Nasdaq-listed fintech company Lexin Fintech has signed an agreement with China Guangfa Bank (CGB), one of the major commercial banks in China, to jointly tap China’s online consumer finance market.
Recently, more and more fintech companies in China are partnering with traditional financial institutions like banks to offer joint services.
Earlier this month, Tencent and China Construction Bank announced to jointly build a fintech lab; Ant Financial and JD Digits have also partnered with a number of banks to explore the fintech market in recent years.
Lexin said, its partnership with CGB is purely financial and that the latter will act as a funding source. Lexin told The Passage that it will help CGB to tap into the credit needs of China’s educated young adults, leveraging its advantages in customer acquisition, loan facilitation, operation and risk management.
Lexin claims to have worked with more than 100 institutional partners by 2018, and the number is growing. Moreover, institutional funding contributed 70% of Lexin’s new loan origination volume in the 4th quarter of 2018. As a result, Lexin’s loan facilitation and servicing fees increased by 448% from RMB379 million in 2017 to RMB2.1 billion in 2018, the company said.
According to Wall Street analysts, stable funding supply and diversified funding sources will become a core competitiveness for China’s fintech players in 2019. Deutsche Bank also said in a March analysis report that “the assets originated by Lexin are more attractive to institutional partners given low APR and stable asset quality.”