit card debt consolidation, purchase credit and unsecured personal loans.

Its capital sources include the small loan subsidies of the company and licensed financial institutions.

The company is one of the few online finance companies that have access to the consumer credit information database operated by China’s central bank which is mainly accessible to the established banking institutions. The risk management system the company has developed have used both the credit data from the central bank and alternative data.

It also operates a network of physical stores to conduct in-person interviews for large loans or with borrowers that its system deems high risk.

The company generates revenues primarily from interest income from consumer credit options and the rest from loan facilitation service fees, guarantee service fees and overdue charges. It turned profitable in 2017.

ChinaFintech – 51 Credit Card Inc. files for HK IPO

51 Credit Card Inc. has recently filed for IPO in Hong Kong.

The company provides personal financial tracking and credit management apps, generating revenues from consumer loans and credit cards issued to app users by the company or third-party financial institutions.

Consumer loans surpassed the credit card segment in revenue in 2015 and accounted for about 80% of the total revenue in the next two years. The company began turning operating profits in 2016.

Cumulative registered users of 51 Credit Card Manager, its flagship app released in 2012, reached 62 million in 2017, up from 27.5 million in 2015.

Source: Company (*Other revenues include interest income from loans extended by its small loan company and trust funding, and overdue charges.)

Consumer Lending

A majority of their individual investors and borrowers are users of the company’s financial tracking apps. Non-credit-card holders as a percentage of the total borrowers have increased from zero in 2015 to 35.5% in 2017.

The company charges borrowers a “credit facilitation and service fee”, which has become the primary revenue source for the company, and third-party loan offerings “loan referral service fees” based on the size of loans referred by 51 Credit Card, the number of applications or clicks.

Before the incorporation of a small loan company in early 2017, the vast majority of the consumer loan capital was from investors of the peer-to-peer lending platform 51 Renpin, and the rest from institutional investors. In 2017, 77%, 20.3% and 2.7% of the loan capital was from 51 Renpin platform, institutional investors and its own small loan company, respectively.

Its lending platform uses the in-house developed systems for credit scoring and pricing, and fraud detection. The consumer loan originations was RMB 815 million, RMB 10.3 billion and RMB 33.9 billion in 2015, 2016 and 2017, respectively.

Credit Card Issuance

Users can compare and apply for credit cards on 51 Credit Card platform where some 500,000, 1.2 million and 2.1 million credit cards were issued in 2015, 2016 and 2017, respectively. The company charges banks a “credit card technology service fee”.

It began issuing co-branded credit cards with banks in April 2017 and would issue more than 100,000 in the rest of the year.

51 Credit Card is expected to enter the insurance market soon as it acquired 95% of insurance broker Shenzhen Zhongrong in November 2017.

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.

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.