即将IPO的众安,宣告完全体保险科技的正式到来

 

red carpetWhat follows is a Chinese translation of today’s InsurTech post on Daily Fintech by Stephen Goldstein, with translation by Zarc from InsurView. This article will also appear in Chinese on the InsurView site. To read more Fintech content in Chinese, you can scan the following QR code by Wechat and subscribe to InsurView’s Wechat account.

以下是今日DailyFintech发布的由Stephen Goldstein撰写的InsurTech文章的中文翻译,由InsurView的Zarc进行翻译。 本文也将在InsurView网站上以中文显示。 要阅读更多Fintech的中文内容,您可以扫描以下二维码,并订阅InsurView的微信公众号。

InsurView QR code

这一天终于来到了,众安保险获港交易所上市批准!

CB Insights也对众安进行了详细的分析。

于2013年由平安、腾讯和阿里巴巴联合成立的众安,是中国的第一家互联网保险公司。CB Insights在其分析文章中指出,众安以运费险起家,如今其保险产品已经多达240余种。在2016年,众安卖出了72亿份保单,为4.92亿用户提供了服务,并且获得了将近5亿美元的保费收入。

Daily Fintech此前已经多次撰文分析过众安的相关消息,具体文章请点击文章一文章二

众安上市对于保险科技市场来说是极其重要的大新闻,以下几点是我认为其重要性所在:

  • 这意味着保险科技公司也可以为客户提供全套保险服务;
  • 中国让亚洲成为了顶级的保险科技市场;
  • 阿里巴巴已经出手了,亚马逊会是下一个入局保险科技的巨头吗?

保险科技公司也可以为客户提供全套保险服务

提供完整服务链的保险科技公司并不少见,其数量还在不断增加。就如我上周专栏中所说的一样,这些保险科技公司属于保险业中的创新圈。但是众安是这一类别中第一家有望上市的公司,这对于整个保险科技圈来说意义非凡。不管众安上市后的表现如何,能够上市,就是向传统保险公司宣告道:“保险科技已经到来了,并且会和你们展开竞争,如果你们不寻求改变,你们将会见到越来越多的保险科技公司上市,并颠覆你们甚至取代你们。”更重要的是,众安和保险科技将会进入到更多普通人的视野,众安之于保险科技,或将像网景公司之于互联网那样重要。

我们所有的保险科技圈的人都会感谢众安,感谢众安让保险科技成为主流。

中国让亚洲成为了顶级的保险科技市场

一直以来,硅谷是世界科技的中心。各类保险科技创业公司、孵化器以及投资机构都集中于此。美国还有位于其他州的科技枢纽,如纽约和奥斯丁,以及规模较小的得梅因和底特律。美国将会一直是科技创新的重要区域。

在欧洲,保险科技在英国和德国最为热门。创业公司、加速器、孵化器和投资机构在这两个国家为保险科技的发展添砖加瓦。

但是在欧美地区,还没有一家保险科技公司能够上市。上市对于创业公司来说意味着成功,意味着你获得了行业的认可,意味着大公司愿意与你共同竞争了。我们有望在亚洲市场上率先见到这一幕。新加坡的保险科技圈一直致力于将亚洲打造成金融科技/保险科技的枢纽,而中国众安的成功更是让亚洲成为了顶级的保险科技市场。

阿里巴巴已经出手了,亚马逊会是下一个入局保险科技的巨头吗?

我不是第一个提出这一观点的,有人在2014年2016年就探讨过亚马逊入局保险科技的可能性。阿里巴巴已经证明其有能力在包括保险在内的多个垂直领域开拓业务,他们能做到这一点,一个重要的原因就是其品牌影响力和优秀的客户服务。就这两点来说,亚马逊和阿里巴巴是高度相似的。所以大家不免会联想到,亚马逊什么时候入局保险科技呢?

众安通过为电商提供保险起家,这一领域显然已经非常成熟和充满竞争了。亚马逊对于开拓市场也从不保守,相信未来我们很快能见到亚马逊的大动作。

虽然亚马逊目前也有提供消费保险类的产品,但他们和众安的关键区别在于,亚马逊提供的保险产品是由传统保险公司承保的,而众安的保险产品都是由其自己承保的。因此亚马逊目前只是作为保险销售的平台,而不像众安一样是一家保险公司。

不过,随着传统保险公司,特别是再保险公司对于保险科技领域的投入日益增加,谁又能保证,不会出现一家传统保险公司选择和亚马逊合作,成立一家类似于众安的公司呢?

