The nation lags behind China in developing Internet banking because regulators are less tolerant of financial innovations that may upset the traditional banking ecosystem, Greg Gibb, chairman of the Shanghai Lujazui International Financial Asset Exchange Co, said yesterday.
Gibb, founder of Lufax.com, a peer-to-peer lending platform under China’s Ping An Group (中國平安), said the platform is the world’s third-largest P2P firm just two years after its formation, thanks to regulatory tolerance and the prevalence of the Internet and smartphones.
Peer-to-peer lending, also known as person-to-person lending and abbreviated to P2P lending, is the practice of lending money to unrelated individuals or peers without going through a traditional financial intermediary such as a bank.
Lending is transacted online on a host Web site using various lending platforms and credit checking tools. P2P lending is growing fast in many countries and China stays ahead in this market as the number of Internet users is increasing rapidly and regulatory restrictions are largely absent, said Gibb, who used to be chief operating officer at Taishin Financial Holding Co (台新金控).
There were 1,000 P2P companies in China as of last year with transactions totaling 105.8 billion yuan (US$17.03 billion), including 26.8 billion in deposits and 68.03 billion in loans, Gibb said.
Taiwan may not see a big breakthrough in the next three years as regulators are conservative about financial innovation, even though the government constantly underscores the importance of innovation, Gibb said, adding that the overcrowded and fragmented market helps limit bold and competitive strategies.
China allows non-traditional innovation and takes regulatory action only when necessary, he said.
That helps explain why China’s e-commerce agent Alibaba Group Holding Ltd (阿里巴巴) and its online payment affiliate, Alipay.com Co (支付寶) have expanded so fast, and risen to a globally dominant position, Gibb said.
“Greater market tolerance fosters better discipline among companies,” he said, whereas Taiwanese regulators have implemented detailed restrictions to slow e-commerce.
In addition, the large difference in interest margins between traditional banks and underground lenders provides business opportunities for P2P companies, Lufax.com vice president Hurbert Tai (戴修憲) said.
Chinese banks set interest rates at about 8 percent, but shadow banking firms may charge 30 percent to 40 percent.
Aware of the high credit risk linked to innovation, Gibb said he would not be surprised if 80 percent of P2P companies folded, as quite a few have exited the market, mainly because of reckless operations and loose credit analyses.
Lufax has managed to avoid the mistakes by using big data to analyze the credit profiles of potential clients, Gibb said.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
While China’s leaders use their economic and political might to fight US President Donald Trump’s trade war “to the end,” its army of social media soldiers are embarking on a more humorous campaign online. Trump’s tariff blitz has seen Washington and Beijing impose eye-watering duties on imports from the other, fanning a standoff between the economic superpowers that has sparked global recession fears and sent markets into a tailspin. Trump says his policy is a response to years of being “ripped off” by other countries and aims to bring manufacturing to the US, forcing companies to employ US workers. However, China’s online warriors
RSS