Internet Business Thinking

Chapter 20 Online Lending: Ending the Lending Crisis?Financial Age Revolutionary? (2)
What is intriguing is that on the one hand, P2P online lending platforms have frequent disasters, and on the other hand, there has been a surge in platform entrants and transaction volume.iResearch predicted at the beginning of 2013 that P2P online lending platforms would increase by 161.1% to 346, and the scale of lending transactions would be 680.3 billion.However, the data provided by the China Electronic Commerce Research Center have both refreshed the conservative forecast of iResearch: by the end of 2013, the number of P2P online lending platforms had reached 1500, and the scale of lending transactions had exceeded 1800 billion.But what we must face up to is that the overheated P70P online lending industry is constantly smelling of burnt due to the various problems that broke out in the 2 P2P online lending platforms.

"Ponzi scheme" type shady
Just imagine: If a P2P online lending platform sticks to the bottom line and only provides platform services—no deposits, no violations of regulations to increase yields, and no disguised financial products—even if the development speed is slow, how can it go bankrupt overnight, and even the boss just runs away? event?
The Jinxin Wealth incident is not a simple case, it is a microcosm of the current P2P online lending chaos.In order to clarify the shady scene of bad companies in the P2P online loan industry, "Manager" conducted a further investigation on Jinxin Fortune.

"Manager" first wants to know such a question: What kind of background does Xiang Guoxiao, the boss of Jinxin Fortune, have?The business license on the Jinxin Fortune platform shows that Xiang Guoxiao is the legal representative, and the company is located in an office building in Zhabei District, Shanghai, with a registered capital of 2000 million yuan.However, after investigation by "Manager", Xiang Guoxiao was originally the boss of "Wenzhou Ruian Gaomeigao Sanitary Ware Co., Ltd. (hereinafter referred to as Gaomeigao)", and Gaomeigao Company was founded in 2004.In this way, the second question arises: Why did Xiang Guoxiao turn from industry to finance?

An investor on the Jinxin Wealth platform provided a clue to Manager: This investor visited Jinxin Wealth on August 2013, 8 to conduct a survey in order to invest in lending.At that time, Xiang Guoxiao told him that Gao Meigao was still doing export trade, with an annual profit of 6 million to 600 million yuan.

The doubts are obvious.

At that time, the export of sanitary ware industry fell by [-]% year-on-year.In this situation, is Gao Mei Gao really making high profits as Xiang Guoxiao said?If the answer is yes, then why didn't Xiang Guoxiao temporarily lend Gao Meigao's money to Jinxin Fortune to deal with Jinxin Fortune's difficulties when Jinxin Fortune was in trouble?In addition, why did all the employees of Jinxin Fortune go to Gaomeigao to find Xiang Guoxiao, but they couldn't find him, so they took extreme actions—posting this notice on their own platform?
Xiang Guoxiao's behavior is likely to be suspected of "self-financing", that is, his own Gao Meigao actually not only does not make money, but may also be in high debt.Xiang Guoxiao, who was in desperate need of money, took the risk and used the so-called financing from Jinxin Fortune's P2P online loan platform, and subsidized the money raised to Gao Meigao.

But what Xiang Guoxiao didn't expect was that the loan defaults on Jinxin Fortune's platform had risen rapidly, so that on November 11 of that year, he asked the company to issue an announcement, saying that he was busy with collection and fundraising. Postponement of issuing new bids (issuing borrowing requests).In addition, the lenders (investors) on the platform will have their principal and income repayment deadlines approaching... Jinxin Wealth promises an annual rate of return as high as 25%. At that time, what payment will Xiang Guoxiao take?It was under such a predicament that he chose to "walk first".

Then, "Manager" studied Jinxin Fortune's business model."Save the families of 2013 investors" mentioned in the report provides another important message.If Jinxin Wealth is only a third-party platform, and the loan transaction is only a matter between the lender (investor) and the borrower (fundraiser), how can we say "save the families of a hundred investors"?In addition, Jinxin Fortune said an intriguing sentence in the "Suspension of Cash Withdrawal Announcement" released on November 11, 15: "The cash flow is temporarily tight, and the cash flow will be suspended from today." We can't help asking, why is the cash flow tight?As a normal P2P online lending platform, cash flow can only appear in basic costs such as rent, wages, and internal control systems, and should not be related to the so-called "cash withdrawal". The word "cash withdrawal" is very sensitive, it generally only appears in banks, the premise is to absorb deposits.

