The mainland’s peer-to-peer lending industry, though growing fast, has been plagued with frequent reports of failures and frauds.
The business is also catching on in Singapore, where an increasing number of small business owners are tapping the P2P channel to finance their operations.
Singapore’s practices in the business may offer their Chinese counterparts some insights on how to improve the quality of internet lending platforms.
First of all is credit information. In addition to credit scores, investors also have access to details about a borrower, such as if a company director is married or divorced, or if a company is embroiled in any legal dispute, as well past repayment records, according to The Business Times.
Some P2P platforms in the city state also call and remind investors if they are putting too much funds in a single loan, and advise them to spilt the sum across a number of borrowers, the report said.
A systematic recovery process is usually in place. When payments are overdue, measures including phone calls to borrowers, the use of debt collectors and demand letters sent on behalf of the investors are carried out.
Individual players such as Funding Societies advocate a “skin in the game” philosophy. In other words, they eat what they cook by co-investing in every single loan to align interest with the small investors.
With small borrowers underserved by mainland banks, P2P platforms definitely has a lot of growth potential.
Those who are willing to give priority to customer interests stand a good chance to come out as big winners over the long run.
They can start with the transparency issue as many Singaporean operators emphasize.
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