Date
27 July 2017
The rate of return on offer is a good indicator of the long-term prospects of P2P players, says Soul Htite, warning against promises of unrealistic high returns. Photo: Bloomberg
The rate of return on offer is a good indicator of the long-term prospects of P2P players, says Soul Htite, warning against promises of unrealistic high returns. Photo: Bloomberg

How to distinguish a reliable P2P platform from a bad one

Lending Club co-founder Soul Htite has been doing a lot of travel lately to drum up support for his Chinese peer-to-peer (P2P) lending platform Dianrong.

Dianrong, known as the Lending Club of China, now aims to expand into Hong Kong, StartupBeat reports.

But instead of competing with banks for borrowers, the Hong Kong unit will focus on providing investing opportunities for people with surplus funds.

“Hong Kong people can use the platform to lend to mainlanders, Americans or people in other countries,” Htite noted.

Dianrong matches borrowers and lenders and takes 10 percent of the interest involved as commission.

The Hong Kong operation will be launched after the firm wins regulatory approval.

Recently, a rating agency warned of an upcoming crisis in China’s P2P lending sector. In comparing Dianrong and less sound operations, Htite said a key differentiating factor is the rate of return.

“A healthy rate of return is about 7-10 percent, platforms touting 30 percent return are unreal.”

Offering ultra-high return to win market share is a practice that is unsustainable. Poor risk management is another issue that leads to the failure of many P2P operations, Htite added.

– Contact us at [email protected]

RC

EJ Insight writer

EJI Weekly Newsletter

Please click here to unsubscribe