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FinEX Asia - US marketplace to invest professional Asian investors
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About FinEX Asia

What is FinEX Asia?

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.

What are FinEX Asia’s unique advantages?

FinEX Asia provides:

Platform diversification.
Our API solution allows us to simultaneously plug into multiple U.S. marketplace lender platforms to maximize diversification.

Asset protection.
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.

What is the shareholding background of FinEX Asia’s shareholders and its team?

FinEX Asia’s shareholders and management team mainly consist of senior professionals in the fields of FinTech, finance, and technology. Dianrong is a strategic technology partner.

Who is Dianrong?

Dianrong is FinEX Asia’s strategic technology partner. A leader in online marketplace lending in China, Dianrong originates US$500 million in monthly assets for 4 million retail lenders. Founded in 2012, Dianrong offers small and medium-sized enterprises and individuals a comprehensive, one-stop financial platform supported by industry-leading technology, compliance and transparency. The company’s sophisticated and flexible infrastructure enables it to design and customize lending and borrowing products and services, based on industry-specific data and insights, all supported by online risk-management and operation tools. Dianrong’s specific offerings include marketplace lending-related services and fintech solutions. The company was named in 2016 to the executive directorship of the National Internet Finance Association of China, led by the People’s Bank of China. Dianrong is headquartered in Shanghai. Click here to learn more about Dianrong.

What makes FinEX Asia different from other asset management company?

FinEX Asia is the world’s first FinTech marketplace platform and asset management company that integrates blockchain with artificial intelligence technology. It connects Asian investors to US consumer credit and other high-quality and low-volatility assets. With its advanced FinTech infrastructure, FinEX Asia can provide risk modelling, blockchain-based data security systems, real-time performance monitoring and liquidity in the secondary market, allowing investors to make better investment decisions.

Financial Technology

What is Financial Technology (Fintech)?

Fintech is the dynamic intersection between traditional finance and technology. It now includes a variety of technologies and applications:

Blockchain or distributed ledger technology stores information in a distributed and secure way across the Internet. The primary benefit is data security and the complete transparency of the data transacted within the system, which can never be changed or deleted.

Marketplace Lending
Online lending platforms quickly and easily connect borrowers and lenders to expand attractive consumer lending options. Marketplace lenders use technology to facilitate and service the loans, but do not participate in the financial transaction itself.

Supply Chain Finance
Blockchain technology maps and manages large, complex supplies chains and bridges the financing gap for many smaller suppliers. These complicated supply chains are common in consumer electronics, automobile manufacturing and garment production.

Credit Factory 2.0
This is the risk management and credit evaluation framework that combines Big Data and traditional credit-evaluation processes through a powerful fintech quantitative system. This credit infrastructure reduces manual operations and ongoing risks.

How is blockchain technology applied?

FinEX Asia selects investment targets across cross-border online credit platforms. A cross-border and cross-platform system connection relies on mature blockchain technology.

Blockchain is a secure distributed ledger technology (DLT) that integrates new technologies in mathematics, cryptography and economic principles. Transactional data is scattered across each of the connected books. As no one can temper with the data, the information in the system remains correct and complete. This is an extremely important technology for ensuring the safety and authenticity of data in cross-border and cross-platform transactions. Since it ensures that the data cannot be tampered with, the authenticity is assured, thus it has higher security and transparency than traditional transactions. FinTech has made international investment more secure compared with the traditional ways, and has ensured better risk management.

Because blockchain does not require third-party verification procedures or reconciliation in the process of data maintenance (it usually operates in the back office), it helps significantly reduce cross-platform and cross-platform transaction costs, yet allowing for more transparent audit and supervision procedures. The cross-border FinTech trading platform provided by FinEX Asia also spares investors of the needs for direct investment review procedures, withholding of income tax, and other trivial matters.

How is AI technology applied?

AI models perform granular analysis using big data and complex computational engines. With the help of AI deep learning, FinEX Asia is able to classify asset quality more carefully, breaking through the existing framework to discover high-quality products that are not easily found by the traditional model, and identifying risks more thoroughly before reducing them.

Investment Process

Who can invest into FinEX Asia’s products?

Individuals or institutions who are qualified as professional/accredited investors recognised under all applicable laws and regulations governing securities dealings and investment activities in the corresponding jurisdiction(s). The definition of professional/accredited investor varies from country to country. Please see below for examples from Hong Kong and Singapore.

Professional / Institutional / Accredited Investors

What is the definition of professional/accredited investor in Hong Kong?

In Hong Kong, professional investors (Professional Investors) are divided into three categories:

  1. Institutional Professional Investors – i.e. those falling within paragraphs (a) to (i) of Part 1 of Schedule 1 to the Securities and Futures Ordinance (SFO), e.g. authorised banks, licensed intermediaries.
  2. Individual Professional Investors – i.e. individuals who, either alone or with their spouse or children on a joint account, have a portfolio of at least HK$8 million or its foreign currency equivalent. The term “portfolio” is defined as a portfolio of securities, money held by a custodian or a certificate of deposit issued by a Hong Kong authorised financial institution or a bank which is regulated in any other jurisdiction.
  3. Corporate Professional Investors being:
    1. Trust corporations with trust assets of at least HK$40 million;
    2. Corporations or partnerships which have a portfolio of at least HK$8 million or total assets of at least HK$40 million;
    3. Corporations whose sole business is to hold investments and which are wholly owned by one or more of the following: (i) a trust corporation within (a) above; (ii) an Individual Professional Investor; (iii) a corporation or partnership within (b) above.
What is the definition of professional/accredited investor in Singapore?

