Writer: Lu Xiaoming
Last Friday, Chinese leading groups of the offices of the special regulation of Internet financial risks and the special rectification of P2P Internet loan risks formally issued the “Circular on Regulating and Adjusting the Business of Cash Loans“.
The circular calls for suspending the issuance of Internet-based microfinance loans that do not have specific applications or designated purposes to gradually reduce the loans issued within a short period. Meanwhile, the requirements for interest rates and risk control for cash lending were also declared. According to reports, the notice has caused much unrest within the cash loan industry – much of the industry must now restructure or cut interest rates.
However, Wang Jin, founder and CEO of FinTell (融慧金科), believes that this is beneficial for the fintech industry, as well as an opportunity for FinTell.
Before the regulations were introduced, many cash loans were issued with high interest rates in order to cover bad debts. But now, the new interest rate restrictions force cash lending platforms to take stricter risk control measures and rigorously screen users. This means that basic risk control, which has been neglected by some cash lending platforms, will be a major focus for the financial industry in the future.
FinTell uses Internet big data, AI, and its specialized risk control experience to provide financial institutions with turnkey risk control solutions.
The company currently serves over 30 clients, including licensed consumer finance companies, Internet companies, insurance companies, debt collection companies, and banks.
FinTell provides services to financial institutions through two methods: one is through standardized products and the other is providing end-to-end services for financial institutions, such as banks.
Specifically, end-to-end services refer to working with financial institutions to jointly select risk control factors and establish risk models, to build a risk management system for online services that FinTell also helps maintain and operate. The service is charged based on the value of the products and the technology provided.
From the perspective of banks, cash lending platforms providing loans to its mobile app users and countervailing the responsibilities not only violates the Notice’s restriction on outsourcing risk control, the risk control system of these cash lending platforms is also obscure to the banks. However, for FinTell, this is not the case.
To date, FinTell has launched two standardized products that address two major pain points faced by financial institutions.
One of the two products is an address integrity index to help financial institutions identify fraud risks. FinTell gathers user behavior and other data to verify whether the correct address was provided by users to compute the risks associated with each user.
The other standardized product is the multiple lending index, which addresses the problem of multiple lending. Currently, information sharing between financial institutions is still a work in progress, the Internet loan industry still lacks a mechanism for information sharing, and there are limitations to enumeration attacks.
FinTell’s solution evaluates a user’s multiple lending risks based on 20 or so behavioral patterns of the user on mobile Internet lending platforms.
Of course, the value of the aforementioned products to users depends on its coverage. Wang Jin believes that data is one of the advantages of FinTell and that through close cooperation with strategic partners, desensitization and value mining of information on active BAT devices can be achieved. In terms of compliance, the data requires the dual authorization from the mobile app user and technology service providers.
In addition to the wider coverage of the underlying data, FinTell believes its two other advantages are its team and technology.
The team currently consists about 40 people. Wang Jin, FinTell’s chairman and CEO has 20 years of management experience in the financial industry. He has previously served as VP of Baidu and was co-founder of Baidu’s Finance and was Sr. VP at American Express.
Chief Scientist and VP, Sheng Jun, has nearly 10 years of experience working with financial data models. He was the GM of Baidu’s financial risk control model and the director of the global risk supervision/enterprise model supervision department at American Express.
COO and Vice President Zhang Yu has 18 years of experience in the financial industry. He previously served as Financial Risk Strategist and GM of Baidu’s Financial Technology Department. Prior to that, he worked for Bohai Bank and American Express.
With respect to their technology, the team has experienced the global financial crisis and they also possess the risk management processes of domestic commercial banks and Internet finance. Wang Jin believes that these serve as the basis for the development of their financial risk control models, AI research, and the design and development of their fintech. It also allows them to provide customized services for different institutions.
Wang Jin believes that the risk-control industry has provided standardized products to the entire output management process and in the future, we will further refine the credit and modeling strategies based on the users and the situation.