对于众安来说,下一步会是什么呢?他们会像曾经的阿里巴巴一样,开始拓展东南亚市场吗?还是继续扩展其产品库,深耕中国市场?

我们不知道,但我们会持续关注众安的IPO进程以及IPO之后的发展,也会持续观察,看看这次众安的IPO会对整个保险科技市场带来怎样的影响。

我们衷心地希望众安IPO能够大获成功,也希望众安不会重蹈网景以及Lending Club的覆辙。(上述两家公司都是互联网企业,在上市后股价暴涨,然而前者拉开了上个世纪末互联网泡沫的序幕,后者作为P2P借贷鼻祖在高开后一路低走,至今市值仅为上市初期巅峰的20%)

Four China firms that have leveraged the Ecommerce boom for Fintech fame

The consumer finance market in China is projected to reach 37.4 trillion yuan ($5.75 trillion) by 2019. A recent report by iResearch Consulting Group noted that the Internet-enabled consumer finance segment is expected to reach 3.4 trillion yuan in 2019 from 6 billion yuan in 2013. However, Fintechs in China have demonstrated how an explosive growth in ecommerce and a business model well integrated with ecommerce could be a launchpad for Fintech Fairy tales.

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Please note that the numbers in the infograph are about a year old. But they convey the message that a strong ecommerce ecosystem has provided a sound base for China’s Consumer Fintech giants. I have picked four of them for discussion today.

JD Finance

JD Finance was founded in October 2013 and is engaged in seven lines of business: supply chain finance, consumer finance, crowdfunding, wealth management, payment services, insurance and securities services. JD Finance’s services include JingBaobei, its microloan platform, Baitiao, its crowdfunding platform, Jintiao and Xiaobai, which provides wealth management services.

Apart from the plethora of services they provide in the consumer Fintech space, they have also recently launched a fund that focuses on early and growth stage investments called Qianshu Capital. JD Finance is backed by Alibaba’s primary competition – JD.com and Tencent. They were recently valued at about $7 Billion and have the backing of some of the top VCs like Sequoia.

Zhong An Insurance

Zhong An was founded in 2013 and offered property insurance, cargo insurance, liability and credit insurance. In about 5 years, Zhong An has risen as the largest insurance company in the world with about 500 Million customers. Their first and most successful product is an ecommerce returns insurance, which they launched on Alibaba. This insurance covered merchants when customers where dissatisfied with the goods. As a result merchants can bypass Alibaba’s deposit requirements.

Zhong An was the first Fintech firm to receive the insurance permit in China. They have grabbed the first mover’s advantage, and have pioneered this space in China. However other players like Ant Financial and JD Finance are launching their own insurance products, that may be a challenge for Zhong An to overcome.

WeCash

WeCash was founded in 2014 and they are a big data credit assessment platform that uses machine-learning algorithms to provide credit assessments in less than 15 minutes. They have developed AI solutions to evaluate consumer credit for loans in a range of industries, including agriculture, aesthetic medicine, home rental, cars, insurance and travel, helping to facilitate more than $2.2 billion in loans.

They use analytics on mobile data from about 600 million mobile internet users,. Wecash is able to provide extensive credit assessments and build predictive models for customers’ credit risk.


“Our core risk-pricing engine is a dynamic risk model combined with artificial intelligence system. This engine collects and processes up to 12,000 data points which are then classified into 9 categories of key user behaviours to evaluate the credit of each loan applicant. In merely 3 seconds, our engine can compute an applicant’s credit and risk scoring, reducing non-performing loans for partner financial institutions by 70 percent or higher” 

Tang Xuewei, Chief Risk Office at WeCash.


 

Yirendai

Yirendai is the consumer finance arm of the P2P lending firm CreditEase. The Company provides a solution to address investors and individual borrower demand in China. They have an online platform that automates the process of matching borrowers with investors and execute loan transactions.

