Shanghai-based P2P lender China Rapid Finance (CRF) has partnered up with China Construction Bank (CCB) in an effort to safeguard investor funds.
CCB is the second largest bank in China in terms of assets under management, and is the first of the “big four” Chinese banks to tie up with one of the country’s many peer-to-peer lenders. China Rapid Finance is building a platform, in conjunction with the CCB, which will essentially allow investors to access CRF’s P2P offering via the bank – such that they may monitor their account, invest and withdraw money through CCB. We’re told that the new platform will be live by the end of September.
The People’s Bank of China’s recent outlining of a new set of regulatory proposals for P2P lenders appears to have served as the impetus for the CCB collaboration. Among the People's Bank of China's propositions were calls for consumer protection to be strengthened, which will entail an improvement of dispute resolution mechanisms and provisions. An upgrading of anti-money laundering systems was also on the agenda. But perhaps most relevant here was the stipulation that consumer funds must be kept in a third-party depository system – a requirement which will require the assistance of a third-party, qualified financial institution.
China Rapid Finance is a world leader in the mobile space. The peer-to-peer platform launched a mobile-based, pre-approved borrower acquisition campaign for loans up to 500 RMB ($80) in February 2015, and then wrote a staggering 800,000 loans in just 2 months. CRF is powered by cutting-edge technology and a focus on big data analytics. The platform has quickly risen to prominence within the market.
The next phase in the evolution of the Chinese P2P space will boil down to a separation of the wheat from the chaff. Some estimates suggest that up to 90% of existing operators will either need to drastically change their business models or close down entirely, in the wake of tighter regulation. CRF’s tie up with a major bank should set the platform in good stead to weather this period of change.
Of course, CRF is not the only Chinese P2P lender that is preparing for a storm. Leng Cheng of the ShanghaiDaily points out that the joint-stock banks Minsheng Bank and China Citic Bank have partnered with the likes of CreditEase and Jimubox in the past.