Image source @ Visual China
Text | Lei Shuai fast and slow
Pony Ma once said a very hot sentence: finance is to fight who has a long life, not a short-term who runs fast. This sentence reflects the requirements for the healthy development of domestic Internet finance, but for overseas cash loans, it needs to be reversed: overseas cash loans are fighting for short-term who runs fast, not whose life is long.
Since 2017, supervision has gradually become stricter, high-interest loans are no longer legal, the private capital that was earned in the early years has lost its place, and the "era of lying down to make money is over." In such a big environment, many private capitals have set their sights on southeast Asia and even the African market, hoping to copy the risk control technology that China has successfully tested to these developing countries and continue to make money in the form of usury.
Rush. As a result, most of the overseas cash loans come from Chinese companies, and when we talk about overseas cash loans, we essentially want to talk about China's cash loans going overseas.
In these areas where financial infrastructure is lacking and regulation is weak, we treat them as blue ocean markets, but there are also many risks hidden in them. Whether the blue ocean is blue or not depends on whether you have enough armament.
Judging from the results of Chinese enterprises expanding overseas cash loans, there are not a few who go back with high morale and discouragement, and the main reasons for the failure are several: unstable financial regulatory policies in overseas markets, weak customer acquisition channels and high costs, lack of credit reporting tripartite data that can be used as references, very weak risk control capabilities, limited borrowers' understanding of products, and difficulties in collection.
Of course, there are also many teams that run through the entire process and quickly realize the exponential accumulation of capital.
When we discuss overseas cash loans, we cannot do without the difference between comparison and domestic cash loans, and we should also touch on some pain points in overseas cash loan operations and give some solutions that can be tried.
01 Product differences
The essence of the product is, of course, the amount, the interest rate and the term.
The existing mainstream cash loan products in China are monthly interest calculation and installment repayment, a small number of head platforms can meet the regulatory requirements of 24% annual interest, most of the influential platforms are in the red line of 36%, and there are also many well-known platforms with an actual annual interest rate of more than 36%, which is a category of usury.
That is to say, there are still many platforms in China that are frantically tempting on the edge of breaking the law, but this is much better than "714".
The era of the "714 anti-aircraft guns" is an era of small amounts, short-term and high interest rates. The borrowing cycle is generally 7 days or 14 days, the loan interest rate during the term is as high as 30%, and the amount is generally 1000 or 2000, that is to say, borrowing 1000 yuan, only occupying a week's time, to pay 300 yuan of interest. In order to further squeeze the interest rate, the form of "beheading interest" was also invented, borrowing 1,000 yuan, which was actually only 700. If you do not repay when due, you will incur overdue fees, 50 or even 100 per day, you can also extend the repayment time in the form of renewal, and another 300 renewal for one week.
The motivation for domestic cash loans to go to sea is the "714 high artillery" going to sea, so the products of overseas cash loans are the localization of 714 products.
The target group in overseas markets is more sinking and single, and most of them are unemployed and non-working zero workers without savings. Common loan terms are 7 days, 14/15 days, 28/30 days, and there are also weekly and semi-monthly installments, but not mainstream. The amount of a single loan is very low, mostly 300 or 500 yuan, the minimum can reach 100 yuan, and the amount of installment products is only a few thousand. The "beheading interest rate" has also been copied, with the daily interest rate based on 1.5%, the high can be doubled or tripled, and the low regulatory requirements have also been reduced by half.
No matter how it is calculated, overseas cash loans are usury by domestic standards, but they are also much lower than the profits of the "714 high artillery" in the past few years.
02 Data differences
The amount of data used in domestic risk control is staggering. In addition to credit information, multi-head data, blacklist data, UnionPay data, SDK data, operator data, etc., are all available. Although the promulgation of the "Individual Insurance Law" has restricted the abuse of data to a certain extent, compliance still maintains a large number of data service providers.
Overseas, relative to these are very lacking, it can be said that the financial infrastructure is in a state of absence. Developing countries like Southeast Asia and Africa, the credit reporting system can be said to be a disaster, many are still in the era of paper bookkeeping, and it is impossible to systematically dock data and develop models.
Fortunately, overseas supervision is relatively relaxed, there is no excessive information protection requirements, so the data that can be crawled, mainly address books, call records, device information, APPlists, and text messages, has become the oxygen and water of overseas cash loans.
There is no long head, no blacklist, no account balance (the popularity of bank accounts is too low), no consumption, China's outstanding risk control athletes are difficult to assess the repayment ability of local borrowers for a while, and can only start from their own Apps, do the burial point of information collection, and collect equipment information. One-sided data dimensions will naturally lead to deviations in the risk assessment, which is a helpless move.
A few years ago, I met a classmate who did overseas cash loans, talked about risk control strategies, and said that the rule of "whether to install WhatsApp" worked very well. As long as the blue ocean is not red, this strategy can be retained, but its effect is definitely getting worse and worse. That is to say, the further back you go, the more different the strategy is from whether it has or not. Just like the domestic requirement to install WeChat and Alipay as a condition for access, it is just an insignificant strategy.
03 Cultural differences
The differences between people are all cultural differences, and the business of running people must take into account cultural differences.
In the world, the Chinese are the most industrious. Locals in many Southeast Asian countries are mostly laid-back, slow-paced and lack enthusiasm for work, while Africans are notoriously lazy. Communicating and cooperating with these locals will be more difficult. This difference will bring a lot of trouble to the collection, because the collection must be to recruit locals.
