The concept behind P2P (peer-to-peer) lending or online lending is very compelling—to connect borrowers, whether they are individuals or companies, with lenders, saving the profits that have been harvested by big banks and credit card companies. It seems a win-win deal for all parties involved: the loan borrowers get lower interests, the investors have a higher return and the platform enjoys a service fee.

The idea became popular when it was first proposed around a decade ago. The then fast-growing sector fostered a series of unicorns. US P2P pioneer Lending Club was valued at $5.4 billion in its 2014 IPO and its peer Prosper was valued by private investors as worth $1.9 billion in its prime. Although a few years later than its foreign counterparts, Chinese P2P platforms have grown rapidly with leaders in the sector such as Hexindai who has gone public, and the likes of Lufax and Dianrong poised for an IPO.

But running the appealing concept in the real world is a whole lot more complicated when facing rising default risks and profitability problems. The P2P industry soon hit that point where doubt and genuine concern outweigh whatever goodwill its novelty once attracted. Large chunks of the once-up-comers were wiped off the map and some of them went bankrupt.

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Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.