In this way, we have to think that behind Jinxin Wealth, there is very likely a "Ponzi scheme" hidden: in the case of rising default rates of borrowers, Jinxin Wealth may start to absorb a large amount of deposits from lenders, and at the same time transfer the latter The investment of the lender in the previous round will be paid to the lender in the previous round as investment income until the capital chain is broken.

On the second day after the employee of Jinxin Fortune issued the report, "Manager" communicated with a customer service staff named "Wenwen" of Jinxin Fortune as an investor.She said that the company has stopped accepting investment, and her salary has not been settled. Tomorrow, the serious crime team of the public security department will intervene in the forensic investigation.When asked how much the company is short of now, she said she didn't know, but under questioning, she said that internal rumors may exceed the company's registered capital.

It took only 5 months for Jinxin Wealth from its establishment to the boss running away. However, its operating trajectory reflects the popularity of the entire P2P online lending market.History is always strikingly similar. Let us turn our memory back to 3 years ago. At that time, a new mode of Internet was emerging—group buying. At one time, thousands of companies surged, but more than half of them closed down in a year.Similarly, will P2P online lending, a new model of Internet finance, follow in the footsteps of group buying?

Five "black holes" of P2P online lending

P2P online lending is to build a platform through the Internet to provide loan services. It is not financial in nature, and its income can only come from service items, such as consulting management fees and transaction fees.If you engage in wealth management products, or even absorb deposits, or change the benchmark loan interest rate stipulated by the state in violation of regulations, it is a de facto financial transaction, which means "disintermediation" and separation from third-party attributes.Therefore, behind the explosive growth of the P2P online lending industry, it must be closely related to its rapid separation from third-party attributes.Summing up behind the "running doors" of P2P online lending platforms such as Jinxin Fortune, Taojindai, Angel Plan and Tianlidai, we can find five "black holes" in this industry: low entry barriers, model variation, deposit absorption, and super high returns The rate and credit information system are missing.

Low barriers to entry lead to a mixed bag.Judging from the registered capital of the P2P online lending platforms where "running away" occurred, it is basically between 1000 million and 2000 million, but the existence of these capitals is "as the name suggests" - just "registered", and only when the debt is settled, the registered capital means "limited liability".In fact, the threshold for starting a business on a P2P online lending platform is not only low, but also very low.

"Manager" learned that when starting a new P2P online lending platform, in addition to office building rental and initial start-up costs, the biggest expense is the purchase of a P2P system. "Manager" once tried to inquire in the industry, and found that this system can be purchased for a minimum of 2000 yuan.Then, with servers and customer service recruited, the company can operate.It is precisely because the threshold is so low that P2P online lending has become a booming industry.

Huge business opportunities lure speculators.Many people who had no previous experience in the Internet and financial fields rushed in. What they saw was a huge business opportunity for private lending.CITIC Securities pointed out that the total scale of China's private lending market exceeds 4 trillion, accounting for 10% to 20% of the scale of bank loans.Therefore, the lending market has attracted most of the non-financial circles of speculators to enter.For example, Xiang Guoxiao, the boss of Jinxin Fortune, and Liu Mingwu, the boss of Tianlidai, the former makes sanitary ware and the latter makes metal casting. Neither of them has worked in the Internet or financial fields for a day. Think of it as a speculative arbitrage business.

Stepping on the third foot in borrowing. There are only three main stakeholders in the P2P online lending model: the front-end is the borrower, the middle is the P2P online lending platform, and the back-end is the lender.It can be seen that the borrower is the market demand, the platform only acts as an intermediary, and the lender is the beneficiary.From the perspective of platform development and competition, the focus should be on the front end. Only by doubling the number of front-end borrowers and releasing the demand for loans can the back-end lenders be induced to pay.

Take the Angel Project in "Running Gate" as an example. In order to release the demand for loans on the platform, this company adopts the method of inflating borrowers and issuing false loan bids on its own platform, thus absorbing a large number of lenders. people's funds.But just like the result of the "Ponzi scheme", when the defrauded money is not enough to pay, it also means that the capital chain is broken and the scam has come to an end.

