Lufax, one of China’s leading online wealth management groups, is transferring its entire “tens of billion US dollars” worth peer-to-peer (P2P) lending portfolio onto a blockchain platform, according to South China Morning Post.
Greg Gibb, Chief Executive Officer of Lufax highlighted that the nature of the distributed ledger technology (DLT) could help serious players in P2P leading industry to improve transparency and drive down costs, at the Hong Kong Fintech Week 2018 on October 31.
As the Chinese government is strengthening oversight on the industry, Gibb expected that, in the near future, hundreds of P2P platforms would be weeded out from the existing 1,500 still operating today. He explained that:
“The problem for the P2P lending sector, not just in China but also globally, is that it is not transparent. So if we could put all the contract terms between a borrower and lender on the blockchain ledger, then these (become)unalterable.”
By adopting DLT blockchain technology into the global P2P ecosystem, all the players including regulators, custodians and transaction parties will be able to access any updates in all loan contract terms in real time. As thus, a timeless and effective peer-to-peer lending process can be completed by the DLT-based solutions.
The CEO indicated that Lufax will use blockchain to manage their clients’ documentation. According to the new rules on the asset management industry that came into force in May, define a qualified investor as someone whose net financial assets are at least 3 million yuan (US$432,950), and gross financial assets of 5 million yuan.
Lufax is about to update the financial information of their clients in the blockchain ledger, including the bank statement or others that can verify their source of income, in order to target qualified investors without frequent bank qualification.
In addition, Gibb disclosed that the Ping An Insurance unit will also adopt blockchain technology to verify the eligibility and documentation for qualified investors in China.