With the rapid development of China’s Internet finance industry, people’s awareness of financial management is awakening with the improvement of their living standards. Many people invest their money in financial planning projects, among which P2P lending has become one of the most popular investment methods for investors.
Among many P2P platforms, Building Block Box, which was launched in 2013, completed its C round of financing on April 21, 2015, with a total amount of 84 million DOLLARS, and completed three rounds of financing in just three years, with a total amount of 150 million dollars. By the beginning of 2015, blocks box ranked among the top five in the overall ranking of online loan platforms.
However, with the occurrence of some negative events, the building block box in the rising stage suffered a failure, suffering the first big storm since its establishment.
Third party guarantee is broken halberd, building block box encounters trust storm
From the very beginning, The positioning of Blocks Box is to provide efficient and convenient financial services for middle class users. At the beginning of its launch, the platform was advertised with the slogan of “sincere and transparent, dare not to invest”. With the support of third-party guarantee companies, Building Block Box quickly expanded its platform operation, and within four months of its establishment, it had already borrowed more than 100 million yuan, and doubled the amount in another one and a half months.
Like most information intermediary platform, lego box mainly operating light asset platform model, does not have the ability to guarantee and attract investors in order to reduce investment risk, lego box selection and guarantee companies, by the guarantee companies and other institutions provide guarantee funds, lego box as an intermediary in the course of trading risk control management and charge a fee for the second time. However, this model also has a considerable loophole, that is, guarantee institutions can not appear capital fracture, once the capital fracture, the risk will be transferred to the platform for the matchmaking.
At that time, the industry reshuffle was still in full swing. Building Block Box cooperated with Hebei Turong, which had a state-owned background, and quickly occupied part of the market in a short time. But just as the so-called success is also xiao He, failure is also xiao He, relying on the MODEL of P2N building blocks box quickly started, but also planted in Hebei Financing investment bankruptcy of the emergency. In April 2015, Hebei Investment Finance faced the crisis of bankruptcy. As an AA+ rating guarantee institution with a state-owned background in Hebei, the bankruptcy crisis also gave a heavy hammer to the building block box in its prime.
According to the online loan risk assessment at that time, a total of 193 bids were entrusted to Hebei Finance Investment, with a total loan of 585 million yuan and a total repayment of 637.01 million yuan. Due to the bankruptcy of Hebei Investment And Finance, Building Blocks Box as an intermediary platform was also pushed to the forefront by public opinion. In order to reduce risks, building Blocks Box was forced to reduce a lot of cooperation with guarantee companies. In order to increase the trust of consumers, block Box chose to cooperate with third-party insurance companies, but now it has to eat the seed.
Blocks tend to be conservative boxes with more security but less appeal
The bankruptcy of the third-party guarantee company taught the building Blocks box a lesson. The platform also found the importance of risk control and management ability, and risk control should not be carried out for the sake of risk control. Only adding a layer of risk guarantee mechanism is not enough to form a systematic guarantee. Moreover, in previous cooperation, core data such as risk calculation were in the hands of guarantee companies. Although the platform only acts as an intermediary to connect investors with the project, once the borrower has problems, the interests of the platform will be implicitly implicated, and even part of the compensation pressure will be transferred to the platform.
After the Hebei Investment and Financing event, Jiengboke began to try to transform, and cancelled the cooperation with many third-party insurance companies, and reduced or even stopped many auto loan and mortgage business. Blocks box began to change from a strategy of rapid expansion to a business policy of steady play.
In order to strengthen the risk control ability of projects through the self-management mode, In 2015, Blocks Box launched the “Dome Plan” to cover the bottom of some investment projects, in an attempt to dispel the doubt of consumers’ trust in guarantee companies. However, the work notice issued by the online loan risk Special rectification Action group in 2017 once again explicitly forbidding the institutions within its control to continue to draw or add risk provisions, should gradually digest and reduce the scale of risk provisions, and strictly forbidding the online loan platform to advertise with risk provisions. The introduction of this policy means that the appeal of building blocks box to investors by relying on the bottom function of “Dome Plan” will be reduced to a certain extent. In order to attract the attention of more investors, building blocks box needs to find a new way.