Whose right is the loan?Regarding the exchange of funds in lending, many P2P online lending platforms require investors to deposit funds into the platform account first, and then the platform transfers the money to the account of the fundraiser.However, this model itself has three major regulatory deficiencies: First, is the power to lend money the investor or the platform?Second, if the investment is not realized, where will the interest generated by the funds lying in the platform account go?Third, absorbing a large amount of public money is suspected of establishing a "fund pool" in violation of regulations, that is, reserves.

The sweet trap of high interest rates.Many P2P online lending platforms adopt the method of increasing the return on investment, that is, the annualized rate of return (according to the cycle of capital investment and recovery, and finally calculate the total rate of return for one year) in order to win the lender's funds.

The annualized rate of return of the angel plan once climbed to 96%.According to the data from Wangdaijia, Zhongbao Investment, which ranks first in the P2P online lending industry in terms of annualized rate of return, is only 31.13%. Obviously, the Angel Plan has seriously deviated from the order of the industry.

The credit system is missing. The capital flow of the P2P online lending platform focuses on whether the borrower can repay the money? The P2P online lending platforms of "Running Gate" have all experienced high debt defaults, which is related to the lack of credit reporting systems on the platforms.

What is a credit system?That is, the credit history and safeguards of the borrower can be recourse.In the words of Tang Ning, CEO of CreditEase, “Competitors can copy CreditEase, but they cannot copy CreditEase’s credit system.”It can be seen that the credit information system is a real competitive weapon for P2P online lending. The lack of a credit information system means increased risk. If it is added to intentionally create a "Ponzi scheme", disaster is only a matter of time.

As an innovative model of Internet finance—P2P online lending, it started from scratch in China in 2007, and now it has experienced 6 years of self-growth, giving birth to the current scale effect, and even China Merchants Bank, China Ping An and other financial giants are also actively involved , indicating that the P2P online lending market is vast, but if the industry is still as good as it is now, with frequent vicious incidents and group incidents, it will definitely lead to strict control by the regulatory authorities. At that time, bad money will inevitably drive out good money. It will also enter an inflection point.

Online Business Tips
Ponzi scheme
In 1917, Charles Ponzi (Charles Ponzi) opened a so-called "Securities Exchange Company" in Boston, USA, claiming that the company purchased international return coupons from France and Germany from Spain, plus a certain amount of profits to transfer U.S. dollars were sold to the U.S. Postal Service to earn the "price difference" between the U.S. dollar and the currencies of France and Germany, which were severely devalued after the war.

This plan can't make money at all, but some people still try to invest for a high rate of return of 50%.In fact, Ponzi pays the money of the new investor as a quick profit to the person who originally invested, in order to lure more people into being fooled.As the word spread widely due to the incredible profits, Ponzi managed to attract 4 investors in a few months, and the cumulative investment received exceeded 1500 million US dollars.

Later, when media reports caused new investors to question the company and wait and see, leaving the company with no new source of funds to pay the interest of early investors, Ponzi closed the store and fled with the investors' life savings.

(Section 2) Directly attack the chaos of the P[-]P online lending model
There is nothing wrong with the multiple innovative models of the current P2P online lending platform, the fault is artificial!In actual operation, some P2P online lending bosses and operators either hide their potential purpose, or intentionally violate regulations, or lack risk control capabilities, or have no qualifications at all. It is they who have created the current chaos of P2P online lending.

P2P online lending (Peer to Peer Lending, personal-to-personal lending), known as the "Internet financial spokesperson", has suffered a heavy fall: According to the statistics of Wangdaijia, as of the end of 2013, there were nearly 70 P2P lending The online lending platform encountered difficulties in withdrawing cash, and even went bankrupt, involving an investment of more than 13 billion.

How did P2P online lending, which originated in Europe and the United States and flourished all over the world, become a huge black hole in China?Is it the fault of the model, or the alienation after arriving in China, or is it the problem of the operator?

