BDA-H资本积木盒子科技金融项目商业尽调报告-EN-2015 01 31

BDA’sDueDiligenceReportonJimubox

Enjoyfastgrowthbutisnotsustainableduetolackofloyaltyfrombothchannelpartnersandinvestors,andenoughriskcontroloverloans;

Potentialtransitionintootherbusinessmodelsisalsoquestionableasthecompany’scurrentriskmanagementcapabilityisnotstrongenoughJan31st,2015ForHCapitalOnly©BDA20152TableofContentsExecutiveSummaryIntroductiontoChinaP2PMarketIntroductiontoJimuboxCompetitivenessofJimuboxAttractivenesstoInvestorsBargainingPowerOverChannelPartnersRiskControlCapabilityProfitabilityofJimuboxAppendixUnit:RMBMNSource:CompanyData,BDAAnalysis4Q2013+74%4Q20143Q20142Q20141Q20143Q2013+132%LoanOriginationofJimuboxAsaB2B2Cplatform,Jimubox’sloanoriginationhasgrownrapidlyoverthepastyear…InChineseP2Pmarket,theB2B2CmodelisnotfavoredbymostP2Pplayers,duetothelackofcontroloverriskmanagementandtheconsequentialunjustifiedriskandreturn4The

B2B2CmodelisnotfavoredbymostP2Pplayersbecause:LooseControlOverRiskManagementUnjustifiedRiskandReturnItisdifficultandnoteconomicallysensibleforplatformsadoptingB2B2Cmodeltohavefullcontrolovertherisksofloanprojects.Channelpartnersarereluctanttoshareallcustomerinformationwiththeplatforms.Moreimportantly,ifplatformsinsistonhavingcompletecontrolovertheriskonprojectlevel,borrowerswouldhavetogothroughtheriskcontrolprocesstwice;oncebytheplatformandoncebythechannelpartners.Itwouldbetimeconsumingandcostly,especiallyforthemainstreamP2Pborrowerswhoseticketsizeisrelativelysmall.Platformshavelimitedbargainingpoweralongthevaluechain,andtheirtakeratesmaynotbewideenoughtocovertherisktheyhavetobear.Sincechannelpartnersareresponsibleforborroweracquisitionandprovidingguarantees,theyhavethestrongestbargainingpower.Hence,thecutbyplatformsisverylimited,usually2-3%oftheannualizedloanorigination.Meanwhile,althoughchannelpartnersbearmostofthedefaultrisks,ifanychannelpartnersfailunexpectedly,theimpactontheplatformsmaybecatastrophic.Iftheplatformdecidestocompensateitsinvestorswithitsownequity,itsprofitsareverylikelytobewipedout.“Actually,wewereoneofthefirstP2PcompaniesutilizingtheB2B2CmodelinChina,startingin2012.Untilnow,wehaveonly3channelpartners,andtheloanoriginationfromtheB2B2Cmodelonlyaccountsfor10%ofourtotalissuedloans…WeintentionallycontrolthegrowthofourB2B2Cbusiness,anduseitonlyasasupplementtoourinformationplatformmodel…ItisdifficulttomanagetheriskoftheB2B2Cmodel.Thedefaultriskofthechannelpartnersseemslowifyouonlycooperatewiththemostconservativefinancialinstitutions.However,ifonepartnerfails,theimpactontheplatformscouldbecatastrophicsincemanyloansmaybeaffected.ThedownsideriskoftheB2B2Cmodelistoolargetobecoveredbythe2-3%takerate.”

-OperationDirectorofRenrenDai“Riskcontrolisthecorecompetitivenessandvaluepropositionofafinancialinstitution.Relyingonpartnerstoconducttheriskcontrolmakesthecompanyvulnerable…WeexperimentedwiththeB2B2Cmodelin2014forashortperiodoftimeanddecidedtoabandonit.Wecan’tbetourbrandimageontheriskcontrolcapabilityofotherfinancialinstitutions.”

