Under the regulatory requirements, the online loan platform itself “de-guarantee” is becoming more and more obvious. At the same time, under the policy guidance, many platforms are gradually introducing third-party guarantee, or cooperating with insurance companies to provide performance guarantee insurance and other types of insurance as a guarantee method. According to incomplete statistics, as of March 2017, there were 21 platforms involved in performance insurance. So far, no more than 10 P2P platforms offer performance insurance.
It is worth noting that, under the requirements of the regulatory authorities that “all regions should actively guide online lending institutions to adopt the introduction of ‘third-party guarantee’ and other ways to protect lenders”, the spotlight of the industry has been uniformly shining on the big platforms, and many head platforms have also made positive adjustments accordingly.
On the other hand, fintech platforms have increased the speed of reform. Recently, YENDai entered into a cooperation with PICC Property Insurance. According to the cooperation agreement, PICC property Insurance provides borrower performance guarantee insurance for certain loans matched by Yendai. The loan period of insured products is not more than 12 months, and the loan amount is not more than 200,000 RMB. In view of the current regulatory environment, the introduction of the “third-party guarantee” mode is both an attempt and a positive response to the regulation. But what is more critical is that in the sensitive period of industry development, The Company may attach more importance to the significance behind this cooperation.
Under the mode of “third-party guarantee”, the risk and trust mechanism is expected to be upgraded
The so-called “third-party protection” has two points that need to be clarified. First, compared with the platform, the “third-party protection” mode involves the “third party” to provide new binding force in the transaction process. Second, relative to provisions, “third-party protection” is performed in the form of insurance. In the case of Renyendai, on one side is “China’s first fintech stock” and on the other side is state-owned PICC. In addition to the “family matching” of the two parties, the “third party guarantee” model may also attach great importance to the improvement of the business ecology of Renyendai.
First of all, loan transactions on the platform can be further optimized from the aspects of risk and efficiency. In the original provision mode, the platform provides the source of funds for trust-breaking and performance, and all the default risks are grafted onto the fintech platform. In principle, this is not in line with the positioning of the fintech platform as an information intermediary. Therefore, supervision also put forward the requirement of “prohibit to continue to withdraw and add risk reserves”.
The “third party guarantee” mode requires the borrower to purchase the third party insurance before initiating loan demand. From this point of view, the borrower before the transaction, has assumed a certain risk of dishonesty, for the lender to provide financial security. The original provision is the source of funds for trust-breaking and performance initiated by the platform or related parties, while the “third party guarantee” is paid by the insurer. In general, the “third-party guarantee” mode optimizes the risk ratio to some extent and avoids the one-sided phenomenon caused by excessive tilt.
Secondly, the “third party guarantee” mode uses insurance business to constrain the whole transaction process, which has marketization effect and can screen high-quality borrowers and lenders. At present, because this mode has just been implemented and it takes some time to digest the provisions, only part of transactions on the Renyendai platform adopt the mode of “third-party guarantee”. According to relevant information, the borrowing modes on the Platform include elite mode, extreme mode, life insurance mode, provident fund mode, etc. One of the major differences between these models is the borrowing “pass”, that is, the borrowing channels are different.
The specific performance of market effectiveness in these loan modes is as follows: in the original provision mode, the borrower only needs to pass the examination of the platform to enter the market, but now it is different, because the borrower can have the right of active choice, that is, whether to introduce “third-party guarantee” for its loan transaction. This has virtually formed a relatively market-oriented trading mechanism. Because the borrower can choose to introduce “third-party protection”, it acts as an insurance policy for the lender.
Then, users are more likely to be the debt of the third party insurance exchange, so that interest rates would not be the only determinant, so a new trading variables, pleasant credit trading platform will tend to a market-oriented business mechanism, deal with third party insurance may be more likely to get the favour of lenders. In the long run, this mechanism will continuously screen out better borrowers, form a better online lending atmosphere, and further reduce the probability of transaction default.
Finally, PICC is a state-owned enterprise with strong guarantee ability, and the flexibility of “third-party guarantee” is no less than provision, which can further improve the credit mechanism of the platform. On the one hand, as a leading enterprise in the insurance business, PICC must pay attention to two aspects in its cooperation with Renrendai. One is the risk control ability of Renrendai and the other is the perfect business mechanism of Renrendai.
On the other hand, the “third party guarantee” mode is a brand new credit mechanism. Compared with the original trust mechanism, the borrower establishes a new transaction relationship with the third party, which also helps to restrain the borrower’s behavior. In terms of quantity, it is equivalent to adding new trusted parties and enhancing the flexibility of loan transactions.