There are three changes in the mode

The model is the key to analyzing the development of P2P online lending in China, and it reflects the strategic and operational thinking of each P2P online lending platform.To analyze the model, it is necessary to understand the nature of P2P online lending. The first P of P2P stands for the lender (investor); 2 is the platform side of the Internet; the second P is the borrower (fundraiser).Therefore, the platform only acts as an intermediary. The borrower submits the loan demand through the platform, and the platform conducts an online review, and then releases the loan bid, and the investor bids. The platform does not participate in the loan transaction. , the platform does not give advance payment.

China's P2P online lending began in 2007 with an online lending platform called Paipaidai. However, due to the imperfect credit system in China and the low default cost of borrowers, it is difficult for investors to make risk judgments on borrowers through the Internet. That is to say, investors in Paipaidai may face the possibility of loss of principal, so the online loan industry has been tepid during this period.Until 2009, when Hongling Venture Capital proposed the principle of advance payment of principal, investors' concerns about the safety of principal have been greatly improved.As a result, China's P2P online lending industry has been pushed into the fast lane.

In an F1 car, the key to overtaking the opponent lies in the corners.The corner of P2P online loan is advance payment. Only by advance payment can the investor's principal not suffer losses due to investment failure. Immediately afterwards, investors will be willing to come to the platform that promises advance payment, so that the P2P platform can Gain popularity and funds, and thus quickly scale up.

In fact, except for Paipaidai’s promise not to advance payment, almost most P2P online lending platforms carry out various advance payment behaviors in order to increase their influence and scale.

There are two types of initial advance payment models: advance payment by guarantee companies represented by Hongling Venture Capital, and advance payment by risk reserves represented by Renrendai.However, these two advance payment models were quickly re-innovated by latecomers, and the P2N model represented by Kaixindai and Liyiwang was derived, that is, the borrower comes from a cooperative small loan and guarantee company, and the The guarantee company provides guarantee, and the platform does not participate in the borrower's development and principal advance.

In general, the P2P online lending model that provides the whole process of P2P online lending services, but does not provide guarantee for investors' collection can be called the P1.0P online lending 2 model; 2” The introduction of guarantees on the trading platform at this end, where the platform’s risk reserves or guarantee companies provide principal guarantees, is called the P2P online loan 2.0 model; the loan business and guarantees come from unrelated guarantees and small loan companies. , the whole process is P2N ("N" refers to multiple institutions, not direct person-to-person), which is called the P2P online loan 3.0 model.

At present, 2% of China's P99P online lending platforms are in the advance payment mode, that is, the P2P online lending 2.0 model, and the platforms that have problems are also in this mode, and this model has become the target of public criticism. So is there something wrong with the design of this model? ?
Our point of view is that we should not blindly deny this type of model just because there are problems in this model. This will kill the innovation of the entire online lending industry.If this model is detrimental to the market, why has it been welcomed and generally accepted by the market?This only shows that it is what the market needs.However, now we need to study the problems behind the operation of this model. Is it human behavior or insufficient strength and technology?These all require us to think deeply.

true lie
There is no right or wrong for a P2.0P online lending platform that adopts the 2 model, but from companies that have adopted this model and encountered problems, we have discovered four operational problems.

The subject of the guarantee right is unknown.Some online lending platforms use their own funds to lend offline first, and then issue bids online (issue loan requests) to transfer creditor's rights. However, creditors who sign loan and guarantee contracts with borrowers offline are all related parties of the platform. , then the subject of the guarantee is the creditor of the main contract.Therefore, the guarantee provided by the so-called guarantee companies on these platforms is actually confusing the public. What is guaranteed is not the interests of investors, but the interests of the platform side, that is, the creditors in the initial loan contract.

Take Wangying Tianxia as an example. When this P2P online loan platform was launched, it advertised that Hualongtian Investment Guarantee Company and Zhongke Hongye Guarantee Company provided guarantees. Then it stated that it only guarantees the loan from the platform side, and has settled the debt relationship. It has no relevant obligations and can do nothing about the inability of the platform to withdraw cash. At this time, the investor discovered that he was deceived by the gimmick of the guarantee.The platform has indeed received the money back or the advance payment from the guarantee company, but whether it can be withdrawn or not depends entirely on the personal ethics of the platform boss.

(End of this chapter)