-BDManagerofLufaxSource:BDA

InterviewandResearchAssuch,therewereseveralleadingP2PplayerswhotriedtheB2B2Cmodel,buttheyeventuallydecidedtoabandonitorlimititsscaleWebelieveJimubox’scurrentbusinessmodelisvulnerablefor3reasons:usersareverysensitivetothereturnandlackloyaltyinthelongrun,Jimubox’sbargainingpoweroverchannelpartnersisweak,anditsriskcontrolcapabilitywithchannelpartnersandprogramsislimited5AttractivenesstoInvestorsIntheshort-run,Jimuboxcouldacquireusersatareasonablecostandenjoygooduserstickiness,buttheuserreinvestmentrateandloanfulfillmentspeedareverysensitivetothereturnforinvestorsInthelong-run,userslackloyaltyandJimuboxfaceschallengesfrominternetgiantsChannelpartnerswhorepresent74%ofJimubox’sloansarecooperatingornegotiatingwithotherB2B2C,andsomehavealreadyquitbecausetheyhavetheirownself-operatedP2PorfinancingwithlowercostsChannelpartnersvaluefinancialcost,speedoffundraising,andcompliancewithpoliciesmost.However,JimuboxdoesnotshowanyabsoluteadvantageoveritspeersWearen’toptimisticaboutJimubox’sinvestmentstrategyforchannelpartnersanddevelopingoff-linegroupsBargainingPowerOverChannelPartnersJimuboxdoesduediligenceandseasonalreviewsforchannelpartners.Inaddition,JimuboxrequiresasecuritydepositHowever,JimuboxcoulddoalittleriskcontrolonspecificprogramsJimuboxhadoverdueloanswhichwerecompensatedbyitschannelpartners,andincreasedchannelpartnersalsobroughtchallengestoJimuboxCapabilityofRiskControlSource:BDAAnalysisAndcurrentlywehaveconcernsoveritspotentialconversionintootherbusinessmodels6Source:BDA

InterviewandResearchB2B2CInformationPlatform&LoanAssignmentRiskControlProceduresCollectApplicationMaterialandVerifyItsAuthenticityIdentifytheRiskProfileoftheBorrowersbyApplicationMaterialChannelpartnersoftheplatformplaytheleadingrole,whileplatformitselfhaslimitedpresenceinthisproceduresinceitisnoteconomicandeasilyfeasibletohavetwopartiestoruntheprocesstwice

PlatformsareinchargeofbothofthesetwoprocessesBothplatformsandtheirchannelpartnersassesstheriskprofileoftheborrowersaccordingtothecollectedinformationFeasibilityofSwitchingModelB2B2CToInformationPlatformorLoanAssignment