Yirendai have developed a proprietary risk management system, which enables the Company to effectively assess the creditworthiness of borrowers, price the risks associated with borrowers, and offer quality loan investment opportunities to investors. Yirendai’s online marketplace provides borrowers with quick and convenient access to consumer credit at competitive prices and investors with easy and quick access to an alternative asset class with attractive returns.

In Q2 2017, Yirendai did about US$1,208 million of loans to about 140 K individual borrowers on its online marketplace. That is a YoY growth of 80%, where 70.9% of the borrowers were acquired from online channels; 51.2% of the loan volume was originated from online channels and nearly 100% of the online volume was facilitated through mobile.

During the same period , Yirendai managed about 200K investors with total investment amount of about US$1,700 million, 100% of which was facilitated through its online platform and 90% of which was facilitated through its mobile application.

A wave of innovation is particularly effective in adding value to Entrepreneurs, Investors and Consumers when it has an ecosystem that it can find a sound base in. Fintech in China has become so big so fast because the hard work was already done during the Ecommerce boom in the country. While I discussed four firms who have gone down this path successfully, I believe there are dozens more to talk about in China Consumer Fintech.


Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.


 

Midas Touch interview with Mr. Yang Xuan of Warp Speed Capital on the future of Insurtech in China.

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Warp Speed Capital is a new VC Fund based in China and focussed on Insurtech. We interviewed Mr. Yang Xuan, Founding Partner, to get his take on this exciting market.  With Zhong An headed to IPO we read a lot about Insurtech in China. It is interesting to see what is happening at the early stage as Warp Speed Capital is focused on the Angel to A venture lifestage.

Q. Please tell us about your Fund and your personal history.

I have a decade long career in the IT industry and started working as an institutional angel investor since 2011. I focused on opportunities in TMT industries at first and invested in projects like Huxiu.com—a platform of tech news and insights, Weipai—a social app featured in video chatting and streaming and WeiboReach—analytics software for social platforms.

We started paying attention to insurance in 2014 and after some in-depth research into the industry, we were increasingly convinced that next generation of insurance, the Digital Insurance and InsurTech, will fundamentally change how insurance looked like in the old days. So we shifted our priorities into Digital Insurance.

Since then, we have invested in a number of promising projects in Digital Insurance, such as TopMDRT—a digital agent platform, NewTank—a big data company and auto insurance platforms. We have invested in seed stages and all the invested companies have closed their next round.

As for my Fund, Warp Speed Capital, we have 100 million RMB  ($15m) fund in place in our first term. We are looking to expand the fund to 300 million RMB ($45m) in the near future.

Q Please tell us what sort of opportunities you look for and why 

Chinese insurance industry is a huge market, its total premium income increased by 27.5% and reached 3.1 trillion RMB in 2016. Premium income from digital insurance was 234.7 billion RMB and accounted for only 7.5% of total premium income. So there is plenty of space for digital insurance to grow.

Besides, the digitalization of Chinese insurance industry is still at a relatively low level. Big insurers can afford advanced systems and store their data in clouds. But small companies still manually input their data into computers and store them in excel files. That leads to extra operating cost and inefficiency. So there is a huge potential for the development of digitalization in China.

Therefore, as a venture capital fund, we want to help promote the development of digitalization in Chinese insurance. Projects which can cut down operating costs, improve operating efficiency and improve the level of digitalization are our chief concerns and primary targets. We will help them, guide them and fund them to fulfill their purpose and make insurance a better industry.

Q Please tell us about your existing portfolio companies

NewTank

Founded in 2011, Shanghai NewTank Marketing Management Incorporated has devoted itself to providing marketing service for insurance industry. NewTank started exploring the solutions for insurance sales and distribution when they gained enough experience and resources. Those explorations are fruitful and they went public on National Equities Exchange and Quotations (NEEQ) at the end of 2016.

With its experience, resources and technologies, NewTank has built a Saas solution including online marketing and smart sales assistance to improve the efficiency and reduce the cost in insurance distribution.

The Saas solution focused on three processes, that is, source of customers, sales & service and customer management. By establishing ties with professional insurance marketing institutions, NewTank can help insurers acquire millions of potential customers. By building a call center and equipping it with AI technology, NewTank can collect and send useful leads to insurers. As for the customer management, NewTank will collect and reserve all the data about existing customers. With enough data, they can accurately profile everyone.