In Singapore, the two types of investors below are considered as professional investors:

  1. Institutional Investor
    Under the Singapore Securities and Futures Act (Chapter 289), “Institutional Investor” means –

    1. A bank that is licensed under the Banking Act (Cap. 19) of Singapore;
    2. a merchant bank that is approved as a financial institution under section 28 of the Monetary Authority of Singapore Act (Cap. 186) of Singapore;
    3. a finance company that is licensed under the Finance Companies Act (Cap. 108) of Singapore;
    4. a company or co-operative society that is licensed under the Insurance Act (Cap. 142) of Singapore to carry on insurance business in Singapore;
    5. a company licensed under the Trust Companies Act 2005 (Act 11 of 2005) of Singapore;
    6. the Government of Singapore;
    7. a statutory body established under any act in Singapore;
    8. a pension fund or collective investment scheme;
    9. the holder of a capital markets services licence for dealing in securities, fund management, providing custodial services for securities, real estate investment trust management, securities financing or trading in futures contracts;
    10. a person (other than an individual) who carries on the business of dealing in bonds with accredited investors or expert investors;
    11. the trustee of such trust as the Monetary Authority of Singapore (Authority) may prescribe, when acting in that capacity; or
    12. a designated market-maker;
    13. a headquarters company or Finance and Treasury Centre which carries on a class of business involving fund management, where such business has been approved as a qualifying service in relation to that headquarters company or Finance and Treasury Centre under section 43E(2)(a) or 43G(2)(a) of the Income Tax Act (Cap. 134) of Singapore, as the case may be;
    14. a person resident in Singapore who undertakes fund management activity in Singapore on behalf of not more than 30 qualified investors;
    15. a Service Company which carries on business as an agent of a member of Lloyd’s; or
    16. such other person as the Authority may prescribe.
  2. Accredited Investor
    Under the Singapore Securities and Futures Act (Cap. 289), an “accredited investor” means:

    1. an individual whose net personal assets exceed in value S$2 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount, or whose income in the preceding 12 months is not less than S$300,000 (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;
    2. a corporate with net assets exceeding S$10 million value (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe, in place of the first amount, as determined by the most recent audited balance sheet of the corporation, or where the corporation is not required to prepare audited accounts regularly, a balance sheet of the corporation certified by the corporation as giving a true and fair view of the state of affairs of the corporation as of the date of the balance sheet, which date shall be within the preceding 12 months;
    3. the trustee of such trust as the Authority may prescribe when acting in that capacity;
    4. the trustee of a trust of which all property and rights of any kind whatsoever held on trust for the beneficiaries of the trust exceed S$10 million in value (or its equivalent in a foreign currency);
    5. an entity (other than a corporation) with net assets exceeding S$10 million in value (or its equivalent in a foreign currency);
    6. a partnership (other than a limited liability partnership within the meaning of the Limited Liability Partnerships Act 2005 (Act 5 of 2005)) in which each partner is an accredited investor;
    7. a corporation, the sole business of which is to hold investments and the entire share capital of which is owned by one or more persons, each of whom is an accredited investor; or
    8. such other person as the Authority may prescribe.

Marketplace Lending

What is marketplace lending?

Marketplace lending is the application of advanced technology platforms to bring online borrowers and lenders together to make lending fast, flexible and affordable.

Borrowers benefit from:

  • More affordable rates
  • Flexible loan amounts and durations
  • Mobile and online-based, with quick and easy loan applications
  • Scenario-based borrowing options, including personal credit, rental loans, consumption loans and daily merchant cash in advance
  • Real-time account information and management

Lenders gain:

  • Access to high-quality loan assets
  • Sophisticated portfolio management tools normally reserved for large financial institutions
  • Extreme investment diversification across tens of thousands of loans with full transparency
  • Daily interest disbursement and reinvestment
  • Real-time investment performance information
How is marketplace lending different from traditional banking?

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.

What is FICO?

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.

Much like individual debt instruments, potential borrowers are assigned a score from 250 to 900. The higher the score, the lower the risk of default and the greater chance of on-time payments.

FICO is vital for the U.S. consumer. Maintaining a high credit score means easier access to securing a car loan, purchasing a home or even paying for groceries. Low FICO scores dramatically limit access to credit. So, when it comes to rating consumer credit, FICO matters most.

What your FICO Score means to lenders:

How are marketplace assets rated?

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.

Is U.S. consumer credit score getting better or worse?

U.S. consumer credit scores are getting better. This can be seen from FICO credit scores. In a 12-year period from 2005 to 2017, the FICO average score has rose from 688 points in 2005 to 700 points in 2017.  In October 2009 it was once dropped to a low of 686 due to the financial tsunami, but it did not drop further.

U.S. Consumer Credit

Why is consumer credit an attractive asset class?

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.

Why exactly are U.S. consumer lending assets better?

Consumer credit is everywhere today, but typically, the U.S. market enjoys the strongest consumer-credit ecosystem:

  • FICO scores help investors understand default probabilities
  • It is well-regulated by the U.S. government
  • It has the longest history in consumer credit and an established performance track record
Why has it been difficult for Asian investors to invest into the U.S. Consumer credit?

Though U.S. consumer credit is an attractive asset class, several access hurdles remain for Asian investors:

Intimidating Onboarding process
Investors wanting to invest in U.S. consumer credit must 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
If a non-U.S. investor invests directly into consumer credit assets, the investment returns may incur significant 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.

Do natural disasters (such as forest fires, hurricanes, snowstorms) affect consumer credit?

Many natural disasters (such as forest fires, hurricanes and snowstorms) are related to the local geography and climate and occur almost every year. As a result, the current rate of bad debt covers almost all the natural disasters that have occurred, which gives a default rate of about 3%.

FinEX Asia - financial investor in Asia