Shanghai Pudong Development Bank
For decades the Chinese government has repeatedly urged domestic banks to find ways to serve micro businesses to boost job creation and economic growth. But the banks have been hesitant because of the enormous costs and high risks involved.
Shanghai Pudong Development Bank, a Shanghai-headquartered commercial bank that operates across the country under Pan Yaodong, finally came up with an innovative solution whose effectiveness has been proved after more than two years in operation.
SPDB’s online supply-chain financing project for micro businesses was launched in September 2015. By the end of 2017, the bank had loaned nearly Rmb6 billion ($948 million) to nearly 10,000 micro businesses across China. It has a very low loan repayment default rate, according to SPDB.
In China, a large number of micro businesses are small distributors and retailers for large companies. To check background and operations of these businesses, SPDB’s platform accesses information systems at dozens of large companies across a wide range of industries. The project’s team also uses big data analysis. Together, that enables the project to carry out a thorough investigation into the micro businesses to minimise credit risks.
In addition, the project also stands out in efficiency; all its processes are conducted online, starting with customer engagement, through loan application to loan approval. This means it can send a loan to an eligible micro business within five minutes of receiving an application .