NewTank kept its growth rate over 100% in 3 consecutive years since 2014 and their revenue exceeded 40 million RMB in 2016.

TopMDRT

TopMDRT is an agent app developed by Shenzhen Yanyi Network Technology which is designed to provide service for insurance agents and help them get more customers. The ultimate goal of TopMDRT is to help agents realize their dream of becoming a MDRT member.

As the insurance expert for agents, TopMDRT will utilize all kinds of online tools to help improve the efficiency of agents. Besides, TopMDRT also uses the idea sharing economy and provides offline service for third party platforms, improving the conversion rate for them.

TopMDRT now has more than 1.6 million registered users. With their outstanding operating capabilities, they have achieved 5 million unique visitors and 20 million repeat visitors in several online activities. The data is ten times better than other similar apps.

Zhitong Tech

Zhitong Tech is providing solutions and information services for auto insurance companies. They have designed a price engine and a rule engine that help build a closer tie for auto insurers and their customers. By connecting every segment in the auto insurance value chain, they are planning to build an ecosystem in auto insurance industry to improve efficiency.

Their system and solutions are well received among traditional auto insurers and they have helped insurers generate more than 600 million premium income in the first half of 2017.

InsurView

InsurView is an insurance news and insights platform. It is  Warp Speed Capital’s incubation project

and it is designed to connect every participant in the

insurance industry. It enables traditional insurers to learn from latest development of InsurTech, it

leads investors to the most promising startups in China and it provides startups with all the ties

and resources they need to carry out their plans.

 

By the end of July, 2017, InsurView has more than 13,000 subscribers and more than 1000 paid

subscribers. Besides, InsurView has released 5 industry reports about Chinese Digital Insurance

since 2015 and a number of featured reports to help Chinese insurance participants to better

understand InsurTech and Digital Insurance.

 

Bernard Lunn is a Fintech deal-maker, author, investor and thought-leader.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

Will Zhong An follow the same post IPO trajectory as Lending Club?

zhong an

In December 2014 we hailed the Lending Club IPO as “the netscape moment for Fintech”. In February of this year, we described the rumoured Zhong An IPO as the Netscape moment for InsurTech.

The Lending Club trajectory, with the stock well below their IPO price, does not augur well for Zhong An. That is the question we address as investors start to think about the Zhong An IPO in Hong Kong.

We start with what we call our Wind Socket Analysis.

Wind Socket Analysis

The flight time from New York to London is about 7.5 hours, vs about 8.5 hours going the other way.

The one hour difference is due to tailwinds and headwinds. Whether you are on an Airbus or Boeing makes little difference. The Pilot cannot make much difference. Translated into company value, the market matters a lot more than the organisation or the management team. A base level is essential- don’t try flying the Atlantic in a small plane and don’t leave a transatlantic plane in the hands of an untrained pilot. In a crisis a great Pilot makes the difference. However all things being equal, what matters are tailwinds and headwinds.

Tailwinds for Zhong An

This is simple. China is a massive blue ocean market. A growing middle class is buying Insurance for the first time. It is a once in a lifetime land grab opportunity and the incumbents are not strong. Compare that to US or European Insurtech ventures selling to consumers who already have a lot of insurance from big, smart insurance companies.

Zhong An has a good plane & crew

You can see this tailwind in the numbers. ZhongAn offers more than 300 insurance products and has written more than 7.56 billion policies for more than 535 million customers. They are clearly executing well. Having raised $900m there is every reason to believe they will continue to do so.

Possible Headwinds

The Chinese economy is in transition, from manufacturing and export led to a more broadly diversified economy driven by consumption and higher value services. The bull case is this is like betting on America a century ago. China bears point to all kinds of issues, such as excess debt, non-performing loans and massive construction over building. If this is your view of the China economy you will avoid the Zhong An IPO. I incline to the bull case but there will be much volatility and there maybe a 1929 type event along the way in China. Nobody knows. Anybody who says they know probably has something to sell you.

