By Jianfei Leng and Qiaoyun Ye
Business College of Hohai University, Nanjing, China
Image Attribute: Ebaodai.com Website Screenshot
Ebaodai is a financial information service plat form subordinate to Guangdong Ebaodai Asset Management Co, Ltd, which formally launched in June 25, 2014. It first created a new internet financial investment model: “investors-Ebaodai-cooperative institution-borrowers” both online and offline with the combination of platforms and institutions. It is one of the Peer-2-Peer (P2P) platforms that first truly realized third party funds custodian as well as introduce third party guarantees, third party asset valuation and third party law office as cooperative institution. It is also the first landed Guangzhou equity trading center, the first settled in Guangzhou Internet Financial Industry Park. Its total amount of transactions exceeded one hundred million in only half a year in 2014. On April Fool’ sday in 2015, the total amount of the transaction exceeded 2 hundred million with no overdue or bad loan.
1). The key is business model innovation
Ebaodai cooperated with the third parties both online and offline instead of using the traditional mode. Cooperated institutions carry out the examination and verification of qualification of borrower offline, and Ebaodai internet financial information service platform pick out investors online. It chooses the perfect qualified and reliable loan companies, asset evaluation companies, guarantee agencies and law firms as partners. It initially verifies borrowers through the mechanism of risk control and reexamines by asset evaluation companies and guarantee agencies, the law office conducts the second audit over loan qualification and the validity of the pledge. Only the high quality project would release on the Ebaodai platform. This model has its advantages over other P2P platform, the risk is blocked outside the cooperation companies through assessment and audit layer by layer. Although it will reduce some business, it protects the security of the platform investors.
2). 10 major security systems
a). Strict access system: Ebaodai sets up a strict access system to examine the financial strength, credit status, operating conditions, risk control ability and debt-paying ability of cooperated companies, only the approved and qualified companies have the opportunity cooperating with the platform to provide users with services.
b). Multi security examination over project: It includes on-the-spot investigation, examination of information, asset assessment, debt-paying ability assessment, mortgage management and the second examination.
c). Real third party’s funds custody: Ebaodai first adopts third party’s funds custody, which realizes the separation of the funds between the platform, debtor and creditor and cooperative companies. It provides investors with secure funds management.
d). Joint liability guarantee of the institution: Ebaodai directly requested for compensation and debt repurchase instead of traditional form of security. All the loan programs are recommended by cooperated companies which also offered joint liability guarantee. It also requested to provide 100% guarantee of principal and interest for each loan projects. Once the loan project appeared overdue risks, Ebaodai would ask the company to pay 100% advanced principal and interest to protect the safety of investors’ principal and interest.
e). Loan loss provision: It consists of two parts: initial insurance and project insurance. Initial insurance (10 million) was invested by Ebaodai at the very first time to deal with possible overdue risk; project insurance came from each loan projectof a certain proportion. Thus the continual accumulated loan loss provision can guarantee the safety of principal and interest of investors.
f). Third party’s asset value assessment: Ebaodai took the lead in introducing the third party asset appraisal institution. It offered professional and objective value assessment by field visiting of underlying projects’ guarantee and pledge, which can determine a reasonable amount of loan money to ensure the legal rights and interests of debit and credit sides.
g). Consultant guidance of professional service: Ebaodai provides customers with financial guidance, project funds flow tracking, repayment remind and investment advice by their professional consultant team. VIP memberseven can enjoy a one-to-one investment guidance.
h). A whole-process escort offered by leading financial experts: Ebaodai established the best advisory team to provide consultant guidance for its development by inviting the leading financial experts nationwide. The experts team brought continual wisdom for Ebaodai from policy judgments, market analysis, user requirements, product design and service upgrades in a all-round way. For users, it provides professional, safe, and leading business security.
i). Lawyers to provide legal protection: Ebaodai cooperates with authoritative law office to offer the platform with full legal advice and consultants. It ensures that the platform and the parties operate in line with national policies and regulations and protect the interests of all parties.
j). Technical security of the platform: Ebaodai is relying on Ali’s strong cloud hardware and network. With the use of double server interactive data management on cloud and offline and the adoption of security design of the system architecture, it identified as SSL global trusted site.
3). Strict audit process of risk control
The financial projects released on Ebaodai platform are high quality projects recommended by the cooperative organizations. After the loan application launched by the borrowers, cooperative agencies, Ebaodai risk control team and Ebaodai audit committee would carry out the examination. Afterwards, adopted projects can invite bids on Ebaodai platform. All these can guarantee the investment security of investors.
4). Cooperate with banks
Ebaodai reached strategic cooperation with Guangdong conghualiuyin village bank partnership company (which subordinate to Huizhou Bank) on October 2014. They carry out internet financial information service of bank financial products together. Ebaodai became the first platform to cooperate deeply with bank.
The cooperation, on the one hand, is expanding the bank’s business channels, helping to develop new products and services and improving the efficiency of bank loan projects; on the other hand, with strong financial strength of the bank, Ebaodai projects obtain more insurance, which can improve the confidence and investment enthusiasm of investors.
China’s P2P net loan industry is developing rapidly; new platforms emerge in large numbers. For lack of legal supervision since it has been born in our country, its development is not standard; hidden risk becomes exposed. Many platforms close down for all kinds of reasons, which bring a serious blow to the credibility of the industry. The healthy development of the new P2P platform has important practical significance to the stability of the financial order in our country.
About The Authors:
Jianfei Leng - Business College of Hohai University, Nanjing, China and Management College of Fudan University, Shanghai, China
Qiaoyun Ye - Business College of Hohai University, Nanjing, China
This article is an excerpt from a techincal paper, titleld “How Can New Online P2P Lending Platform Catch up from Behind―Take Ebaodai as an Example” published at iBusinessVol.07 No.04(2015), Article ID:61654,5 pages
Download The Paper - LINK
Cite This Article:
Jianfei Leng,Qiaoyun Ye, (2015) How Can New Online P2P Lending Platform Catch up from Behind—Take Ebaodai as an Example. iBusiness,07,132-136. doi: 10.4236/ib.2015.74015