China's big banks stay away from peer-to-peer lending platforms, South Korean financial institutions look to AI for customized services and Lufax plans to create international trading platform for Chinese investors.
China's biggest banks are keeping the peer-to-peer, or P2P, sector at an arm's length given the industry's tainted reputation, the South China Morning Post reported. All P2P lending platforms are required to have the backing of a registered bank by August 2017 but so far, none of the country's big four lenders have decided to act as a custodian to any P2P platform. The custodian requirement was put in place to guarantee that investors' capital was not misused by the lending platforms. P2P platforms have been growing in China since 2007 but banks have been wary of getting in business with them. Shi Pengfeng, CEO of wdzj.com, said the country's largest banks are still concerned given the P2P lending industry's small scale and the number of scandals that have emerged. In one such high-profile scam, Ezubao, which was once seen as the country's biggest P2P platform, turned out to be a giant Ponzi scheme that scammed over 900,000 investors.
South Korean insurers and card companies are following banks in seeking the services of artificial intelligence programs, the Korea Times reported. Financial companies have been looking into the latest AI technology, which they hope will reduce or replace a number of telemarketers and financial advisers. Dongbu Insurance Co. Ltd. said it will begin a trial run of its chatbot service on the mobile messenger KakaoTalk over the next six months. The chatbot service will provide users with information about insurance filings and transactions. Industry source said the AI-based chatbots are an automated response service that offers immediate and direct response to customers' inquiries.
The world's second largest financial technology firm is preparing a platform to facilitate Chinese investors in their asset allocation overseas, the South China Morning Post reported. Gregory Gibb, CEO of Lufax, said a complete online platform will be established in 2017 that would allow wealthy Chinese investors access to foreign capital markets as they look to diversify their assets. The move comes as demand for overseas investment among Chinese people and businesses is constantly increasing amid a depreciating yuan. In the last few years, millions of Chinese residents have remitted part of their cash abroad and sought attractive foreign investments such as stocks and properties, the report said.
Indian banks may derive a long-term benefit from the government's move to demonetize high-value banknotes but in the near term, the move has resulted in plummeting credit demand and additional costs, The Times of India reported. The government's decision to remove 500 and 1,000 notes has led to a cash shortage, which in turn has hit business confidence and demand for loans. The lower demand for loans is painful for a sector that has struggled with low profitability and bad loans. Even if some businesses apply for loans, bank staff are too busy exchanging old currency to have time to process the loan application. State Bank of India Chairman Arundhati Bhattacharya said the bank will likely miss previous forecasts of increased loans as its loan sales teams are not operating at full force due to the government's ongoing demonetization drive.
The head of MLC Life Insurance agreed that the life insurance industry has lost the trust of consumers following several scandals that affected the industry's reputation,The Australian Financial Review reported. Executive Director David Hackett said the industry's first code of conduct was a good first step but more work had to be done to win back customers' trust. Commonwealth Bank of Australia's life insurance arm, CommInsure, drew the most attention after media reports revealed that it denied heart attack claims. Hackett said the company is transforming its back-office systems to reinvent customer relations. The company plans to employ big data to allow policyholders access to their health and other data.