Another issue, raised by a Fintech Genome member is about innovators dilemma faced by Ping An insurance, which is a major shareholder of Zhong An but may also could be a competitor down the road. As @EricForgy put it, writing from Hong Kong with a deep knowledge of the insurance business:

“As interesting as Zhong An is, I actually think Ping An is more interesting and is likely to have an even bigger impact on the rest of the world. I think Lufax is just the beginning of their outward expansion. Zhong An itself is struggling to make profit. If you note the numbers imply many small policies (per customer). They are trying to branch into more profitable lines of insurance, but as they do, they will start competing with their parent Ping An. I’m interested to see how that dynamic plays out. I think Ping An wins in terms of technology and Zhong An is no doubt using a lot of Ping An’s technology. Ping An is also trying to export a lot of their AI tech.”

The numbers that Eric Forgy refers to show rapid growth in revenue but declining profitability. Investors can take two different points of view on this:

Either: this shows the whole proposition is flawed.

Or: this is like Amazon and in a market opportunity as big as Insurance in China, it pays to invest for growth.

Which it is will be revealed by a deeper dive into the financials, which we do not have yet. If you have any insights, please share them on this thread on Fintech Genome.

Disruption from a supersonic plane.

All things being equal, headwinds and tailwinds drive value. But a new supersonic plane will change the outcome and that new plane may need a different type of pilot or at least some retraining. A supersonic plane will cut the NYLON journey time to about 3 hours. The equivalent of a supersonic plane in Insurance will be almost real time settlement using blockchain (which we covered many times, one example here).

Zhong An clearly sees this and is investing in Blockchain. So I do not expect Zhong An to be blindsided by blockchain. When both tech and regulation is ready, I expect Zhong An will be ready. The key is that both tech and regulation need to be ready – just like with supersonic planes. This is one area where I would be confident that Zhong An will get it right, because in China big connected companies and government work closely together.

The Lending Club trajectory since IPO

Lending Club did an IPO at $15, rocketed up past $20 and then crashed to an all time low of $3.51 (where I was fortunate enough to buy after posting this). It is now around $5.20. I sold my shares (Lending Club is still a great company, but valuation now is less compelling than other opportunities).

I did not invest in Lending Clun at IPO, because I had reservations at a fundamental level which I posted here. At $15 there was no room for error. At $3.51, the price implied that the whole model was dead and the team was incompetent, neither of which was true.

Many stocks never give you this opportunity. You never get a chance to buy in below the IPO price. Think of Facebook and Salesforce; the price goes down a bit occasionally but not for long.

If you have any insights, please share them on this thread on Fintech Genome.

Image Source.

Bernard Lunn is a Fintech deal-maker, author, investor and thought-leader.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

China Face-Off America – Battle of Global Payments between Tech Titans

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Earlier this year Daily Fintech did a China week, and there were several interesting topics and key insights discussed. We analysed how the three Chinese Tech giants (Baidu, Alibaba and Tencent) have led the Fintech boom in China and what the favourable factors that helped were. However, over the past few weeks, we have had some developments with WeChat expanding into Europe, and almost as a reaction (perhaps not), Facebook ramping up group payments on messenger, Android pay collaborating with Paypal and more. We have Ant Financial’s bid for Moneygram and there is also a rumour that Whatsapp was ramping up to launch payments in India. That feels like a heated battle between Tech giants of the east and the west (really Chinese vs Americans, such a cliche) for Global Payments Glory. 

While we immerse ourselves in Fin and tech in the west, we often tend to forget that there is a whole new world out there in Asia that completely dwarfs what we have achieved in the west with regards to Fintech. FinTech financing in Asia-Pacific was almost US$10 billion in the first half of 2016, eclipsing the aggregate of North America’s (US$4.6b billion) and Europe’s (US$1.85 billion). WeChat sent 32 billion digital red envelopes over Chinese New Year in 2016 and 46 Billion in 2017. Paypal did 4.9 billion transactions in the whole of 2015 and 6.1 billion in 2016. This list could go on, but you get the point. The dragon really dwarfs the west!!

China Fintech

Stats aside, Chinese tech giants have had tremendous success in their local Fintech market. In comparison, Apple, Facebook, Google and Amazon (the Fantastic Four) have had mixed results in the west.

