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written by | cao shuangtao

editor | yang bocheng

title picture | du xiaoman’s official weibo

"i have been sued by more than a dozen online loan platforms and six or seven bank credit card centers, including alipay, du xiaoman, 58.com, and 360 iou. i have been sued by more than 20 online lending platforms such as douyin anxindai, weilidai, weibo lending, etc. the loan platform is on the way to sue. the total principal and interest owed by alipay, jiebei, and online merchant loans alone is about 200,000, and the total owed by all online loan platforms and credit cards is as high as more than 400,000. "zhang chun (pseudonym). ) said helplessly.

regarding why he owed such a high amount of debt, zhang chun continued to say that unlike other debtors who use credit cards and online loans for consumption, all the money he borrowed from online loans and credit cards was used to start a live e-commerce business.

however, during the three-year epidemic period, the warehouse was closed many times, the platform's investment costs and return rates continued to rise, several fresh food goods were defrauded, and partners withdrew, etc., which caused the business to fail. during this period, in order to repay the debt owed to platform a, we can only continue to borrow from platform b. in order to turn over as quickly as possible, credit cards and online loans have become the main sources of funds when starting a second business, and in order to repay online loans, one can only pay for the other by demolishing one wall. but when this "balance" is broken, the debt becomes larger and larger.

regarding how to repay these high debts in the future, zhang chun said with a sad face, "not to mention my inability to repay these debts now, it is a problem to survive."

as long as funds enter the bank cards, alipay, and wechat bound to your name, the money will be deducted by the court within 1 minute to repay the debt. but how many companies now give cash to their employees? now i only hear the phone ringing every day, and i always think it's a debt collection call. i have been suffering from insomnia and anxiety for more than a year, and i have already suffered from severe depression, but i still have no money for treatment.

zhang chun’s situation is a true epitome of the many young people currently trapped in online loans.according to the "report on the debt situation of chinese consumer young people", the penetration rate of credit products among chinese young people is as high as 86.6%, and the proportion of people with actual debts reaches 44.5%.in order to standardize the online lending industry in a healthy, benign and sustainable direction and help more young people "come ashore" as soon as possible, in recent years, official media have continued to speak out and regulatory agencies have continued to increase their efforts to rectify online lending.

for example, in response to the previous 714 anti-aircraft guns and beheading interest rates in the online loan industry, the supreme court stipulated that the annual interest rate does not exceed 24%, which is legal, exceeds 24% and does not exceed 36%, which is a natural debt zone, and exceeds 36%, which is invalid.

at present, the comprehensive annualized interest rates of leading platforms including alipay, huabei, jiebei, duxiaoman, meituan, weilidai, jd.com and baitiao are all below 24%, while those of mid-waist platforms are between 24% and 36%. however, the selling points of tail platforms are that they do not check credit reports and provide loans quickly, generally above 36%. some online loan platforms add service fees, and the annualized interest rate is as high as 6480%.

source: rule of law daily

in addition, regulatory authorities have also stepped up supervision of other businesses carried out by online lending platforms. recently, duxiaoman’s payment business was warned and fined 1.21 million yuan for six violations. wan, the general manager of the payment business, was directly responsible for some of the above-mentioned illegal acts and was warned and fined 100,000 yuan.

source: people's bank of china beijing branch

but this is not the first time du xiaoman pay has received a fine. baifubao, the predecessor of duxiaoman payment, was fined 30,000 yuan in 2019 for violating liquidation management regulations and relevant regulations on the management of payment services for non-financial institutions. behind the multiple fines is the continuous change in the online lending industry. du xiaoman is facing unprecedented anxiety.

01.

the online loan industry is changing, du xiaoman’s profits are facing a big test

after years of reshuffle, the online lending industry has formed a relatively mature chain of interests from investors → loan assistance platform → tob-side small business owners + toc-side users → collection platform. in addition, a large number of debt planning companies and anti-collection agencies have emerged on the market in the past two years.

after contacting a large number of debt planning companies, zhang chun said that the sales of these debt planning companies have a nice name - debt planner. they claim that they can help debtors provide "free legal consultation services", apply to banks to complete credit card interest suspensions, and negotiate loan extensions on loan assistance platforms, etc. at this stage, the charges of anti-collection agencies are usually more than 5 points of the debtor's current total debt.