InformationPlatformorLoanAssignmentToB2B2C

B2B2Cplayershavetolearnthetechniquesofidentifyinginformationauthenticityfromscratch,sincetheirpartnersusedtohelpthemwiththatSincetheseplayersusedtorunthefullriskcontrolproceduresbythemselves,switchingtoB2B2Cmodeljustmeanstheywilloutsourcepartoftheproceduretotheirpartners;Itismorefeasible,andtheirpastexperiencehelpthemtomonitortheirpartners’workJimubox’sinvolvementinprojectlevelriskmanagementislimited,andthereforelacksoftheaccumulationofrelevantexperience7SMELoanConsumerLoanJimubox’sRiskControlApproachesBDACommentsJimuboxwillverifyallmaterialsprovidedbyitspartners,andcarryonfieldresearch.Mostofthematerialsarecopiesoforiginaldocuments.Forthoseofgreatimportance,Jimuboxwillcooperatewithlenderstoverifytheauthenticityoforiginaldocuments.SomepowerfulpartnersrefusetoprovideallinformationtoJimuboxfortechnologyprotectionpurposes.Italwaystakes2-3people1-1.5daystocompletethefieldresearch.It’sdifficultforJimuboxtoconductriskmanagementforSMEswithlittleexperienceandlimitedoff-linegroups.AsforSMEs,thefinancialstatementsandcompanyprofilesfailtofollowstandardrules.Thevalidityofthatinformationisalsoquestionable.ThesituationofSMEsiscomplex,andrequireslocalexperienceandconnectionsTheJimuboxofflinegroupsarestillintheirearlystages,meaningthatit’shardtoundertakeanyfieldresearch.Jimuboxwillmainlyfocusonspotchecks,andwon’tconductfieldresearch.Asforconsumerloans,Jimuboxwillconductspotchecksaccordingtocertainratios.Atfirst,theratiomightbehigh,andthenitwillbebroughtdownwithfurthernegotiation.Mostofthematerialsarecopiesoforiginaldocuments,suchasemploymentcertificates,IDs,assetreports,andcreditreports.Jimuboxseldomcheckstheoriginaldocuments.Jimubox’sriskcontrolreliessignificantlyonsecond-handparties,withlittlevalueaddedcontribution.Decisionsaremadeusingunreliablecopiesofcertaindocuments,especiallyinChinawheretheinfrastructureofcreditinformationisunderdeveloped.Face-to-faceinterviewsandfieldstudiesarecrucialriskcontrolprocedures,thoughthesearenotcommonpracticeforJimubox.Source:BDAinterviewandanalysisThefeedbacksfromJimubox’spartnersconfirmedthattheinformationofborrowersJimuboxcollectedisprimarilybasedonthesecondarymaterials,andlimitedtothoseprogramswhichgotfinancefromitsJimubox8“WesharemostdocumentswegotfromborrowerstoJimubox,andJimuboxdoesitsriskcontrolbasedonthosematerials.Butsmallandmediumsizedenterpriseslackstandardizedsystem.It’shardtogettheirrealandspecificmaterials.”

--Jimuboxpartner“WeprovidecopiesofpartoriginaldocumentstoJimubox,includingborrower’sbackgroundandfinancialdata.However,wedonotsharecollaterals’informationbecauseit’sconfidential.IndeedJimuboxdoesnothavecompletedriskcontrolinformation.Itiscountingonourfullguarantee.”

