SAN FRANCISCO, April 10, 2018 /PRNewswire/ -- LexinFintech Holdings Ltd. ("Lexin" or the "Company") (NASDAQ: LX), a leading online consumer finance platform for educated young adults in China, today attended LendIt Fintech USA 2018, where its Chief Risk Officer gave a speech highlighting the ways that technological innovation is transforming China's consumer finance market.
In the next five years, the financial industry will be revolutionized as customer service is handled almost completely by artificial intelligence, Lexin's Chief Risk Officer Ryan Liu told LendIt Fintech USA in an address titled "Unlocking China's Consumer Finance Opportunity with Fintech Innovation." The industry will shift to automation of 99.99 percent of loan orders, and 90 percent of loan collections, he said.
While China's consumer finance market remains significantly underpenetrated, such innovations in financial technology, and the expanding use of installment payments, are making credit a way of life, Liu told LendIt Fintech. These innovations are allowing China's consumers to buy on credit anywhere, at any time, for anything from health and beauty products, to travel, buying a car or medical care, he said.
Total unsecured consumer loans were still just 9% of China's GDP as of 2016, compared to 15% of GDP in the US market, Liu told LendIt Fintech. Outstanding consumer finance loans per capita in China are just 4,082 Renminbi ($653), a fraction of the approximately $8,500 U.S. loan per capita figure, Liu said.
There remains a huge mismatch between the income and consumption needs of young, educated people in China, Liu told LendIt Fintech. Traditional financial institutions in China have been unable to serve this young market, due to the lack of credit infrastructure in a nation where only 28% of the population has any kind of credit rating, he said. There are 86 million educated young adults between ages 18-30 in China, which is equal to about 25% of the total US population, and that figure is expected to exceed 100 million in the next 10 years, Liu said.
To tap this opportunity, and meet the consumer finance needs of this underserved segment, Lexin launched its Fenqile platform in 2013, part of an efficiency revolution in China driven by financial technology. Lexin's technology can make credit assessment with information not deployed by traditional institutions, while offering a superior user experience, Liu said.
Since Lexin launched Fenqile in 2013, installment payments have become a common practice among e-commerce platforms in China, Liu told LendIt Fintech. While others have followed, Lexin has become the leading online consumer finance platform for educated young adults in China, with 24 million registered users at the end of last year, Liu said.
Lexin serves a customer cohort of educated young adults in China that represents high growth, high income potential, high consumption needs, and a strong desire to build a credit profile, Liu told LendIt Fintech. Lexin captures this sweet spot of the China online consumer finance market by leveraging the tremendous opportunity in loans to educated young adults, who represent balance between risk and return, Liu said.
The expansion of consumer finance in China is being driven by technology: Artificial Intelligence, Big Data, Cloud Computing, and Blockchain, Liu told LendIt Fintech. Lexin's Hawkeye automated credit approval engine uses over 1,000 decisioning rules and more than 5,000 potential data variables to arrive at an approval decision and credit line amount within seconds, and this technology allows Lexin to handle 95% of loan applications automatically, he said. Lexin's advanced and customized credit risk management, and data-driven customer behavior and risk profiling, allow the company to offer better loan terms to its users, Liu told LendIt Fintech.
For its investors and partners, Lexin offers efficient capital deployment through its Wormhole System, which connects customers and funding partners in real time, Liu said. The Wormhole System allocates to funding sources based on their risk parameters, and sends qualified customer loans to funding partners for final approval, he said.
The trend of technological innovation driving the expansion of consumer credit will only quicken with the application of biometric technologies, like iris and voiceprint recognition, which will replace lengthy application processes, while also reducing fraud, Liu told LendIt Fintech.
Lexin is a Silver sponsor of LendIt Fintech USA 2018, the world's leading event in financial services innovation, which is being held at Moscone West in San Francisco from April 9 to 11.
About LexinFintech Holdings Ltd.
LexinFintech Holdings Ltd. is a leading online consumer finance platform for educated young adults in China. As one of China's leading financial technology companies, Lexin integrates its e-commerce-driven installment finance platform, Fenqile, with advanced risk management technologies, the Company's Dingsheng asset distribution technology platform, and the Company's Juzi Licai online investment platform for individual investors, to create a comprehensive consumer finance ecosystem. The Company utilizes technologies including big data, cloud computing and artificial intelligence to enable the near-instantaneous matching of user funding requests with offers from the Company's more than 30 funding partners, which include commercial banks, consumer finance companies, and other licensed financial institutions.
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LexinFintech Holdings Ltd.
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