DIANRONG

Marketplace Lending, Blockchain and

“The New Future” in China

Presented by
Group 04
Amit
Swapnil Jaiswal
P2P Lending
A form of financial technology that allows people to lend or
borrow money from one another without going through a bank

Global peer-to-peer lending market was worth $83.79 billion in

2021

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Banking Industry in China
● Stable but slowing economic growth at 6.7%
● 5 major banks accounted for 55% of total bank asset
● Concerns: Majority were state-owned, starved the SMEs
● Targeted large deals to overcome operational costs
● Loan process tedious, long and time-consuming
● SMEs increased the risk of loan default

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Credit Industry in China
● Lack of system-wide credit profiling mechanism
● Credit Reference Centre is in charge of the system
● Collected data: 800mn, data available: 350mn
● US comparison: 86% has CC

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 Leading online P2P lending platforms
China, 2015 ranked by average number of page views (in million page views)

0 5 10 15 20 25 30 35 40
Lufax 38.08 PBOC acknowledged
Anxin 4.35 accessibility issue presented by
Duoduozhifu 3.7
regular financial banks in July
2015
Dianrong 3.16
My089 2.66
Yooli 2.46
PPDAI 2.43
PPmoney 2.21
Fangjinsuo 2.05
Renrendai 1.9
 Size of the P2P lending industry in China
(in trillion yuan)

2.8

2.25
Market size in trillion yuan

2.06
1.97
1.79

0.98

0.25

2014 2015 2016 2017 2018 2019 2020*

Source(s): ibaogao.com; Sohu; ID 1261276
 2007: P2P 2016: 138% volume
lending starts 2014: growth over 2015,
ballooning in Exponential $406bn, Expected 9m+
China Growth active users
1 3 5

2 4 6

2011: Starts becoming 2015: Exponential Scandals and ponzi schemes

popular in China, Growth continues unearthed impacting 900k
turmoil begins investor & $7.2bn 7
Regulatory Framework, Aug’16
● “Interim measures for administration of P2P Lending information
intermediaries”
● P2P platforms were defined as “information intermediaries”
● Required ICP license, limited loan amount one could borrow
● Mentioned “What NOT to do”, banks as custodian
● Dec’16: Only 183 complied, 122 in-process, banks disinterested
● Increased operating cost instead, Spot checks were introduced
● Many companies were expected to close by Mar’17
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 Number of P2P lending platforms in
China
3,844
Number of online P2P platforms

2,448

1,854 1,931

1,021

523
343
50 148
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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source(s): Website (wdzj.com); ID 652720

Dianrong
● Founded in 2012
● Soul Htite & Kevin Guo
● Branches in 30 cities, 5000 employees
● $500mn in monthly asset for 4mn investor
● Loans $4.3bn
● Non-perf loan rate: 2.3%
● #1 in compliance, transparency, technology
● #3 Overall in China
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Dianrong’s Tech edge
● US had credit history for 95% of pop, China almost non-existent
● Payments: collaborated with 3rd party SP, small payment with phones.
Optimized for transaction cost and rate of payment success
● Acc Mgmt: Complete history of transactions were available. Loan:
Lender 1:10,000 required extensive record management

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● Credit Profiling: Leveraged domestic data for risk management. Own
rating system in the long run.
● Cx information collection: Online. Used Selfies + Facial recognition +
3rd party verification + Call log access + GPS tracking. Had pre-
configured ”blacklist” warnings for CC
● Automatic Credit Assessment: Automatic + Manual
● Debt Collection Management: 3rd party. Assessment + Reward.
● Cx Acquisition: tracked churn rate of every step
● Cx Service: Call centre + data consolidation within WeChat

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Products & Services
● Only one with product range from $1,500 to $150,000
● Online Loans: Avg $1,500
● Consumer Loans: Avg $51,500; to high quality customers
● Cash advance Loans: Avg $51,500; Focus on Retail & Food Industry,
Low interest rate and low bad debt rate
● SME Loans: Avg $51,500; by offline teams
● Supply Chain finance products: Avg $150,000; used blockchain to
connect suppliers among lower tiers within various manufacturing
ecosystems
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Tuan Tuan Zhuan Core Tech
● Launched in June’14, powered the computing power
● Allocate capital to various lenders in real time
● Cumulative Volume: $5.1bn, Returns $165mn, Growth of 188%
● Dianrong mobile app + TTZ = Transparency

