Recently, Xingye Consumer Finance, a licensed consumer finance company, has been penalized for business violations, and a management personnel of the company was also fined.

Specifically, Xingye Consumer Finance was fined 1.7 million yuan by the Quanzhou Supervision Branch of the National Financial Regulatory Administration for failing to terminate cooperation with third-party institutions that had serious illegal and regulatory violations in a timely manner, imprudent management of cooperative institutions, and inadequate loan "three checks".

The third-party institutions referred to here are mainly loan assistance companies.

In simple terms, loan assistance companies use their own customer acquisition advantages to recommend funders to borrowers. After the funders' risk control final review, the loan is issued, and they obtain related service fees.

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In fact, in addition to consumer finance companies, these loan assistance companies also maintain close cooperation with banks. Among them, loan assistance companies help banks reach a larger loan demand group through their own channels, while banks, as fund providers, are responsible for the final customer review and loan issuance.

Many times, when borrowers cannot meet the bank's loan conditions due to credit issues, judicial records, or other reasons, they will turn to third-party institutions for loans. These issues can be compensated by loan assistance companies in some way, which is also the significance of the existence of the loan assistance industry.

It is worth noting that there are many chaos in the loan assistance industry, such as charging high intermediary fees, frequent routines, reselling customer information, and violent collection. Under supervision, where should loan assistance companies go?

Industry chaos attracts attention.

"Upload your ID card and you can get the loan immediately", "No collateral, low interest rate", "No handling fee", these advertisements that promise easy access to loans seem tempting, but often it is only when you are really trapped that you find the interest rate is shockingly high, and there are always various hidden fees.According to an investigation by a reporter from Legal Daily, some loan assistance institutions send out mass text messages promising "low-interest loans." After receiving inquiries, they contact the individuals, falsely claiming to be "bank staff," and ask them to sign contracts offline to handle loan business. Among these individuals, some have normal credit records but take loans from third-party institutions for the so-called "low-interest rates"; others have poor credit records and thus have further contact. Once a response is made, some unscrupulous loan assistance companies begin to set traps step by step, ultimately extracting high intermediary fees and service charges.

Many individuals have reported that after paying a high service fee to the company in one lump sum, they still have to repay the bank's loan interest, which is the same as the normal interest in the market, not the ultra-low interest originally promised by the company.

Some individuals have also reflected that during the signing process, some loan assistance companies would use methods such as crowding the door with multiple people, threats, and软硬兼施 to force individuals to sign the contract.

At the same time, the loan assistance industry also has issues such as violent debt collection.

According to information from the Black Cat Complaints platform, some loan assistance companies have violated regulations and excessively collected borrowers' information, leading to the leakage of their privacy. Once borrowers are overdue in repayment, they may face various forms of violent debt collection, and their contact list friends may also be subjected to "bombardment" harassment.

A consumer reported that she received a debt collection call just one day after the repayment date on a loan assistance platform. She wanted to negotiate a delay in repayment with the other party but was refused. Soon after, the debt collection calls reached all friends and family in her mobile phone's contact list and also sent related text messages.

According to an investigation by a reporter from Prism, the loan text messages or calls we usually receive from "banks" are usually sent by loan assistance companies in the name of banks. Once a response is made, the phone number will be recorded by the system and sold in batches to other loan intermediaries.

In addition, some publicly available business information, insecure websites, property management, etc., are important ways for loan assistance companies to obtain phone numbers. For example, for just 500-1000 yuan, a loan assistance company can buy the entire community's owner data from the community property management or security captain.

In January of this year, a loan assistance company in Shanghai was fined 300,000 yuan by the Shanghai Market Supervision Administration for using mass text messages, AI telesales robots, and other software to make false propaganda in the name of bank customer managers.Market Competition in Assisted Lending Intensifies

The assisted lending business in China originated as early as 2007, initially implemented in large state-owned banks such as China Construction Bank and Bank of China. However, due to the financial environment and business limitations at the time, it was not vigorously promoted.

It wasn't until the arrival of the "first year of internet finance" in 2013 that the development of assisted lending was provided with fertile "financial soil." Assisted lending institutions expanded from single microloan companies to financial technology companies, e-commerce platforms, and more.

After more than a decade of development, the demand for loans from small and micro enterprises and individuals has grown increasingly strong. Coupled with a vast market space, this has led to the current booming assisted lending market.

