Peer-to-Peer Lending in China, Hong Kong and Southeast Asia

Peer-to-Peer Lending in China, Hong Kong and Southeast Asia

by May 11, 2017
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Peer-to-peer (P2P) lending has become a global phenomenon. In Asia in particular, alternative financing has experienced an explosive growth.

Asia’s large population of smartphone-savvy and unbanked makes it a prime market for alternative lenders. These leverage digital platforms and technology to provide businesses and individuals with financing opportunities outside of the traditional finance system.

In KPMG’s 2016 Fintech 100 report, two of the world’s top five fintech companies were Chinese P2P lenders.

QudianThese included Qudian, which operates two main business platforms: a consumer finance platform and a micro-lending platform. The company aims to broaden the scope of financing available to the many consumers in China that do not currently use credit cards.

As well as Lufax, an Internet-based lending and wealth management platform owned by Ping An Group. In addition to lending, the company also provides risk management expertise, financial assets trading information and related consulting services.

In Hong Kong as well, the market for licensed money lenders has increased exponentially over the past five years. The industry is currently dominated by several ventures, most notably WeLend of WeLab, a company is backed by Khazanah Nasional Berhad and ING Bank. Other P2P lending players in Hong Kong include GoLend, a platform specializing in SMEs loans, and Best Lend, a subsidiary of Hai Tong International Securities that focusing on consumer loans.

 

P2P Lending Regulation

China’s P2P lending sector has exploded in recent years, and today, the country counts over 4,800 P2P lenders.

Regulation P2P lending in Asia

Image by Nejron Photo via Shutterstock.com

This year, however, Chinese regulators are looking to roll out tightened regulatory supervisions which should substantially shake up the industry. According to a report released in February, 90% of the mainland’s P2P lending platforms will struggle to survive this year.

“The wild growth of online lending in recent years exposed a multitude of problems,” the report said. “P2P operators and regulators will face stern challenges to ensure a healthy growth of the P2P sector.”

Indonesia as well as has moved forward to regulate P2P businesses. In January, Indonesia released new regulations for P2P lending platforms that cover areas such as foreign ownership, minimum capital requirements, interest rate provision, and consumer protection.

The policies had long been anticipated by players, who had been working closely with the Indonesian financial services authority (OJK) to come up with rules governing lenders and borrowers.

P2P lending startups now must register and obtain a business license from the authority before starting business. Alternative financing platforms in Indonesia include Modalku, a P2P lending platform, UangTeman, an online micro-lending company, as well as Taralite, and Kredivo.

Indonesia has placed high hopes for fintech to become one of the key drivers in helping the country reach its US$130 billion digital economy ambition by 2020.

Many are expecting to see financial technology playing a key role in increasing financial inclusion, a problem that Indonesian banks have been struggling with.

 

P2P Lending in Southeast Asia

Having named financial innovation as one of its top priorities, Singapore is the undeniable fintech leader in Southeast Asia. The city-state hosts some of the region’s leading P2P lenders, including Funding Societies, but also CapitalMatch and MoolahSense.

Turnkey Lender, which has offices in Singapore, Belgium and the US, provides cloud-based loan management system and software for enterprises. The company was one of the winners of the Fintech Awards as part of Singapore’s Fintech Festival 2016.

Funding SocietiesFunding Societies, which is co-founded by Harvard Business School graduates, has presences in Singapore, Indonesia and Malaysia. In April, the startup announced a partnership with RHB Banking Group to expand funding opportunities for SMEs in Malaysia.

Under the partnership, the bank will provide Funding Societies with transaction banking services, trustee services for investment and know-your-customer services, whereby investors are given the opportunity to invest on the platform form as low as RM100 (US$23).

An important development that was announced recently is the partnership between the Singapore Stock Exchange and Crowdo, another regional P2P lending platform. The two signed a Memorandum of Understanding (MOU) in April to build an infrastructure to educate companies on ways they can access capital.

Crowdo has two separate branches in Malaysia and Indonesia, and recently launched in Singapore after obtaining a full Securities Crowdfunding License from MAS.

Besides Singaporean startups, Southeast Asia also counts ventures located in other countries including Simplex from the Philippines and Loanvi from Vietnam.

 

Featured image: ChristianChan via Shutterstock.com.

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