3, You have said that the biggest challenge for internet finance’s development is the lack of infrastructure building. What you’re really pursuing is to constructing a B2B internet finance platform, which is an asset securitization platform for over-the-counter (OTC) market of fixed income capital, and then formulating the standards by offering series of services, like credit rating and investigation, assets collection and liquidation. What achievements and challenges have you come through building your ABS platform so far?

We have devoted around a year to developing this online ABS system, the whole meaning we contribute so much human resources, time and energy to do it is to match it with bonds’ over-the-counter (OTC) market, which could understood as those provincial-level assets trading platforms. This share of market’s growing prosperous also matches with the trend of the whole finance industry. So among the whole project, the core technologies include financial engineering and information techniques, which help generate ABS products then to trade them effectively.

If we observe the current ABS products in the market, the ways of transforming a underlying assets into trading product include online and offline. Most ones use the offline mode, like traditional investment bank, usually take at least 3-4 months to accomplish a product, and with so much human resources put into, the transaction cost would be hard to cut down. So we’re trying to figure out whether there could come up with a solution to make such a long chain offline trade more simple and flexible, and the standard should be unified for both online and offline.

So by providing this ABS online platform, we endeavor to show how to process the underlying assets’ key parameters through variety of risk valuation models, and then formulate the primary speciation of a product, then it could be interacted among institutes like law firms, rating agencies, securities companies, trust agencies and so on, which also include regulators, hence to make this product tradable. The vital strengths of this platform are shortening of production cycle and cutting down of transaction cost.

The main challenge for us now is that the whole chain is too long, that involves bodies varying from underlying assets to investors. These bodies need to locate themselves in this process through coping with changing trend, and also the system has to adapt to different parties’ needs. Our next step is to update this system’s effectiveness to cater for variety of users’ requirements.

4, Based on your experience in internet finance industry, how do you see this industry’s future, and also how do you see the future innovation that might happen by using internet technology to manage credit risks?

Finance is really sensitive to information technology’s development, like block chain technology is a representative example how internet deeply affect finance industry. My opinion is the core issue is how to use information technology to achieve updating and transformation of the market and individual participant, hence to find the new location of individual in the information market.

For example, in banking industry, there are over 4,200 banks in our country, while actually their ability to implement internet technology is diversified, so the digital gap between banks is increasingly widening. We used to say big fish eating small fish, then it deduces to fast-swimming fish eating slow-swimming fish, while for now you could compare it as technological fish would finally win.

As for the credit information collection and credit guarantee scheme, I regard these aspects as really important trend of future’s development. The first problem is the volume. We could see that the amount of highly-rated credit consulting firms is still too small, their guarantee ability is still too limited. All the assets of 3A credit consulting firms add together would be no more than 100 billion RMB, which means they could only guarantee for 1 trillion RMB.

The second problem is the current credit investigation system is too static and divided, it stays as collecting financial conditions of companies, much effective information are buried among branches of government and commercial institutes in the market. A system built from more comprehensive sources would be needed to solve these problems.