--JimuboxpartnerSource:BDAinterviewsandanalysisMostdocumentsthatJimuboxverifiesaresecondarymaterialsprovidedbychannelpartnersTheinformationaboutchannelpartners’programsthatJimuboxcouldseeislimitedtothosewhichgotfinancefromitsplatform“Asaprogramprovider,ourcompanyenjoysstrongbargainingpoweroverJimubox.Itjusttakesasmallshareofourfinance.WedonotprovideanyinformationforprogramswhicharenotfinancedfromJimubox.”--JimuboxpartnerSMELoansSimilarlytoSMEloans,Jimuboxreviewsborrowers’qualificationbasedonsecondarymaterialsprovidedbychannelpartnersmostly,andtheinformationJimuboxcouldseeislimitedtothoseprogramswhichgotfinancefromitsplatformChannelPartnersMaterialsProvidedRiskControlChinaAnxinCopiesofborrowers’materialsNoprimaryresearchOnlyreviewsecondarymaterialsShengxinrongjinCopiesofborrowers’materialsNoprimaryresearchOnlyreviewsecondarymaterialsZhongshengdeyiCopiesofborrowers’materials,includingcontactinformationNoprimaryresearchOnlyreviewpapermaterialsHerongdaiCopiesofborrowers’materials,includingcontactinformationDophoneinterviewNofieldresearchQCopiesofborrowers’materialsNoprimaryresearchOnlyreviewsecondarymaterialsConsumerLoans76huihelpsJimuboxtocollectinformationoftheborrowers,however,whichisheavilydependentonthesecondarymaterialsfrompartnersAssuch,webelieveJimuboxfacetwogreatthreatsintermsofriskcontrol:informationauthenticityandnonperformingofthepartners’otherassets9KeyThreatsofJimubox’sRiskControlInformationAuthenticityNonperformingofthePartners’OtherAssetsOtherprograms’delinquencyofchannelpartnerscouldhurtJimuboxEvenifJimubox’sprogramsareoperatingnormally,otherprograms’delinquencyofchannelpartners’otherassetscouldstillinfluenceJimuboxbecauseithurtschannelpartners’overallguaranteecapabilityButJimuboxlacksriskcontrolonthoseprogramsTheauthenticityofmaterialsthatJimuboxreviewsisquestionableJimuboxcannotseeoriginaldocumentsformostprograms.Thedocuments’authenticityiscountingonchannelpartners.ButduetotheunderdevelopedinfrastructureofcreditinformationinChina,withhelpfrominsiders,borrowersareabletoproduceallkindsoffakedocumentstocheatchannelpartnersMoreover,Jimubox’sofflineteamdoeslittleface-to-faceinterviewandfieldresearch.Itdoesmostofitsworkbasedonmaterialsprovidedbychannelpartners,ofwhichauthenticityisquestionableSource:BDAinterviewsandanalysisJimuboxhas4reportedoverdueloanssofar,thoughtheactualnumberofoverdueloansmaybegreater;increasedchannelpartnershavealsobroughtchallengestoJimubox10Thereare4overdueloanssofar,allofwhichcamefromYunnanZhongmingandwerecompensatedforbyZhongmingontheirduedateBorrowerDuration(M)Principal(RMBMN)InterestOverdueDayCompensationHongchengCoal6511%6/2014CompensatedtheprincipalontheduedateChengyiLogistics3510%8/2014CompensatedtheprincipalandinterestsontheduedateXingruimaofengAutomobile6512%9/2014CompensatedtheprincipalandinterestsontheduedateXianjianDecoration12612%11/2014CompensatedtheprincipalontheduedateHowever,theactualnumberofoverdueloansmaybemuchgreaterbecausechannelpartnerscompensatetheseloansontimewithoutnotifyingJimubox.Currently,thetotalsecuritydepositcancovertheoverduerisk.UnregulatedFinancialCorporations3Q20134Q201376%31%69%RegulatedFinancialCorporations40%52%100%18%Non-FinancialCorporations15%17%1Q20144Q20142Q20143Q201459%50%OverdueLoansofJimuboxWiththerapidgrowthofitsbusiness,Jimuboxcooperateswithmanymorechannelsandhigh-qualitychannelpartnersaretakingasmallershare.Assuch,Jimubox’sriskisbecominglargerInaddition,largenumbersofchannelpartnersbringJimuboxbigchallengesintermsofmanagementandriskcontrolRisksforIncreasedChannelPartnersSource:Companyinformation,BDAinterviewsandanalysisWespottedJimubox’srecentcooperationwithHanergy