due to the homogeneous competition among loan assistance platforms, how to obtain more users has become the primary problem that loan assistance platforms need to solve.wechat weilidai and fenfu rely on wechat's strong user base and payment portal to acquire users, while alipay huabei, jiebei, and wangshangdai rely on the payment portal and alibaba's e-commerce platform to acquire users. platforms such as jd finance and meituan acquire users by binding them to consumption scenarios, while du xiaoman relies on baidu’s search traffic entrance and small and medium-sized business owners accumulated in advertising business to acquire users. for example, the training institutions that du xiaoman had previously cooperated with, web english and wall street english, ran away, causing du xiaoman's credit business to fall into controversy.

however, baidu's lack of e-commerce business and payment business means that du xiaoman lacks clear consumption scenarios compared with alipay, jd finance, and meituan. du xiaoman, who is aware of this problem, has been crazy about streaming to acquire users in recent years.

according to incomplete statistics from app growing, the amount of advertising consumed by xiaoman on the internet platform from march to september this year alone was close to 160 million yuan.

image source: app growing

if we take into account the customer acquisition methods of the online loan industry, it also includes cpd charges in the app stores of mobile phone manufacturers such as huawei, ov, and xiaomi, cpa charges represented by marketing sms/voice ai/same industry channels, and app store market. aso charges and cps charges represented by various channels from the same industry. in addition, du xiaoman advertisements can be seen in tv variety shows, subway stations, video websites, and short film websites. it is conceivable that du xiaoman’s marketing expenses are high.

high marketing expenses continue to erode du xiaoman’s profits, tianyancha shows,from 2021 to q1 2024, xiaoman's revenue and profits continued to decline, and xiaoman's net profit of 3.0789 million yuan in q1 2024 was only 3.1% of the full year of 2021.

source: du xiaoman

it’s not just du xiaoman. judging from the 2024 interim results of 18 domestic consumer finance companies, shrinking asset size and declining revenue and profits have become the norm in the industry. in other words, in the current volatile industry, how to regain high profit growth has undoubtedly become a big test for du xiaoman.

source: compiled based on public information

but if du xiaoman wants to hand in high-scoring test papers, there are still many problems that need to be solved one by one. although the loan assistance platform has developed over the years and has gradually derived various income methods such as interest income, service fees, post-loan management fees, guarantee fees, overdue penalty interest, data services, etc., the interest difference is still an important way for the loan assistance platform to make profits. this can also be confirmed from the fact that the online loan industry has been mired in public controversy over annual interest rates for a long time.

however, according to the profit model of the loan assistance platform given by the consumer finance industry, when a user borrows 12,000 yuan, the loan period is 11.21 months, and the annualized interest is 24%, the weighted capital cost, average margin cost, and expected loss will be deducted rate, operating costs, manpower and other fixed costs, the net profit before tax excluding customer acquisition is only 599 yuan.

source: xiaojinjie

it is worth noting that the cost of obtaining credit for loan-assisted platforms continues to rise. li ming, a salesperson at a domestic advertising agency, pointed out that the credit cost for large-volume engines has risen from a few hundred yuan/person a few years ago to one or two thousand yuan/person later, and now it has climbed to two to three thousand yuan/person. people. if traffic is relatively tight during major e-commerce promotions, the cost will be higher.

although du xiaoman has continued to reduce the investment costs of huge engines since july, the core reason for the soaring credit cost of huge engines is that the traffic of users with loan intentions has been repeatedly purged. as the current loan assistance platforms continue to look for media channels to reduce costs, the story that happened to the giant engine may also appear on other media channels in the future. how to obtain "high-quality" users at low cost has become a problem du xiaoman continues to face.

in order to hedge against high credit customer acquisition costs and the asset shortage faced by the industry, online lending platforms have lowered financing costs. wu yang (pseudonym), a former employee of 51 credit card, revealed that the annual financing costs accepted by the top, waist, and tail network platforms in the industry are 4%-5%, 5%-7%, and 6%-8% respectively. even if financing is difficult the platform currently only accepts an annualized financing cost of less than 10%, which is 1-3 points lower than two years ago.

