In a Kakao Pay-led Series B round, peer-to-peer (P2P) lending platform PeopleFund took in $11 million in funding. The South Korean company, which was started in 2015, matches borrowers with investors in a marketplace for lending, according to reports.
PeopleFund CEO Joey Kim has said that personal and consumer loans comprise about 25 percent of the loans on platform. In addition, 17 percent of loans are represented by SMEs, along with the rest on property and mortgage.
When it comes to the market for P2P loans, $4 billion are said to have been paid out during the last four years. PeopleFund-cited forecasts suggest that figure could reach $10 billion by 2019’s close. At the same time, the company along with its competitor, Tera Funding, have had $300 million worth of loans so far, per reports.
In China, X Financial specializes in helping underserved prime borrowers and mass affluent investors by matching those borrowers with investors willing to loan them money. Twenty percent of those investors are traditional financial services institutions, and the rest are third-party investors. The company typically serves customers who have already — or would have — qualified for credit from established financial institutions (FIs), but cannot get enough money via that avenue.
That means the big opportunity for X Financial comes from the 400 million or so Chinese consumers who have credit cards, but are hampered by limits that are too low. Those limits remain low because China is relatively undeveloped when it comes to credit bureaus and assessing credit risk, which makes lenders cautious and consumers frustrated. Young consumers freshly graduated from college also make attractive targets, since they have the earnings capacity and cards that have already passed a bank’s credit screen.
X Financial’s offerings include a balance transfer credit card product and an unsecured, high-credit-limit loan product. The company has also built a proprietary risk control system that uses behavioral, social and other data to determine the appeal of prospective lenders.