By the end of March, the pace of reducing the stock interest rate to 20% varies across regions. Many consumer finance companies are implementing rectification measures as required. Industry insiders say: the pressure to transform is significant.

How can AI and consumer finance companies respond to the dilemma of high risk and low pricing?

Cailian Press, March 19 (Reporter Guo Zishuo) Recently, industry insiders have generally agreed that by the end of March, consumer finance companies’ existing business average interest rates must be reduced to no more than 20%. However, in practice, the pace across the country is not uniform.

A person from a South China consumer finance company told Cailian Press that their institution has not received this requirement; another person from a South China consumer finance company revealed that they have been receiving regulatory guidance to lower the comprehensive fee rate since last year through this year. “It used to be 24%, now the requirement is lower than that.”

Several companies in East China confirmed they are implementing rectification measures as required. “Regulators haven’t issued clear written documents, but all companies should be acting according to this requirement,” said a person from an East China consumer finance firm.

Most interviewed institutions agree that the industry’s downward trend in interest rates has been established and is irreversible. Facing the possibility of further reductions, many respondents openly said, “The pressure is quite high.”

Slightly higher than credit card pricing, seeking survival space under the new pricing framework

“Before the adjustment, our rates weren’t too high. 20% puts some pressure on us, but it’s still manageable,” said another person from an East China consumer finance company. Licensed consumer finance companies have long exited markets above 24%, and their current core task is to find survival space within the new pricing framework.

Compared to the 20% cap, what causes deeper industry anxiety is the delicate relationship with bank credit card pricing at 18%. Currently, the weighted average interest rate requirement for consumer finance companies is right at the upper limit, just above the 18% comprehensive annualized rate for bank credit cards.

The aforementioned consumer finance company executive admitted, “Although credit card pricing is around 18%, we still feel some ‘inversion’.” In his view, credit cards leverage banks’ funding cost advantages and existing customer bases to serve clients at lower rates; consumer finance companies, on the other hand, mainly target mid-tier and mass-market customers that banks haven’t fully covered. Their risk levels should be higher, but their pricing space is squeezed into the 20% range. The mismatch of ‘high-risk customers and low pricing space’ is creating short-term operational pressure for consumer finance companies.

As the pricing space narrows, consumer finance companies’ risk appetite is passively shrinking. A senior executive from an East China consumer finance firm said, “When interest rates dropped from 36% to 24%, many underground high-interest platforms revived, and customers paying over 20% struggled to get compliant credit support.” Now, with ongoing cost pressures, even customers willing to pay higher rates find it difficult to obtain funding from licensed consumer finance institutions.

Regarding further downward room, many respondents still said, “The pressure is quite high.”

An executive from an East China consumer finance company stated, “Besides customer acquisition, the biggest cost is risk cost. As long as risk costs can be reduced, pricing can follow.” He noted that the industry’s average return on assets (ROA) is below 1%, “probably around 0.5% in the future. If we further lower prices but risk doesn’t decrease, it will definitely lead to losses.”

Enduring dual pressures, transformation is more difficult than expected

Recently, the Financial Regulatory Administration held talks with five platform operators: Fenqile, Qifu Borrow, Niwo Loan, Yixianghua, and Credit Fei. Meanwhile, regulators issued documents to multiple consumer finance companies, requiring strict control of loan assistance scale, regulation of loan assistance cooperation, and other measures, intensifying expectations of contraction in loan assistance.

Many industry insiders say that the core goal of the regulatory policy combination is to guide customers from loan assistance platforms to licensed,正规 institutions.

This means that consumer finance companies on the path of transformation will face dual pressures: one is to gradually reduce dependence on loan assistance platforms, and the other is to build full-process capabilities for independent customer acquisition, risk control, and post-loan management within limited costs.

A consumer finance company insider said, “The key is to improve our own capabilities, hoping to transfer customers from loan assistance platforms to licensed consumer finance companies. In the long run, this is beneficial, but the question is ‘how to get these customers into our own hands?’”

However, transformation is more difficult than imagined. A person from a South China consumer finance company told reporters that their self-operated changes are not significant yet. In response to falling rates, “backend risk controls have become stricter. Others can only explore slowly, reducing costs across the board.”

An East China consumer finance company insider revealed that the cost of information flow customer acquisition can reach “four figures per person,” and the company has already paused related investments this year. “Self-operated customer acquisition mainly involves H5 or mini-program methods, mostly collaborating with the parent company,” he said. Currently, their loan assistance costs haven’t changed much, but building other self-operated channels is still in exploration.

Previously, some insiders disclosed that building customer acquisition and risk control platforms requires huge investments. “Our company’s annual tech investment alone exceeds 100 million yuan, which small and medium-sized institutions can’t afford.” By comparison, many bank-affiliated consumer finance companies leverage shareholder funds, traffic resources, and fintech support to establish their own platforms; non-bank small and medium institutions face significantly increased transformation difficulties.

(Cailian Press, Guo Zishuo)