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Target Cohort
● 95% accessed via mobile, 75% b/w 18-38yrs
● Focus on Social Media such as WeChat
● Cx viewed Dianrong as Savings Channel alternative
● Low expectation of Cx: <7% return
● Didn’t switch investment regularly, Regular increases in investment
from $1,600 to $4,400 + $175/month
● Non-performing Assets ~2%
● Aligned well with the new rules limiting lending to smaller amounts

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 The New Finance
Cloud Computing
Old relied on high
performing hardware
New was infinitely scalable,
less expensive and on-
demand
Multiple-to-Multiple Data Microservices
Processign Structure Modular architecture made it
Old One-to-Many, Central efficient to assemble for
decision making tailored solution
New M2M, independent
decision making, improved
data processing speed

● 400bn individual transaction/day

● Daily platform update, Banks did it few times a year
● 3 Foci: Improved, Enabled & Created Finance
Improved Finance
● Automation of financial operations
● Comprehensive Business Intelligence: customized and personalized
reports for departments.
Eg: Risk Management could see overdue loans in real time
● Was able to provide affordable, faster & better

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Enabled Finance
● New Risk Management Capabilities
● Credit assessment process required analysis of massive unstructured
data collected from sources such as SM etc
● Developed AI & DA tools to self-adjust and update real-time
● Knowledge Chart: Graphical representation of borrowers and
investors. Showed high-risk loan and related connections.

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Created Finance
● Blockchain & Supply Chain Finance
● SMEs needed capital, but unable to secure loan traditionally
● Banks would cover 15% of 40mn SMEs
● Dianrong + FnConn = “Chained Finance”
● Focus: Electronics, Auto-manufacturing & Garments Industry
● End-to-end visibility, error reduction, cost savings, Inv mgmt.
enhancements
● Successfully disbursed $6.5mn loans

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 DR Group

Wholly
Joint Venture Partnerships
Owned

Dianrong Chained Hanwha Suzhou Bank

Credit Factory FinEX Asia
Marketplace Finance Group P2P Platform

Small Loans
Business

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Acquisitions + Partnerships
● Credit factory: Data Analysis & Automated anti-fraud filter, lowers
operational risk, expenses and processing time
● JV with Hanwha Group: Online lending market in Korea
● FinEX Asia: Connects Asian investors with HQ, low volatility asset in
US
● Suzhou Bank P2P Platform: Dianrong provided infrastructure etc

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Guidance Questions
?
1. How does Dianrong decide where to invest? How does the
company decide on nature of collaboration for growth?
2. What are the downsides of overexpansion?
3. How does Dianrong benefit from the positive externalities
it creates?
4. Thoughts on going public.
Discussions
Where and How to invest?
I. Alignment with mission/ vision/ business strategy
II. How big of an opportunity is it?
III. If they can add value/ mutual benefit
IV. Market Competitiveness/ Potential market share increase through
collaboration
V. Timing of the market
VI. Government regulations

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Discussions
Downsides of overexpansion?
I. Increased capital requirements/ A shortage of cash
II. Loss of control.
III. Compromised productivity and quality
IV. Insufficient planning and preparation
V. Expand too quickly.

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Discussions
Benefit from the positive externalities Dianrong creates?
I. Positive externalities are beneficial spillovers to a third party
or parties.
II. Benefits of a new product or process invented by a company
that can be captured by investing in a company.
III. Social benefits are the dollar value of all benefits of a new
product or process invented by a company that can be
captured by other firms and by society as a whole.

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Discussions
Thoughts on going public?
I. Benefits: Access to Capital, Increased Visibility, Improved
Liquidity, Valuation, Credibility, Improved Financial
Reporting, Access to New Markets
II. Currently, Dianrong seems to be well-off and thus doesn’t
need to go public.

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Thank You!