Resigned to change
Domestic peer-to-peer (P2P) lending platforms have suffered a wave of employee resignations in recent months as the industry goes through a period of reorganization in the wake of new government regulations. Since authorities issued new regulations in February 2017, many domestic P2P lending platforms have either shut down or abandoned the business. The number of Chinese P2P lending platforms fell from 3,516 in November 2015 to 2,393 in February 2017, according to industry data. Platforms will need scale, digital capacity and “special resources” to survive the ongoing reorganization, industry insiders say.
With the rollout of new regulations in February, there has been a wave of resignations in China's peer-to-peer (P2P) lending industry, as employees worry about the prospects of the business.
“I resigned in February,” said a woman surnamed Liu, a former employee at one of China's leading P2P platforms, which she refused to be named.
Liu started her career in Internet finance in October 2016. Half a year later, she worries about the industry's prospects.
“Many of my colleagues have resigned, primarily because they are concerned about the company's future,” she told the Global Times on Sunday.
Recently, P2P industry employee turnover has shot up, with some workers joining larger P2P companies and some moving to other industries.
A former public relations representative at a domestic P2P platform noted that industry employees still have options, provided they get out now, according to a March 21 report on the domestic news portal 21jingji.com.
“Given that many P2P platforms are reorganizing, workers can still find good jobs if they resign right now,” the representative said. “It will be hard for them to find goods jobs if their companies' business takes a turn for the worse.”
The representative's former employer has cut its staff and trimmed its budget over last few months, the report said.
The wave of resignations in domestic P2P lending industry is connected to the shutdown and reorganization of many online lending platforms, said Zhou Zhihan, general manager of Kaixin Financial, China Development Bank's Internet financial platform.
The number of Chinese P2P lending platforms fell from 3,516 in November 2015 to 2,393 in February 2017, according to data from the Shanghai-based P2P lending platform wdzj.com.
Many P2P platforms have shut down because they performed poorly or were unable to comply with stricter regulations, according to a report jointly released on March 13 by wdzj.com and the Shanghai-based Internet finance institute Yingcan Advisory.
Some P2P lending platforms employed a strategy of rapid growth that left them with a swollen staff, Zhou said. When the government instituted stricter regulations over the industry, these companies had to cut the size of their business to comply.
In August 2016, the Ministry of Industry and Information Technology (MIIT) issued new regulations for the online lending industry.
The regulations included rules for how P2P lending platforms could raise money, guarantees for lenders and requirements for selling wealth management products. The MIIT gave the platforms 12 months to comply with the regulations.
After the ministry issued the regulations, many platforms stepped up efforts to get their businesses into compliance.
Kaixin Financial files with regulators when it issues new lending products, with the goal of guaranteeing its projects in compliance with the rules, the company said in a statement sent to the Global Times on Monday.
In February, the China Banking Regulatory Commission released guidelines requiring P2P lending platforms to appoint qualified banks as custodians for their funds within six months.
Many P2P lending platforms rushed to sign agreements with banks to comply with the guidelines. By March 20, a total of 234 platforms, or about 10 percent of the industry, had announced custodial agreements with banks, Beijing-based magazine China Economic Weekly reported on Monday, citing data from wdzj.com.