(566.HK)andwebelievethisloanfacescreditrisk;wethinkthereshouldbemoreuncoveredbyus11JimuboxhelpedHanergy’ssubsidiarytoborrowRMB18MNwithnomaterialcollateralsHanergyhasbeenquestionedbyinternationalmediaforunusuallyrevenuegrowthandunrealisticprofitabilityHanergy’ssubsidiaryZhongXinNengFinancialLeasing(ZXN)borrowedRMB18MNthroughJimuboxbypledgingitsaccountreceivablefromHanergyGroupZXNhasbeenestablishedforonly3monthsbeforeborrowingmoneythroughJimubox,anditsonlybusinessistoprovideleasebackservicetoitsparentcompany,HanergyGroupTheholdingcompanyofHanergyprovidecreditguaranteeforthistransaction;However,thelistcoisnotresponsibleforthisguarantee,neitheristhepresidentofHanergy,Mr.LiHejunThefinancingmanagerofHanergytoldusthattheychoosetofinancethroughJimuboxbecause,unlikethetraditionalfinancialinstitutions,whichonlyacceptguaranteefromlistcoratherthantheunlistedholdingcompany,Jimuboxhasmuchlooseriskcontrolprocedures.Assuch,HanergycangetthefinancingquietlywithoutinformingitsinvestorsQuestionableToplineGrowth:AccordingtoFinancialTimes,filingsofHanergyshowthatmuchofthetoplinegrowthcomesfromwithin,i.e.thelistcosellmanyofitsproducttoitsparentcompany,ratherthanexternalclients.UnusuallyProfitability:Whilemanyofitsrivalshavestruggledtoremainprofitable,thelistcoofHanergy,whichsellsequipmentusedtomakesolarpanels,hasreportednetprofitmarginsofover50percent.Source:BDAresearch,interviewsandanalysisHanergyappearstobeasolidcompanywithstrongcredibility;However,thecreditriskofthecompanyisverylikelytobemuchhigherthanJimubox’sexpectation;Moreimportantly,Jimuboxdidn’tuseeffectivemeasuretoprotectitselffromthedefaultrateofHanergyWebelieve,tosomeextent,thisillustratedJimubox’svulnerabilityinriskcontrol,whichwillincreaseasthecompanycooperatewithmorepartners12TableofContentsExecutiveSummaryIntroductiontoChina’sP2PMarketIntroductiontoJimuboxCompetitivenessofJimuboxAttractivenesstoInvestorsBargainingPowerOverChannelPartnersCapabilityofRiskControlProfitabilityofJimuboxAppendix13DevelopmentofChina’sP2PMarketP2PlendingisthefastestgrowingfinancialserviceproductinChina171%515%813%201320122011201020092014198%272%TransactionValueSizeofChineseP2PLendingMarketUnit:USDBNTheChineseP2Plendingmarkethaswitnessrapidgrowthinthepastfewyears……muchfasterthanmicro-creditandwealthmanagementproductsinbanksLoanBalanceofChineseMicro-creditCompanies45%46%201320121,53220107421,145201120094522741H20142,032BalanceofChineseWealthManagementProducts

inBanksSource:

Wangdaizhijia,thePeople’sBankofChina,ChineseP2PlendingservicesindustryWhitePaper,

iResearch,brokerreportsUnit:USDBNUnit:USDBNN/A14P2PlendingprovidesamuchneededsolutiontoaverylargeunmetdemandSmall

enterprises(5-19

staff)90%Medium

enterprises(20-99

staff)43%68%Large

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(Year:

