BUSINESS An Alibaba-backed fintech company founded by a 34-year-old just had an amazing IPO

BUSINESS

An Alibaba-backed fintech company founded by a 34-year-old just had an amazing IPO

Frank Chaparro | Business Insider

09:02, October 21, 2017

Alibaba Fintech IPO.jpg

Qudian, an online small credit provider went public on the New York Stock Exchange.   (Photo: Kerry Gao)

The company, which was founded by a 34-year-old named Min Luo, is going after a market it says China's biggest banks can't serve.

Carl Yeung, the company's chief financial officer, told Business  Insider the firm was going after a market the country's  traditional banks couldn't serve. Yeung said reaching the  hundreds of millions of Chinese people with modest incomes is too  expensive for larger financial-services players. Qudian is using  nascent technology to capture that market.

"We are looking to use behavioral data, more and more data, to  discover business opportunities," Yeung said. "We are tracking  the cutting-edge data with artificial intelligence to see who has a high willingness to repay."

With such technology, the company is able to offer folks higher  credit limits and earn a larger margin.

Qudian, according to a press release, "facilitated $5.6 billion  in transactions" to 7 million customers in the first half of the year.

Qudian's strong IPO illustrates the red-hot market for fintech in  China. Some of the world's largest privately owned financial  technology companies are based in China, including Lu.com, a  Shanghai-based personal finance company, valued at $18.5 billion,  according to CB Insights.

A recent study by the consultancy EY found that one in three  digital consumers used two or more fintech products. This level,  according to EY, indicates that fintech has crossed the threshold  of early mass adoption. The firm said adoption was being driven  by emerging markets, such as China.

"FinTech adoption by digitally active consumers in Brazil, China,  India, Mexico and South Africa average 46%, considerably higher  than the global average," the report said. "From an individual  market perspective, China and India have the highest adoption  rates at 69% and 52% respectively."

The firm said emerging markets were more open to fintech  disruption because of the large populations of people who are  underserved by existing financial infrastructures. 

Here's EY,   "Our five emerging markets are characterized by having growing  economies and a rapidly expanding middle class, but without  traditional financial infrastructure to support demand.  Relatively high proportions of the populations are underserved by  existing financial services providers, while falling prices for smartphones and broadband services have increased the digitally  active population that FinTechs target."

Yeung said this environment would open the door to many  multibillion-dollar financial technology companies in China. He  hopes Qudian will be among them.

Carl Yeung, the company's chief financial officer, told Business  Insider the firm was going after a market the country's  traditional banks couldn't serve. Yeung said reaching the  hundreds of millions of Chinese people with modest incomes is too  expensive for larger financial-services players. Qudian is using  nascent technology to capture that market.

"We are looking to use behavioral data, more and more data, to discover business opportunities," Yeung said. "We are tracking  the cutting-edge data with artificial intelligence to see who has a high willingness to repay."

With such technology, the company is able to offer folks higher credit limits and earn a larger margin.

Qudian, according to a press release, "facilitated $5.6 billion in transactions" to 7 million customers in the first half of the year.

Qudian's strong IPO illustrates the red-hot market for fintech in  China. Some of the world's largest privately owned financial  technology companies are based in China, including Lu.com, a Shanghai-based personal finance company, valued at $18.5 billion, according to CB Insights.

A recent study by the consultancy EY found that one in three digital consumers used two or more fintech products. This level, according to EY, indicates that fintech has crossed the threshold  of early mass adoption. The firm said adoption was being driven by emerging markets, such as China.

"FinTech adoption by digitally active consumers in Brazil, China,  India, Mexico and South Africa average 46%, considerably higher  than the global average," the report said. "From an individual  market perspective, China and India have the highest adoption  rates at 69% and 52% respectively."

The firm said emerging markets were more open to fintech  disruption because of the large populations of people who are  underserved by existing financial infrastructures.

Here's EY, "Our five emerging markets are characterized by having growing  economies and a rapidly expanding middle class, but without  traditional financial infrastructure to support demand.  Relatively high proportions of the populations are underserved by  existing financial services providers, while falling prices for  smartphones and broadband services have increased the digitally  active population that FinTechs target."

Yeung said this environment would open the door to many  multibillion-dollar financial technology companies in China. He hopes Qudian will be among them.

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