X Financial (NYSE: XYF) (the “Company”) is a leading technology-driven personal finance company in China focused on serving China’s underserved prime borrowers and mass affluent investors, according to the Oliver Wyman Report. The Company’s platform, empowered by its risk management capabilities and technology, efficiently matches borrowers’ loan requests with investors’ investment demands and executes loan and investment transactions to provide borrowers with prompt funding, enabling X Financial to satisfy the financing needs of borrowers and meet the investment demands of investors.
X Financial offers a comprehensive suite of products specifically catered to the financing and investment needs of individuals in China. The Company’s major loan products include Xiaoying Card Loan, primarily a credit card balance transfer product, and Xiaoying Preferred Loan, a high-credit-limit unsecured loan product, both offering borrowers a combination of large credit line, and a long-term and attractive APR in China. X Financial offers attractive and diversified investment opportunities to investors in China through its wealth management platform, Xiaoying Wealth Management, which is one of the very few platforms able to enhance investors’ confidence in the investment products with insurance protection.
The strong credit performance and underlying insurance protection of the loans that the Company facilitates and its proven risk management and credit assessment capabilities enable it to attract a diversified and low-cost funding base to support its growth. The loan products X Financial facilitates are funded through the investments from its individual and corporate investors through Xiaoying Wealth Management platform and the funding arrangements with multiple institutions in China.
X Financial’s business model is light in capital and labor commitment, and the Company believes it can manage transaction and operating costs in an effective way. Benefitting from its superior loan product offerings, strong credit performance and underlying insurance protection of its investment products, X Financial continues to expand its user base of both borrowers and investors, primarily through referrals without incurring significant sales and marketing expenses, resulting in relatively low user acquisition costs. Furthermore, the Company’s highly automated risk management system and technology infrastructure enable it to automatically facilitate a large number of transactions simultaneously.
The Company utilizes data-driven and technology-empowered credit analysis. It’s proprietary risk control system, WinSAFE, builds risk profiles of prospective borrowers upon data from reputable credit information providers employed by traditional financial institutions, augmented by a variety of social and behavioral data from internet and mobile platforms that are typically not utilized by traditional financial institutions. Leveraging data analysis and machine learning in analyzing a borrower’s value, repayment capability and propensity, the Company has the capabilities to offer differentiated credit limits to borrowers based on individual credit assessment result. X Financial’s rigorous data-driven credit assessment methodology has helped it to achieve a strategic balance between borrower expansion and asset quality control.
X Financial benefits from its strategic partnership with ZhongAn. The protection offered by ZhongAn's credit insurance on the Company’s investment products significantly enhances investor confidence. The Company’s risk management system is also strengthened by ZhongAn’s rigorous risk control of insurance decision opinion. ZhongAn’s credit assessment model is based on information from various databases, including PBOC CRC which is only available to licensed financial institutions. The model serves as one of the inputs of the Company’s comprehensive credit risk management system, along with other behaviour and credit information.