In short, this cooperation between Yandai and PICC is first to meet regulatory requirements, and second to enhance their trust and risk mechanisms to cope with the coming changes in the industry.
The industry is undergoing constant changes and needs leaders to lead the way
Currently under the tuyere, in-depth actor is not much, such as point selection and close security cooperation in the melting earlier is testing the waters, and pleasant to borrow as head platform must move quickly, from its own perspective, takes the lead in introducing the “third-party guarantee” model can not only ahead, at the same time, it must also hope that the cooperation can bring some inspiration to the entire financial industry science and technology.
First of all, the fintech industry is currently a mix of fish and fish, platform development level is not uniform, and under the requirements of regulatory filing, “standard shortage” phenomenon is common. Net loan home survey data shows that in its random selection of 8 large net loan platforms, the number of new online targets this year is 2.192 million, and the same period last year was 2.818 million, down 22.3% year on year.
The strict audit mechanism will undoubtedly further reduce the approval rate of borrowers, but the reason lies in the platform to successfully pass the record, so as to strengthen the business audit standards. However, the difference is that the “third party protection” is advocated by the regulation. At present, there are very few large platforms that introduce the third-party guarantee mode, and the cooperation between Renyendai and PICC not only means trial operation, but also grabs certain first-mover advantages. For other platforms, “third-party protection” is a good way to break the ice.
On the one hand, “third-party protection” can update the trust and risk mechanism of the platform; On the other hand, the “third party guarantee” mechanism can release more borrowers from the original review process, further supplement the liquidity of the platform, and bring more profit opportunities to the platform.
Second, since its birth, the fintech industry has faced strong requirements for risk control capabilities. However, due to the lack of risk control capabilities, the wild growth of the fintech industry was also affected by the lack of risk control capabilities. In essence, the “third-party guarantee” mode aims to make fintech platforms return to the building and cultivation of risk control capabilities.
Under the mode of “third-party guarantee”, the platform will no longer guarantee various risk events through provisions, which requires the platform to keep its eyes open and improve its risk control requirements for any link. In essence, “third party protection” introduces more participants into a transaction process, which also leads to the need to add more risk control points to ensure the rationality and transparency of each transaction.
Finally, regulation requires fintech platforms to clarify the role of information intermediaries. In the provision model, fintech platforms take on more of the role of lenders’ capital guarantee, and excessive responsibility will lead to a lack of balance in transactions. The cooperation between Yirendai and PICC, as well as the cooperation between Dianrong and Zhonghe Guarantee, can provide some reference for the industry.
On the one hand, the “third party guarantee” mode removes the fixed provisions; On the other hand, the “third-party guarantee” mode enables the platform to be relatively free from transactions and focus more on the audit of transaction information. With increased flexibility and greater time and space to control information, fintech platforms will clearly be inclined to provide reliable information on financial services.
In this way, fintech platforms will also form their own databases of information in the process of transformation, and with the help of technologies such as big data analytics, they will be able to differentiate themselves. Therefore, in the long run, the positioning of information intermediaries under the “third-party guarantee” model is not a bad thing for fintech platforms.
Under the mode of “third-party guarantee”, the industry ushered in the era of “centralization of risk control”
What is clear is that under the constant pressure of regulation, provisions will soon become a thing of the past, and the “third party guarantee” model will come to an end. The head platform is more sensitive to the environment, and the increasing number of cooperation like Rendai and PICC actually sends a clear signal that the era of centralization of risk control in the fintech industry is coming.
In the past, the unreasonable growth of the industry led to the emergence of many malignant tumors, and the trust mechanism of the industry was once hit by large or small. Now, regulation is one thing, but more importantly, many platforms in the industry have realized this is a new growth opportunity and are beginning to steer the ship for a new start. For example, PpDAI canceled its warranty service in February, and Yidai.com canceled its limited advance payment program in March. On the surface, these platforms cater to regulatory demands, but in reality they are also seeking change in a changing world, and such a shift in direction requires sustained risk control.
On the one hand, the addition of “third-party guarantee” mode and the clear positioning of fintech platform information intermediary will make platforms focus on information supply and screening, which is the data basis of risk control ability. On the other hand, with the promotion of filing, a number of non-compliant platforms will be eliminated or rectified, while the remaining platforms will more or less plan new development directions under the guidance of supervision. After seeing the actions of the big platforms, it is bound to be a trend for small and medium-sized platforms to attach importance to risk control.
It is foreseeable that the wrestling point of fintech platform is shifting from the promise of break-even income to the risk control capability and trust mechanism of big data, and the era of “risk control centralization” in the fintech industry is coming.
Article/Liu Kuang public account, ID: Liukuang110