News Alternative Lending

Taiwan’s Top Peer-to-Peer Provider

The global phenomenon that is the peer-to-peer movement has long since taken root in Taiwan.

a group of people posing for a photo

AltFi News has been expanding its scope to encompass the whole vast and vibrant world of alternative finance. Asia is perhaps the most opaque and intriguing of the international markets, with as many as 2,000 peer-to-peer firms operating. Today we shine the spotlight on Taiwan’s first ever peer-to-peer lender and insurance provider – Shacom.

Could you introduce us to the platform please?

Our company was founded way back in 2000 by our Chairman when he saw, early on, the transformative power of the internet and its ability to revolutionize industries, including traditional banking and finance. He built the first web-based P2P lending platform in 2001 and it did pretty well, reaching about USD 27 million in total loans in two years.

Then, in 2008, Shacom partnered with Bank SinoPac in Taiwan to launch our 2.0 platform, the MMA Personal Bidding Platform. This too did well over the past six years, with about USD 208 million in cumulative lending to date.

This year, we’re trying to launch our 3.0 platform and scale it even more as the era of marketplace lending has truly arrived. Once again, we’re in talks with several Taiwanese banks to make this happen. We’re also in preliminary talks with a couple of potential local partners in mainland China as that’s one of our priority new markets.

Our platforms are essentially a refinement of the “hui,” a variant of a rotating savings and credit association (ROSCA) that’s been practiced in southern China, Taiwan and other parts of Asia for centuries. Will describe our mechanism more under the next question below…

How does the lending process work?

In a traditional hui or ROSCA, a predetermined number of people (usually community friends and neighbors) group together each period for a set number of periods, and each chips in a set amount to a money pool. Whoever wishes to borrow from this communal pool bids for it, and the highest bidder wins the pool for that period. His bid amount is the interest that he pays to each of the other members who haven’t yet taken from the pool. Each member may only win or take from the pool once, so in essence everyone’s a lender and borrower in the group.

For instance, in a 10-month hui with 10 members, each member chips in $1000 to the pot every month. If I want the money for the first month, I’ll bid $100 for it. Assuming this is the highest bid, I take $1000 x 9 = $9000 (multiplied by 9 b/c I’m not counting the money I give to myself), but pay out $100 in interest to each of the other members. Then in subsequent periods, I chip in $1000 each period as my role has turned from borrower to saver/lender.

Our platform basically brings this entire method online and scales it so that there are hundreds or even thousands of these groups online and people can pick which ones they’d like to join based on their needs.

How much have you lent to date?

Approximately USD 235 million.

Could you explain more to us about the P2P Insurance platform and subsidiary?

Our P2P whole life insurance platform was started in 2009 and is run by our wholly-owned subsidiary Intercare Inc. We cater mainly to the traditionally uninsured in Taiwan (the elderly, disabled and those with long term illnesses) as there’s no age limit or health screenings required to join our platform.

It works similarly to our P2P lending platform with regards to the mutual aid or community pool concept. Members pay an annual fee to join a group of mutual policyholders. Then, if someone in the group passes away, the other members each pay out a small premium that are then pooled together to cover the payout for the beneficiary. The payout received by the beneficiary may vary from person to person depending on certain factors such as age and length of time joined, but members/beneficiaries will always get more than what they put in.

What is unique about your platform?

I would say most defining feature is our mechanism and how borrowers are able to determine their own rates on our platform.

How do you see P2P developing in Asia?

P2P lending has been growing extremely fast in Asia, particularly China, in the past couple of years. Because growth has been so unrestricted in China (there are currently about 2000 P2P firms there), most people expect a wave of platform failures and consolidation in the next couple of years, to about a more manageable number of 100-200 firms. Additionally, the Chinese government has been keeping an open mind and regulators are working closely with the major platforms, if only because the Chinese economy simply needs to support the healthy growth of alternative lending to provide financing for SMEs and to stimulate consumer demand. Like many others, I believe China will be the P2P story in not only Asia, but the world.

In Taiwan, we’re currently the only firm doing P2P lending as internet finance and e-commerce practices in general have lagged behind the mainland Chinese and US markets. However, offline, non-bank lending mainly in the form of hui’s/ROSCAs is still estimated at USD 10 billion a year, so there’s definitely a lot of room for growth. Dare I say industry growth in this market will largely be dependent on us alone (in cooperation with the banks)?

In Hong Kong, a couple of P2P firms have popped up in the past year. Haven’t heard too much from Korea, Japan or Singapore. However, I do expect tremendous growth in Southeast Asia and India as all trends (underbanked population, vibrant small business sector, growing economy and consumer middle class) point favorably to this burgeoning sector.

Companies In This Article


People In This Article

More Like This