I am fascinated by what Alipay(from Alibaba) and Wechat (from Tencent) have managed to achieve in China. A good story about the growth of these firms is how WeChat created a highly localised product to compete with Alipay. WeChat had been lagging Alipay upto the launch of “Lucky Money” during the Chinese New Year of 2014. It combined the Chinese tradition of “Red Pocket” with conventional peer-to-peer transaction, and achieved huge success by adding a fun flavor of luck into its payment function. During the New Year holiday of 2014, approximately 10 million users engaged and bundled their bank cards, and 40 million red pockets were dispatched. In 2016 these numbers on WeChat further increased to 420 million, and reached a massive 8 billion that same year. Jack Ma called this strategy by WeChat the “Pearl Harbour Attack” on Alipay.

WeChatVSAli

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Now, lets take a look at what the Fantastic Four have achieved in Payments.

Facebook, apart from hiring David Marcus (from Paypal) haven’t really had much joy with its payments business. Its payments revenue (for 2016) of $753 Million is tiny when compared to ads revenue of about $28 Billion. And the payments revenues were down 11% from 2015.

Google’s Wallet project didn’t go anywhere at all, however it had a much better uptake with its Android Pay. By end of 2017, Android pay is projected to have about 27 Million users. Android Pay have just agreed to integrate Paypal to it, which would mean customers can use Paypal through Android Pay.

Amazon’s “Pay by Amazon” has been a good story from the time it was launched. It has now 33 Million users which is almost a 50% annual growth from 23 Million users last year. Amazon managed to get its Wallet License in India last week (watch this space).

Apple pay has been the leader of the pack in the payments world. With about 84 Million users projected by end of 2017, Apple have so far done well in this space, however still lags behind Paypal.

All these numbers from the Fantastic Four are tiny when compared to the numbers achieved by WeChat and AliPay.

Alibaba have been quite active in expanding through acquisitions. Investment into PayTM in India, provides them a hold into PayTM’s 200 Million user base in India. However the most recent news on Moneygram is an ambitious step into the remittance market, and if the deal did happen (post all the drama), it would provide Alibaba a 5% share of the 600 Billion pound remittance market.

'The Americans aren't objecting in principal to a merger down the line as long as we build a Chinese wall to keep a couple of things secret from the Chinese.'

WeChat have more recently started global expansion into South Africa, set up its European offices in Italy and planning a London launch soon. While they are behind Alipay with their global expansion, their customer acquisition strategy has worked better (than Alipay’s) so far.

When I talk to innovators in India, I often tell them to create a simple solution to an existing problem without overengineering it. That’s generally true for most developing nations. There are ample problems to solve and a half decent solution can see massive growth if executed well.  In the case of China a few hundred million users went from Cash to Mobile Payments and it was a classic leapfrog moment. Most likely Alipay and WeChat wouldn’t see this again in their Global expansion adventures.

I believe they would have better success through acquisitions, investments and partnerships with key payment players in their target markets, rather than trying to lift and shift their business model in China elsewhere. I also think that the winner of the East vs West payments war would be decided by key battlegrounds in India, LATAM and Africa. If Alipay and WeChat could expand into these regions quickly, then the Fantastic Four would struggle to gain ground. However, you don’t write off the likes of Apple, Amazon, Google and Facebook that easily. Watch this space!!

Arunkumar Krishnakumar is a Fintech thought-leader and an investor. 

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

Interview with Soul Htite of Dianrong to understand the intersection  of Supply Chain Finance and Blockchain

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Both subjects, Supply Chain Finance and Blockchain, get a lot of attention on Daily Fintech. So when we saw a solution combining them (called Chained Finance) we were intrigued. When we saw that the venture behind this initiative (Dianrong) is in China and that the Founder & CEO (Soul Htite) was a co-founder of Lending Club, we reached out to him to understand more.

I asked the questions that occurred to me. What questions should we have asked Soul? (tell us in comments).

 Soul please tell us about your professional journey and what Dianrong does?

As a technologist and entrepreneur, I’m constantly looking out for new opportunities to harness the potential of fintech to solve every day financial challenges.  This is what led me to co-found, firstly, Lending Club in the US and, more recently, Dianrong in China.

Dianrong has quickly grown into a leader in online marketplace lending in China, originating more than $300 million in monthly assets for 3.7 million retail lenders. We offer individuals and small and medium sized enterprises a comprehensive, one-stop financial platform supported by industry-leading technology, compliance and transparency.

