P2P platform can become road to modest riches

Xiong Jianwei, a 27-year-old network engineer in Nanjing, Jiangsu province, has put his savings of more than 60,000 yuan ($9,690) into a peer-to-peer lending platform since 2013. His investment may not sound like very much, but Xiong receives a return of 7 percent to 10 percent, depending on how long he leaves his money with Tongbanjie, an online platform that hosts lenders with unrelated individuals, or "peers", without going through a bank.

"Tongbanjie has been my only financing platform for three years," said Xiong. He is happy with the extra income to subsidize his living costs in one of the most expensive cities in China.

"At first I was not sure if Tongbanjie was a reliable platform, but I came to trust it because it puts security first and offers satisfying services."

Such remarks must be music to the ears of the executives of Tongbanjie (literally, "copper coin street"), who have been bent on winning customers like Xiong.

Chief Executive Officer He Jun, 35, said that his company prides itself on its differentiation strategy, which focuses on being a supermarket of P2P products for individual investors.

He Jun, CEO of Tongbanjie. [Photo provided to China Daily]

"This year, rather than merely seeking more transactions, we will hone our differentiation strategy, strengthen risk controls and improve users' experience," he said.

Established in 2012, the Hangzhou-based company recorded transactions of 270 million yuan in 2013, rising to 10 billion yuan last year, when it turned profitable. It charges fees on each transaction.

As of the end of March, there were 1,728 Chinese P2P companies with outstanding loans of 151.8 billion yuan, according to data from Wangdaizhijia, a portal that provides Internet lending information.

Rather than competing with them, Tongbanjie serves as their platform. Although some Internet giants have entered the domestic online finance market, they have only generated traffic for P2P companies. For instance, Baidu Inc offered a series of financial products in conjunction with fund management companies that "ride" on the giant's traffic.

He said that as an online platform, Tongbanjie does generate traffic for other P2P companies, but it has also studied the quality of these companies and the products they offer to investors.

"We require our P2P partners to lend to individuals, and micro-sized and small firms, which make a large contribution to China's economy but often lack access to financial services," said He, adding that the company has selected more than 30 P2P companies to be on its platform.