however, the current problem facing the industry is that it is difficult to lend money and it is even more difficult to obtain effective new users.first, based on the endorsement of trust, the banking industry acquires high-quality customers with loan intentions and good credit reports in advance; second, although some customers have loan intentions and are willing to re-borrow, the leading online loan platforms have tied up with users' credit reports. however, the credit of these customers who are trying to pay for others is generally poor and difficult to get loans; thirdly, as the consumer market and personal investment become more rational and the online loan industry grows wildly and becomes chaotic, consumers pay more and more attention to personal credit. it is believed that more and more people are unwilling to take online loans.

as wu yang said, in q2 this year, except for xinye technology, the other four companies contributed to a general decline in loan scale. the decline ratios of qifu and lexin were both more than 20%.

picture source: donews mapping based on public information

02.

when will the violent debt collection stop?

in addition to difficulty in lending, the online lending industry also faces the problem of "difficulty in collecting payments." yindeng center data shows that as of september 20, 2024, 13 domestic consumer finance companies have transferred a total of 105 individual loan non-performing asset packages, involving nearly 12 billion yuan in outstanding principal, and more than 18.5 billion yuan in outstanding principal and interest, which has exceeded all of last year. boc consumer finance's total principal and interest repayments exceeded 9.4 billion yuan, the highest in the industry.

image source: yindeng center

not only online loans, private banks are also facing the problem of both non-performing loans and non-performing loan ratios growing.according to data from the state administration of financial supervision, in the first half of 2024, non-performing loans of private banks increased by 3.3 billion yuan year-on-year to 22.8 billion, and the non-performing loan ratio increased by 0.16% year-on-year to 1.75%.

source: state financial supervision and administration bureau

generally speaking, the online lending industry will sell non-performing assets to third parties at low prices, and the third party will be responsible for collection. for example, home credit consumer finance's "fire sale" of a 26 billion yuan personal loan asset package was acquired by ruijing asset for 1.96 billion yuan. previously, du xiaoman's non-performing loans were handled by hunan yongxiong asset management group, known as china's largest collection company. however, under the combined influence of multiple factors, the debt collection industry is in trouble.

on the one hand, the mentality of debtors continues to change. zhang chun went on to say that after being bombarded by debt collection companies for more than a year, he summed up several major tactics used by debt collection companies: using different mobile phone numbers to call debtors, sending group text messages or making phone calls to contacts in the mobile phone address book, impersonate public security personnel, send text messages to inform debtors that they are coming to your home, mail lawyer letters, etc.

the collection competition is about who can intimidate debtors better and who can bring greater mental pressure to debtors. in this way, debtors who owe money to multiple platforms at the same time are likely to repay which platform in advance, and the platform can reduce the non-performing loan ratio and sales only then can you get the commission.

based on this, du xiaoman’s violent debt collection situation is quite serious. as zhang chun said, the cumulative number of complaints involving du xiaoman on the black cat complaint platform exceeds 41,000, and the complaints mainly involve violent debt collection, loan sharking, etc. zhang chun continued, taking the group of several thousand debtors he belongs to as an example. the debtors in the group first cooperate with anti-collection agencies. these anti-collection agencies "teach" debtors how to deal with collection routines or simply refuse to repay. second, even if the debt collection company files a lawsuit in court and the court enforces it, the vast majority of debtors are unemployed, have low incomes, and have no funds to repay, and in the end they can only become "old debtors".

at the same time, the huge number of debtors and the long court process means that it is difficult for collection companies to sue in batches and it is quite stressful. third, some debtors simply lie flat with the mentality of "a dead pig is not afraid of boiling water" and refuse to repay no matter how much the collection company tries to collect.

on the other hand,regulatory authorities continue to increase supervision of the debt collection industry and continue to standardize debt collection behavior.in march this year, a shenzhen debt collection company with more than 300 employees was arrested. in july, ningbo police arrested 107 people. it is said that the ningbo branch of a leading debt collection company, xld, was also investigated. as the online lending industry continues to change, how to achieve a balance between "collection" and "release" will be a profitability problem du xiaoman continues to face.