Overall, assisted lending companies in the market can be roughly divided into three categories. There are seven companies with a management scale exceeding 100 billion, including Qifutech, Lexin, as well as well-known internet giants such as Lufax, Du Xiaoman, and Meituan. There are 20 companies with a scale above 10 billion, including Xinye Technology, Jiayin Technology, Xiaoying Technology, Shuhe Technology, Orange Technology, ZhongAn Microloan, and BaiRong Cloud, and 16 companies with a scale below 10 billion.

Additionally, leading companies such as Qifutech (NASDAQ: QFIN), Lexin (NASDAQ: LX), Xinye Technology (NYSE: FINV), Jiayin Technology (NASDAQ: JFIN), and Xiaoying Technology (NYSE: XYF) have gained the favor of many investment institutions by leveraging the trend of assisted lending and have successively gone public overseas.

In terms of interest rates, most assisted lending companies' loan interest rates are between 18% and 24%, but a small portion of companies have interest rates as high as 36%.

As the market gradually matures and industry competition intensifies, the means by which companies compete for the market mainly focus on product innovation, service quality, and price advantages.

Taking product innovation as an example, some assisted lending companies have introduced technologies such as artificial intelligence and big data to improve business efficiency while reducing operational costs.

Furthermore, some companies have begun to seek innovative service models and differentiated competition, attracting customers and increasing customer stickiness by providing personalized solutions.The current industry trend places a greater emphasis on refined operations, such as user segmentation, and more detailed operations and services, with finer granularity and a higher degree of digitalization and intelligence.

Transformation Pressure under Stricter Regulation

As the market continues to evolve, the lending facilitation industry has entered a fiercely competitive phase. However, alongside the rapid development of the industry, a series of issues have arisen, including excessively high loan interest rates, overtaking risks, illegal customer acquisition through traffic diversion, and the potential to generate social risks.

In response, regulatory authorities have begun to intensify their oversight.

In July 2020, the China Banking and Insurance Regulatory Commission issued the "Interim Measures for the Management of Internet Loans by Commercial Banks," requiring banks not to delegate operations such as loan disbursement, principal and interest recovery, and stop payment to lending facilitation institutions. At the same time, it clarified that banks need to implement entry assessments, list systems, and tiered and categorized management requirements when introducing lending facilitation institutions.

In August 2020, the new version of the "Supreme People's Court's Provisions on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases" was released, establishing the upper limit of judicial protection for private lending interest rates, replacing the original "two lines and three zones" based on 24% and 36% as benchmarks, and requiring personal loan interest rates to be fully controlled within 24%.

In September 2021, the People's Bank of China introduced the "Credit Reporting Business Management Measures," requiring lending facilitation institutions not to directly provide personal information voluntarily submitted by individuals or obtained from external sources to financial institutions when cooperating in traffic diversion, lending facilitation, joint lending, etc., in order to achieve a comprehensive "direct connection cut" between personal credit information and financial institutions.

Faced with the pressure of stricter regulation, lending facilitation companies have begun to seek a second curve of business.

Going overseas has become a new growth point for lending facilitation companies in their pursuit of profits.

Taking FinVista Technology as an example, in the first quarter of 2024, the loan disbursement volume reached 46.1 billion yuan, a year-on-year increase of 10.3%, of which the international market's loan disbursement volume in the first quarter increased by 40.8%, contributing to the main growth.Currently, Xinye Technology has established international business in Indonesia and the Philippines, and is also carrying out technology service business in the Latin American region. Among them, the Philippines maintains a high growth rate, achieving a loan volume of 560 million yuan in the first quarter, a year-on-year increase of 194%, becoming a leading financial technology platform in the local area.

For example, JiaYin JinKe's overseas business has been launched in Indonesia, Nigeria, Mexico and other places. In the Indonesian market, the number of new registered users on the platform increased by 37% month-on-month, and in the first quarter, it is negotiating with five local licensed financial institutions.

LeXin also mentioned in the telephone meeting that going abroad is one of the company's future strategic directions. At present, the company has started its business in Southeast Asia and South America, and will focus on developing overseas business in the future.

Under the supervision, loan assistance companies begin to seek the second growth curve of the business. In the future, will the loan assistance industry usher in a smooth road, or higher and farther mountains?