Are peer-to-peer lending firms set to be become the next big thing in wealth management in China?
Swiss boutique private bank Bordier & Cie will be hoping so, given its new partnership with Credit China Holdings, which provides internet-based financing to small and medium-sized enterprises.
This follows moves earlier this year by another mainland P2P firm, CreditEase, to build its own wealth management business and look to source investment products from outside China.
The Bordier-Credit China deal is not a full-blown joint venture, but a statement of intent to explore working together on the mainland. The target segments may seem quite different, but there is a clear overlap in terms of potential clients.
Credit China's P2P platform has a client base of 450,000, of which it estimates 10% are HNWIs. The firm has also obtained a licence this year to sell mutual funds and it may start putting funds on its open-architecture platform next year, said Phang.
Ang Eng Hieang, executive director at Bordier, is confident the strategic partnership can realise growth for both firms. The bank will explore the potential for client referrals and distribution if products and services to high-net-worth individuals (HNWIs) via Credit China's online platform.
This would have been difficult otherwise, given Bordier's relatively small size. The Zurich-based firm has SFr20 billion in AUM, but Ang declined to specify the figure for Asia. It opened its first regional office in Singapore four years ago and has less than 15 relationship managers serving clients in the region.
Meanwhile, Credit China aims to expand its business from providing short-term loans and financing through its peer-to-peer platform into wealth management solutions. Partnering with a private bank with 170 years of heritage gives it the credibility to serve HNWIs, said Phang Yew Kiat, chief executive at Credit China. The firm is listed in Hong Kong and has offices there and in Chongqing, Shanghai and Shenzhen.
Most of its wealthy clients are first-generation wealth creators who need succession planning and trust services, as well as investment solutions, he added. Bordier has the relevant expertise in this area, as it is managed by the fifth generation of its family founders.
Ang sees the internet as a logical and powerful channel for Bordier to use. “China is an innovative market,” he said, referring to the surge in popularity of online platforms for investment fund distribution. He cited Alibaba’s e-commerce site, Alipay, which propelled Tianhong Asset Management to become China's largest fund house by assets through online sales of money-market fund Yu'e Bao.
It was too early to say what form the online platform partnership would take, Ang said, but he noted that the internet has potential for applications in the private banking segment, as well as for retail.