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Asia-Pacific

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Comparison

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2.Thefinancing

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enterprises.TherearelimitedchannelsforthefinancingdemandsofSMEssince:BankssetahighbarforSMEapplicationsAlimitednumberofmicro-creditinstitutionsandpawnshopsareavailable,andtheyareusuallygeographicallydispersedandwithalimitedavailablebalanceIn2012,86%ofthedomesticSMEsfailedtomeettheirfinancingneeds15Alargenumberofsmallenterprisesfailtofulfilltheirfinancingneedsduetoextremelyscarcefinancingchannels,whichprovidesvastpotentialfortherapidexpansionofP2Plendinginstitutions…ScarcityofFinancingchannelsprovidesvastpotentialforthedevelopmentofP2PlendinginstitutionsP2Pinstitutionsestablishtheirnationwidepresencethroughonlineplatforms,theavoidanceofgovernmentregulations,andlow-costfundingfromleveragingfinancesComparedwithotherchannels,P2Pinstitutionsaremoreattractivetoborrowersbecauseoflowerrequirementsandsimplifiedprocedures“ThereasonwhyIchooseP2Pforcreditloansisthattherearefewchannelsavailable.Banksdon’tevenacceptmyapplication,whilesmall-loancompanies,institutions,andpawnshopslackawidepresenceandIneverseethematall.”----P2PBorrower“ThemostsignificantadvantageofP2Pplatformsisthattheyavoidregulations,makeuseoflargeamountsoflow-costindividualcapital,andrealizescaleoperations.P2Pcompeteswithvariousfinancingchannelsbysettingalowandflexibleloantermandsimplifyingloanprocedures.”----P2PIndustryExpertSource:BDAinterviewandresearch16…andfinancingdifficultiesfacedbySMEsinclude:1)mostbanksstillprioritizelarge-sizedenterprises,astheirloandemandsarehigher…Bankspreferlarger-sizedenterpriseswithhigherloandemands1Currently,themainclientsfromdomesticbanksaremediumandlarge-sizedSOEs,whosedefaultriskislow.Thisenablesthemtocompletestrictreviewprocedureswithfewemployeeswhendealingwithhugeamountsofloans(timespentreviewingaloanapplicationperpersonisrelativelyfixed)Withdepositssqueezedbyotherfinancialproducts,theloan-to-depositratioisclosetotheupperlimitof75%formanybanks,whichrestrictsbanksfromlendingoutmorefundsandthereforemakesitlesslikelyforbankstoconsiderlendingtoSMEsLoan-to-depositRatioofMajorBanksinQ32013BanksL/DRatioBanksL/DRatioChinaMerchant’sBank77.48%SPDBank70.31%BankofCommunication73.86%EverbrightBank70.24%BankofChina72.23%BankofBeijing69.25%CiticBank71.53%HuaxiaBank68.95%MinshengBank70.34%PingAnBank66.06%“Restrictedbytheloan-to-depositratioandlimitedloanquota,banksprefertolendtohigh-profitclientswithlargeloandemands.Besides,bankspursuestabilityandthuspreferlow-risk,large-sizedenterprises.”----CreditSupervisorformCMB“TheStateCouncilissuesregulationsinDocumentNo.107statingthatcommercialbanksshouldseparatedepositors’fundsfromself-ownedfunds.Theyarealsoprohibitedfrombuyingtheirownloanswithdepositors’funds,whichactuallyputstheoff-balancebusinessbackonbalanceandforcesbankstosettheloan-to-depositratiocloseto75%.”----PolicyExpertfromCBRCSource:BDAinterviewandresearch17…2)Small-loancompaniescannotassemblesocialfundsandtheirinterestrateishigh;3)Pawnshopshavehighrequirementsoncollateralsandcannotexpandrapidly;4)Informallendingisnotprotectedbythelaw,anditsfinancingcostisusuallyhighRestrictedbyfinancingleverage,small-loancompaniescannotassemblesocialfundsandtheirinterestrateishigherbecauseofthehighercostofself-ownedcapital2Restrictedbylicenseregulations,thefinancingleverageavailableforsmall-loancompaniescannotexceed50%,thussocialfundscannotbefullyassembled.Withthehighcostofself-ownedcapitalandlimitedsize,institutionssethighinterestratestoensureprofits.“Small-loancompaniesarerestrictedtousingfinancingleverageduetolicenseregulations.TheirmoneyiscollectedfromshareholderswhohavehighROIrequirementsandthat’swhyweaskforahigherinterestrate.”----Expertfromsmall-loancompaniesPawnshopsareunlikelytoexpandduetothelimitsofself-ownedcapitalandthebusinessmodel3Pawnshopsdependfullyonself-ownedfundsandclaimhighROI,whichsqueezestheroomforreducingloanrates.Assuch,theyarelesscompetitiveandcannotexpandveryquicklyPawnshopsrequirecollateralfromborrowers,whichkeepssomepotentialcustomersaway“Non-financialinstitutionsincludingpawnshopsandfinancialleasingcompaniesarestrictlyregulatedintermsofbusinessscope.Pawnshopsarerequiredtodotheirownprimarybusinessandshouldnotenlargethefinancingleverage.”----StateCouncilDocumentNo.107Informallendingisnotprotectedbylaw,anditsfinancingcostsareusuallyratherhigh4Informallendingisorganizedbynon-financialorganizations.Borrowershavetopayahighinterestrate(usuallyevenhigherthantheannual25%).Astheinterestrateishigherthanthegovernmentprotectioncap(fourtimesthebenchmarkedinterestrate,i.e.,around25%),informallendinghashighlegalrisks.Source:BDAinterviewandresearch18P2Plendingisinitsinfancy,addressingaUSD$1.4-1.5trillionmarketInformalLendingSmallLoan600UnmetNeed8-16Pawnshops800P2PFinancingChannelsofSmallEnterprisesintheUS,2013IntheUS,thefinancingsmallenterprisesgetfromnon-banksis3-5timesthatofbanksNon-banksBanks2013E75-80%20-25%Ifweapplythesamescale,ChinesesmallenterprisesneedUSD1,300-1,600BNfromnon-banksFinancingChannelsofSmallEnterprisesinChina,2013Unit:USDBNBanks1,500320-400Non-banksBreakdownofNon-bankLoansforSmallEnterprises,2013Unit:USDBNSource:PBOC,CreditEase,iResearchP2PiscurrentlystillsmallinsizebutwillprobablyenjoygreatpotentialfrominformallendingandtheexplorationofunmetneedThegovernmenthasstrictcontrolsontheircapital.WillprobablygrowinthefutureatamuchslowerpacethanP2P.InformallendingcontainshighlegalrisksandwilllikelybereplacedbyP2P,smallloans,andpawnshops.Unmetneedswillbesatisfiedinthefutureasthelendingenvironmentimproves.Lowlegalriskwithlowcapitalrequirement.Willprobablyenjoygreatpotentialinthefuture.1920BusinessModelsofChinaP2PPlayersTherearecurrentlythreedistinctoperatingmodelsforP2PplayersinChinaBorrowersLendersP2P