In addition to risk control measures such as guarantee mode, investors also value the advantages and disadvantages of the projects provided by the platform when choosing a platform. At present, there are two products for investors to choose from: “Easy investment” and “optional investment”. Among them, “Easy investment” is an automatic bidding product with an annual return of about 7%, while “optional investment” has two investment plans: dome plan and self-risk plan, with an annual return of 10% and 14% respectively. By comparing products with similar platforms, it can be found that the building blocks box is not as good as the emerging online loan platforms such as Wukong Wealth Management and Hongling Venture Capital in terms of interest rate, and may not be able to compete with lufax and Rendai in terms of product safety.
In order to reduce risk, lego box the product generally tend to low interest rates, more conservative, but its platform 2018 Q1 earnings, according to project is more popular with investors one of the few high interest rates and 85% of the amount in the annual interest rate exceeds more than 10% of the project, and generally such projects is also associated with higher risk, This situation seems to be against the more conservative overall development strategy of block box.
It has been proved that the appeal of building blocks boxes to investors is gradually declining. According to the annual report, the number of building blocks box transactions in 2017 was still floating around 700,000 / month, while the average number of monthly transactions in 2018 was only 400,000 / month. I want both fish and bear paw, but we can’t have both. For those who choose bear paw instead of fish, whether they choose to continue their business concept or obey the general trend of investment, the building blocks box obviously needs to make a better decision in the future development.
There is no shortage of new opportunities, and the box deserves another shot
History tells us that net credit industry has been full of unknown risks and opportunities, like the middle ages the changeable sea, lego box in its inception with bravely fight won a large number of users and good wind industry status, but also due to be hit by reasonably after became more conservative. The industry is always changing, and conservatism can be a stumbling block, so the box should sail again, but before it does, the box needs to be ready to sail.
First, money to attract more young people, especially new middle-class users. Data show that the age distribution of investors is becoming younger. 46% of investors are post-90s, while 19% of investors are post-80s, and this proportion is increasing year by year.
If it can capture more young people, or the young middle class, then the box will undoubtedly have a good source of funding. This not only accords with the initial user expansion goal of Block Box, but also helps to lay a better foundation for the development of block box to a certain extent. Therefore, block boxes need targeted action. In terms of promotion methods, block boxes can be promoted through short videos, live broadcasts and other channels according to young people’s preferences. In terms of investment projects, building blocks box can design its own products based on young people’s preferences such as individuation and re-experience.
Second, further consolidate the attractive advantage of long-term investment. Reports show that investors are more inclined to invest in the long term, of which the project of more than 12 months accounts for about 45%, while the project of 7-12 months accounts for 35%, of which the investment of 1-3 months accounts for only 7%.
At the same time, the average project investment period of building blocks box also extended from the average of 6.76 months in 2017 to the average of 10.55 months in 2018. From this point of view, the trend of building blocks box itself is in line with the overall investment intention of the industry. If we can attract some funds with higher interest rates, the proportion of projects will be tilted towards mid – and long-term projects. Most of them provide high-quality medium – and long-term projects for investors, and if risk control is well applied, the evaluation of the platform itself can be improved. In this way, block boxes can not only have a higher market share, but also focus on long-term fixed investment with accumulated experience, forming a unique barrier advantage.
Third, seize more opportunities under the general situation of stricter regulation. At present, P2P platforms are facing thunderstorms. By the end of June 2018, there have been many fledgling P2P platforms stopped operation because of thunderstorms. With the further promotion of supervision, the number of non-compliant online loan platforms will be further reduced.
For the building blocks box that always pays attention to safety, this can be regarded as a good signal. First of all, the platforms that make up the number have left one after another. Investors are more strict about platform selection, which is exactly in line with the building blocks box’s safety-oriented strategy. Through the small and micro credit of the platform itself to disperse risks and the capital closed loop designed by the transaction structure, as an ecological chain, the borrower is strictly screened and the risk control strength of the platform itself is improved. The building block box may give a shot in the arm to some investors who lose confidence in P2P.
In summary, after years of cultivation, no matter what the mode of operation, brick box must have accumulated a lot of experience, after experiencing all kinds of ups and downs, more sophisticated brick box should continue to be stable, or expand the market in the turbulent period of the industry? It’s about survival, and the box has to make the right choices.
Article/Liu Kuang public account, ID: Liukuang110