China’s leading Fintech company, Lexin (Nasdaq: LX), in Sanya announced that it plans to invest RMB 1 billion (USD 159 million) together with its partners over the next three years, on April 18 at the Lexin Partner Conference 2018.
Approximately 300 staff members from Lexin’s partner organizations attended the conference to exchange ideas and extend cooperation.
“We will expand cooperation with financial institutions by offering co-branded credit cards, expanding our service to more use cases, and working on technology cooperation, ” said Jay Wenjie Xiao, Lexin’s chairman and CEO.
Xiao said that Lexin has made breakthroughs in 2017 as their total registered user count nearly doubled, and users who have made purchases on Fenqile grew by 42.5% from 2016 to 2017. According to the company’s unaudited Q4 earnings report, the total number of its registered users soared to 23.9 million as of December 31, 2017. As a result, Lexin is becoming profitable. In the Q4 report, the company’s total operating revenue reached RMB 5.6 billion (USD 89.2 million) in the year of 2017 while financial services income reached RMB3.0 billion, representing an increase of 92.9% from 2016.
Lexin’s key online financial service product, Fenqile (which translates to “happy installment”), provides young Chinese consumers with easy access and low interest loans for installment payments. In the near future, the company plans to launch a new feature called “Lejie” under Fenqile, which will allow users to borrow cash from multiple financial institutions.
Moreover, Lexin also plans to issue more co-branded credit cards to its users as well as provide users access to installment financing on other e-commerce platforms.
China’s online payments market is estimated to be worth as much as USD 17 trillion while the growing habits of young Chinese using installment financing has fuelled a list of Fintech platforms including Qudian, Rong360, and ppdai.com. Similarly to Lexin, these platforms were all successfully listed on the U.S. stock market last year.
Still, Alibaba’s online payment platform, Ant Financial, has secured its crown as the top player in the Chinese market. Ant Financial’s revenue reached USD 8.9 billion in 2017. The platform is currently seeking an IPO in Hong Kong. It is reported that Ant Financial will likely to become the world’s top super unicorn with an expected total valuation of about USD 150 billion valuation from various investors.
For Lexin, it remains extremely positive to the potential purchase power of educated young Chinese.
According to the 2017 Installment Shopping Behavior Report, “The use of installment payments is on the rise in China, and will continue gaining in the next few years, becoming a new engine for domestic consumption.”
The report was published in this past January by Lexin with the help of business partners including Apple, Vivo, Oppo, Xiaomi, Dell, and others.
For example, the annual average number of orders per user paid for by installments on Fenqile platform has increased in each of the past three years, to 11.2 in 2017, from 10.6 in 2016, and 7.2 in 2015, the report said.
In the future, Lexin said that it aims to assist more financial institutions to better manage the risks of their loan portfolios related to the educated young adults.
(Top photo taken by AllTechAsia)