Fireside Chat with Gregg Gibb & Jason Jones
A fireside Chat with Gregg Gibb, Chairman & CEO of Lufax, and Jason Jones, Co-Founder & Partner at Lend Academy, at LendIt USA 2015.
Lufax is a 3 year old company and has originated $2.5 billion last year from their platform. Half of their business is connecting lenders and buyers. This includes loans for cars, small businesses etc. The other half of the business is securitization. Lufax securitizes and resells loans to retail investors.
Lufax’s philosophy is that there are assets and investors. Their platform is a way to give better risk adjusted returns to hungry Chinese investors as well as credit to borrowers. The population in China tends to save more at a younger age, meaning that those with spare capital are more tech savvy than their older, yet similarly investment seeking US counterparts. This is a factor in the popularity of seamless online p2p lending in China.
There are other differences beyond the relative youth of Chinese investors. Regulations and SOE banks constrain returns and also prevent any institutions from lending to individuals. In China, if you are a company lending, then you are a bank. But in the US, you can be lent as an institution and not be a borrower. In the online p2p lending world in the US, three quarters of money comes from institutional investors. For Lufax, it is very fractured with 100% being retail investors.
Lufax is linked directly to the Chinese Credit Bureaus. They use alternative methods to underwrite, such as driving safety records to evaluate how safe it is to lend to a driver. It also seems better to lend to women or someone who has had 1 phone number for more than 2 years.
One of the main factors in the initial growth of Lufax was their partnership with Ping An, (founded in 1988) which is the largest non-state owned lender in China. Gregg Gibb states that the Chinese p2p and securitization lending market will grow 30x in the next few years.