Platform“InformationPlatform”BorrowersLendersP2P

PlatformChannelPartner“B2B2C”BorrowersLendersP2P

Platform“LoanAssignment”InformationFlowCashFlowInformationPlatformBearstheLeastRegulatoryRisksandistheMostCapitalEfficientModelLoanAssignmentModelRequiresaLargeBalanceSheetandOperatesLikeaBankwithoutaLicenseB2B2CModelGeneratesLeadsforSmallLoanCompanies,WhoGuaranteePrincipalandInterestsSource:BDAinterviewandanalysis21P2PplatformsadoptingtheInformationPlatformmodelconnectborrowersandlendersinapureinformationexchangecenter,andprovidetheservicesofriskcontrolandloanmanagement22BorrowersLendersP2PPlatformInformationPlatform123Source:BDAinterviewandanalysisLendingProcessBorrowersfileapplicationstotheP2PplatformP2Pplatformsattractborrowersthroughofflinesalesteamsoronlineadvertisements;borrowerssendtheirapplicationsandrelevantdocumentstotheplatformsP2P

platformspublishborrowers’informationAfterreviewingtheborrowers’application,P2Pplatformsputtheinformationofthequalifiedapplicantsontheirplatforms,enablinglenderstoselectborrowersLenderslenddirectlytoborrowersWhenlendersdecidetolend,theirmoneyistransferreddirectlytoborrowersthroughthirdpartypaymentcompaniesorcustodianbanksServicefeesP2PplatformschargeservicefeestoborrowersonamonthlybasisorasanupfrontfeeSomeoftheplatformschargelendersservicefeesaswell,usually10%oftheirreturnsRevenueSourceofP2PPlatformsRiskControlP2PplatformsareresponsibleforthewholeriskcontrolprocessLoanManagementMeanwhile,P2Pplatformsarealsoinchargeofdebtcollection,ifanydefaultsoccurValueAddedServices123BorrowersfileapplicationswithchannelpartnersUsuallythechannelpartnersarevariouskindsoftraditionalfinancialinstitutions(microcreditcompanies,guaranteecompanies,etc)withtheirownsourceofborrowersChannelpartnersreviewtheapplicantsanddeliverthequalifiedonestotheP2PplatformP2P

platformspublishborrowers’informationP2PplatformsscreentheborrowersandpublishtheselectedonesontheirplatformsLendermakethelendingdirectlytoborrowersBoththeP2PplatformandthechannelpartnerappearontheborrowingcontractasserviceprovidersMeanwhile,P2PplayerswiththeB2B2Cmodelacquireborrowersthroughchannelpartners;usuallychannelpartnersareinchargeofriskcontrolandloanmanagement,whileP2Pplayersprovidelenders23BorrowersLendersP2PPlatformChannelPartnersB2B2C12341234Source:BDAinterviewandanalysisLendingProcessServicefeesP2PplatformsshareservicefeeswithchannelpartnersChannelpartnersusuallytaket