We developed a sophisticated and flexible infrastructure that enables us to design and customize lending and borrowing products and services, based on industry-specific data and insights, all supported by online risk-management and operation tools.  Dianrong’s specific offerings include loan originations, investment products and marketplace lending solutions.

 As I understand it, Chained Finance is designed to provide financing to the vendors who are further down the supply chain. Supply Chain Finance works well today for the vendors who supply to the corporates who are investment grade. As I understand it, Chained Finance will get financing to the vendors who sell to that vendor. Can you give us an illustration about how this will work?

The complexity and scale of supply chain finance has posed major challenges in ensuring adequate funding and efficient operations.  Chained Finance creates a unique ecosystem that will provide supply chains with easier access to funding at competitive rates. In return, supply chain operators will gain greater visibility of their suppliers and the many layers of finance embedded in the process.

 Is it only one link in the chain (i.e. vendor to vendor of investment grade corporate borrower) or multiple links in the chain?

Chained Finance’s ecosystem provides a better link between supply chain operators and their vast network of suppliers.  Additionally, new loan assets generated by Chained Finance will be available to Dianrong’s 3.7 million investors, expanding the company’s portfolio of diversified investment options.

How is the credit priced? Is it based on the buyer’s credit rating (as in traditional Supply Chain Finance)? Or is it based on the seller’s credit rating as in Factoring, Receivables Financing and other SME lending?

The Chained Finance pricing model is proprietary.

 What stage is Chained Finance? Have transactions already been completed. Can you share what sort of APR % the SME companies are getting and how this compares with other SME lending?

 Chained Finance successfully completed a successful six-month pilot with FnConn, which originated US$6.5 million (RMB45 million) in high-quality loans for supply chain operators, many of whom were unable to secure needed financing in the past.

The pilot was only recently completed, so it is premature to disclose representative APR data.

Please tell us why you use blockchain technology as opposed to some other distributed database technology and a bit about the technology?

 Blockchain technology allows both lenders and borrowers to gain unprecedented control and transparency of their records.

Lenders gain greater transparency of the financial history of borrowers, enabling them to make better lending decisions. This capability enables financial institutions to lower the risk of potential bad debts and problematic financial sources.

For borrowers, the technology provides a comprehensive track record of their financial history, which increases their creditability when applying for a loan. Borrowers also have greater control over who has access to their records, because borrower data can only be obtained with their approval.  That efficiently avoids borrowers’ personal information being abused by third parties, e.g. lead generation companies.

The primary benefit of blockchain is the transparency, and thus security, of the data transacted within the system.  At Dianrong, compliance and transparency are part of our DNA. This is why we are integrating blockchain technology across our entire platform.

Is this a permissioned or permissionless system?

Permissioned.

What blockchain technology do you use (e.g. Ethereum, Hyperledger). Please tell us why you chose this technology

Chained Finance was designed to be technologically (and geographically) agnostic.  That said, Dianrong is an active participant in the Hyperledger project.

 Soul, please give us your vision of where Chained Finance could go in the future.

By harnessing the power of blockchain, the Chained Finance platform is geographically agnostic. So, while Dianrong’s initial focus is on China, where 85% of SMEs have no effective access to funding, the potential for the platform goes far beyond China’s borders.

Blockchain for supply chain finance extends to any large company that has a complex supply chain and, as such, is enormous.  The electronics, garment and auto industries are a natural fit.

Chained Finance offers large multinational manufacturers unprecedented transparency and risk control capabilities for their supply chain finance ecosystems.

Thank you, Soul

What questions should we have asked Soul? (please tell us in comments).

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Bernard Lunn is a Fintech thought-leader and deal-maker. 

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Wrap of Week #5: Mainland China Fintech thematic week

The year of the Rooster is upon us and both the size of the market in China and the unique accelerated pace of fintech innovation beckons us to turn our head towards the East and pay attention to what is happening there.

You can start with our introduction and follow the order of our posts, on WealthTech, Smallbiz, Insurtech and MPL. Or you can pick what interest you the most.

Introducing China Fintech Week

Digital Wealth – Shùzì cáifù – in China

No score, no problem. The lenders opening up access to SME credit in China

The Zhong An IPO in China could be the Netscape moment for InsurTech

With Lufax, Marketplace Lending is becoming a 4 horse global race

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