03.

none of the six major businesses are top-notch, can ai save xiaoman?

in addition to credit business, du xiaoman also has five major business sectors: payment, finance, insurance, personal financial technology, and supply chain finance. however, none of these five major businesses is top-notch. in the financial management business, zhongdu xiaoman said that the number of customers it serves exceeds 12 million, but it did not disclose the specific scale of assets under management.

however, based on the "top 100 list of public fund sales retention scale of fund sales institutions in the first half of 2024" released by the china fund sales association, the top three in the industry are ant fund, china merchants bank, and tiantian fund, and du xiaoman ranks only 82nd.

source: du xiaoman official website

in the payment business, wechat pay relies on wechat's huge social network advantages, alipay relies on alibaba's e-commerce advantages, and the two have the advantage of opening up more online and offline scenarios, occupying 90% of the market share of the mobile payment market, and other payment institutions such as du xiaoman payment are divided eat about 10% of the portion.

if du xiaoman wants to continue to increase its payment market share, in addition to facing how to expand more merchants and user habits that are difficult to change, the core still lies in how to better adapt to the consumption habits of different domestic markets.

in the domestic sinking market, the frequency of merchants and users using wechat payment is significantly higher than that of alipay. the core is that users in the sinking market have a stronger risk aversion mentality.

on the one hand, payment behavior in county markets is often based on the trust chain of acquaintances. people are more inclined to use tools that are widely recognized and used by acquaintances. the widespread use of wechat as a social software makes wechat payment regarded as a "familiar and trustworthy" tool. . in contrast, alipay has strong financial attributes. many users think it is more suitable for large-value payments or professional financial management, but this only increases the psychological threshold for use.

on the other hand, although alipay is rich in functions, its interface design and functional complexity may appear too complex for county users who are not often exposed to digital services.

in contrast, the user interface of wechat pay is simpler and more intuitive, requiring almost no special learning costs. users can directly transition from social networking to payment without additional operations. this "senseless learning" experience makes wechat payment more user-friendly.

du xiaoman, who is aware of the above problems, has been telling the story of large financial models by embracing wen xinyiyan since 2023.du xiaoman ceo zhu guang once pointed out that after the implementation of the ai ​​technology base, the "second act" of application implementation is slowly unfolding. artificial intelligence 2.0 represented by large model technology, its general intelligence and financial industry data and real business scenarios integration brings financial technology into a new stage of development.

however, it remains to be discussed how much incremental contribution the large ai model can make to du xiaoman in the future. the commercialization of this round of ai large models faces core and prominent issues on the tob side. reducing costs and increasing efficiency has become the consensus of enterprises. how ai large models can help enterprises reduce costs and improve efficiency, that is, how to measure roi and how to maximize roi? .

dr. bao jie, chairman and founder of wenyin internet/financial knowledge graph working group of the language and computing committee of the chinese information society of china, also pointed out that the current stuck point in the financial large model market is that many people pay too much attention to algorithms, computing power and data and ignore business details.

basic large model manufacturers may still be trying out early business models, but their quotations may be out of touch with market reality, causing them to have to cooperate with large hardware manufacturers to place orders together. this is the most realistic sticking point on the market today.

yang qing, executive chairman of du xiaoman financial technology committee/general manager of data intelligence application department, also pointed out that the underlying core technology of large models may not be enough to deal with complex decision-making problems.

take risk control as an example. the core of risk control lies in risk judgment and decision-making, which usually falls under the supervised learning category of traditional artificial intelligence. if you use large models for risk assessment, you may encounter hallucination problems and lack of interpretability, which directly limits the application of large models in core business processes.

conclusion:

since 2021, du xiaoman has been rumored many times to be about to ipo. however, what du xiaoman waited for over the past few years during the national day was not the bell to go public, but the continued plunge in market value.

in 2019, xiaoman ranked 84th on the global unicorn list with a valuation of 20 billion yuan. however, from 2020 to 2022, du xiaoman's rankings fell to 108, 230, and 305 respectively. according to data from the "global unicorn list 2024" released by hurun, du xiaoman's valuation of 11 billion yuan is only followed by ant group (570 billion yuan), webank (235 billion yuan), and jd technology (135 billion yuan). yuan) 1.9%, 4.7%, 8.1% of the valuation.

perhaps du xiaoman still has a long way to go on the road to "listing", but for many ordinary young people, online lending platforms represented by du xiaoman still need to be rational. as zhang chun said, when young people encounter online loans, the depth is as deep as the sea. from then on, their credit reports are "dirty and messy", and it is like reaching the sky if they want to land.