How asset managers like FinEx Asia are using AI to disrupt traditional bank lending

Banking disintermediation – essentially, taking out the middle man – has taken a new twist. While in recent years peer-to-peer (P2P) lending has become the poster-child for threatening banks’ lending business, a new type of hybrid disrupter is apparently starting to emerge: asset managers backed by financial technology.

One such firm attempting to cut banks out of the consumer-lending equation is FinEx Asia. The newly-licensed asset manager connects Asian investors with American consumer-credit assets, using artificial intelligence to select the loans based on risk appetite.

Founder and chief executive Maggie Ng said the company’s three funds now have US$100 million under management. They are backed by a portfolio of more than 10,000 US-based borrowers who have obtained loans from multiple online lending platforms, she said without specifying which ones.

FinEx Asia is leveraging the machine-learning and blockchain technologies developed by Dianrong, a Shanghai-based P2P platform, with whom it recently partnered.

Dianrong, which was established by LendingClub co-founder Soul Htite, has a 20-strong technology team supporting FinEx Asia in loan selection using machine learning. Using Dianrong’s blockchain technology, investors can also monitor in real time how the quality of each loan in the fund has changed over its tenor, and check out a borrower’s credit data.

“By applying artificial intelligence in our risk modelling, we will now have more parameters in performing more refined analysis on consumer loans’ credit quality than those run by banks,” said Ng. She said that Dianrong’s platform is capable of approving loan transactions of up to US$500 million every month.