More women, more third-tier city lenders, falling returns, and larger, longer loans: a new report sheds light on how the world’s largest peer-to-peer (P2P) lending market is changing fast. After the negative coverage, some of the trends are the opposite of what you might expect: trust is growing and as the sector is seen as safer, its user base is changing. We got some industry insiders to explain the changes.

To recap, in China, there are few places to invest money and fewer ways to raise it, with state-owned enterprises sucking up available credit from the mainly state-owned banking sector. This is partly what made P2P lending, where a platform acts as an intermediary to match borrowers and lenders, prove wildly successful in China. However, things were not quite as good as they seemed and high-profile Ponzi schemes and fraud have led to large swathes of new regulations which are expected to see the majority of platforms being shut down.

The negative coverage would suggest an industry in decline, but despite the challenges to the platforms, the P2P lending landscape is showing signs of development and maturity as the concept becomes more mainstream. A report released by Dianrongwang (点融网), a P2P lending platform, and Wangdai zhi Jia (网贷之家), online lending consultants, reveals how the lending side of the arrangement is changing: “Breaking with Tradition, Rational Optimism: A Portrait of Online P2P Lending Investors in 2016” (see a summary here).

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Frank Hersey

Frank Hersey is a Beijing-based tech reporter who's been coming to China since 2001. He tries to go beyond the headlines to explain the context and impact of developments in China's tech sector. Get in...