FinEX Asia is a new fintech asset management company with global reach. Our fintech solution makes it easy and efficient for Asian investors to finally tap into the U.S. consumer credit asset class.
FinEX Asia provides:
Our API solution allows us to simultaneously plug into multiple U.S. marketplace lender platforms to maximize diversification.
Our blockchain solution allows us to securely lock down the underlying consumer credit asset and to ensure data integrity and safety.
Risk and Tax Optimization.
We have a proprietary, machine learning-based risk model that allows us to pick the best quality consumer loans, which in turn reduces default risk. Our structure also optimizes tax withholding requirements for investors.
Transparency and Control.
All investments returns are monitored in real time, allowing for instantaneous reporting.
Fast & Efficient.
Our fintech solution ensures greater cost efficiency that allows us to share our savings with our investors and maximize returns.
Consumer credit is a superior, but often overlooked, asset class for many investors. Importantly, consumer credit is resilient to market movements and enjoys a high-yield, fixed income return that outperforms other asset classes over time. It is also a short tenor asset class that allows flexibility.
Consumer credit is everywhere today, but typically, the U.S. market enjoys the strongest consumer-credit ecosystem:
Blockchain stores information on the network in a distributed and secure way. The primary benefit of such distribution is data security and transparency of the data transacted within the system. Blockchain is powerful and presents limitless opportunities.
FICO, originally Fair, Isaac and Company, is a data analytics company based in San Jose, California focused on credit rating services. Since 1956, the U.S. consumer credit market has trusted FICO scores to rate the creditworthiness of individual borrowers.
According to FICO’s score standards, the three major credit bureaus – Equifax, Experian, and TransUnion – produce credit reports for every individual using a massive number of consumer credit records. The reports correspond to different FICO scores.
Banks typically raise capital through banking deposits and then lend at much higher rates to borrowers. This is driven in part by the banks’ high cost structure, including branch networks, higher capital reserve requirements and a reliance on manual processing.
Alternatively, marketplace lending relies on advanced technology platforms to bring online borrowers and lenders together to make lending fast, flexible and affordable. Fintech significantly lowers operating costs, often 50% less than traditional banks, which benefits borrowers and lenders.
Much like individual debt instruments rated by S&P or Moody’s, potential U.S. borrowers are evaluated and assigned a FICO score from 250 to 900. The higher the score, the lower the risk of default and the greater chance of on-time payments. Marketplace assets are sourced from borrowers with very strong FICO scores.
Though U.S. consumer credit is an attractive asset class, a number of access hurdles remain for Asian investors:
Intimidating Onboarding process
Any investor wanting to invest in U.S. consumer credit has to onboard themselves with the marketplace lenders and each platform’s onboarding requirements are different. Onboarding processes such as Know-Your-Customer (KYC)/ Anti-Money Laundering (AML), as well other due diligence can be time consuming and costly
Risk of Platform Concentration
Due to the onerous onboarding process, a typical investor will likely only onboard with one or two marketplace lenders. That works against asset diversification.
U.S. withholding tax issue
Unless an investor fulfils an elaborate U.S. tax-withholding exemption, the investment returns will attract up to 47% in U.S. withholding tax, which limits the attractiveness of this asset class. Additionally, unfamiliarity with the U.S. market or the underlying product, coupled with language barriers, are other potential problems.