In addition, another important cultural difference stems from religious differences. Indonesia, Malaysia and other important Southeast Asian lenders are mainly Muslims, and there are strict dogmas in the Quran that require them to repay their debts, but also prohibit interest on loans. This is a double-edged sword for the lender, which can be used as a powerful tool for collection on the one hand, and may be cursed on the other hand.
It is said that among the Chinese who lent money in Indonesia, there is a saying: "If they are overdue, we will collect only one sentence, and if you don't pay back, your god will punish you." They'll think about paying it back no matter what. ”
But it also happens that you go to train local collectors to intimidate the borrower's family, and they will say that it is not his family who borrows the money, so it is wrong to intimidate the family and scold the family. There are also many borrowers from the beginning with the idea of bad debts, soft and hard do not eat, determined that financial institutions can not earn interest, can not lend usury, "people who eat interest, like the people who have been demonized, stand up madly."
In general, Southeast Asian countries have many similarities with China, and the methods and methods of collection are only partial failures. But in countries with very different national conditions from China, such as India and Nigeria, the experience can hardly be copied.
In India, for example, there is no need to hide high interest rates, because the poor in India borrow to survive. A lot of times, it may just be for a meal. The most common amount they borrow is around $50-100. There are only two options: starvation, or borrowing usury. I don't know if you ever thought that when you are penniless and starving to death, you will choose to find an inn for a big meal and be beaten to death. At this time, the repayment ability and willingness to repay the domestic risk control assessment have lost their due meaning.
Policy differences can also be seen as part of cultural differences. The impact of policies on the credit industry is often the most deadly, and everyone knows it by domestic reference. The policy is loose, everyone can live well, the policy is strictly cracked down, and no one should want to live. The policies of overseas countries are different, some countries have more relaxed policies, and some countries are more stringent. The problem is that the loose ones become harsh, and the harsh ones can become loose.
Everyone knows that the unqualified cash lenders who are far away from the country are trying to harvest, and this owner includes the regulatory authorities of overseas countries. The reason why it is vigorously introduced or not strictly prohibited is either that it does stimulate the growth of the local economy to a certain extent, or it is waiting for the reverse harvest. Reflected in the outside is that the observation, response and policy implementation of a country's supervision takes time, a short period of 1-2 years, a long period of 3-5 years, and this short and long period, by arbitragers as "market dividend window period".
04 Policy model differences
These differences ultimately lead to differences in the strategy model.
In the three model strategy systems of credit risk control, I introduced the developing model strategy system in detail, one is the rule-based, the model is supplemented, the second is the model-oriented, the strategy is supplemented, and the third is the strategy-oriented, the model-supplemented. The domestic cash loan head is the third type, and the other is the second type.
Overseas cash loans are in the second category, not the first. The reason is that the methodology of the model is very mature, and although the data is not diverse, the data collected by the app is still good. Whether it is rules or strategies, professional strategists are needed, and real strategists are scarce. Algorithms have long been a pain point at the application layer.
Doing overseas cash loans, your sense of security also comes from the model. As long as the model AUC and KS remain high, no matter how much money flow is released every day, you will be more at ease.
Thanks to the rich data and samples, the domestic model will include A card, B card, C card, including advertising delivery, which is divided by stage. According to the data, these models can be divided into two or three.
Overseas cash loans are incomparable, and almost all the information relied on by the policy model is in the address book, call log, device information, APPlist, SMS data, from which various statistical development models are extracted. This is an A card, there is no B card, no C card, and there is no quota management, pricing management. The ideal, of course, is to locally assess the repayment ability, spending habits, and bullishness of the locals, but since there is none, use the only ones to the extreme. Generally speaking, the information on these apps works well.
In addition, the strategy must be localized. Crowd habits, paydays, holidays, etc. should be more understood and think clearly about the impact on the business.
05 Pain points of overseas cash loans
There are many pain points in overseas cash loans, and the most important ones to sum up are these.
1. Policy risks, regulatory risks from overseas governments and GG and FB;
2. High interest rates are accompanied by low retention, and the proportion of new users in new transactions is too large;
3. The payment collection is unstable, and the environment is very large, such as holidays, paydays, collections, etc.;
4, the customer base is too sinking, the pieces are very low, and the absolute profit is not too high.
Policy risk is the most fatal risk, because once it occurs, it will lead to the blocking of various accounts, the removal of APP shelves, etc., and the entire business line will be directly destroyed. This is the most difficult to control, we can't predict an emergency like an outbreak, and we can't prevent someone from committing suicide in debt.
High interest rates must be accompanied by low retention, things that improve life we will often use, things that hurt life we use a few times to learn to be obedient. Generally, the overseas cash loan business has developed to a stable period, and the proportion of old and new households is at most 5:1. The proportion of long-term and lasting credit business old users is not capped, the limit is to stop opening new accounts, stock operation, the domestic head of the institution has almost done so.
As for the payment collection, it must be very volatile. Some countries stipulate that collection can only be collected during working hours, and because religious collectors cannot accept violent collection, the gig economy allows salaries to vary by day, week, half month, or month. You can't expect a very smooth payback performance.
Even if it is a super high interest rate of 30% in 7 days or 14 days, because the unit price is very low, the absolute return is not high, you cannot make tens of millions of users. The parts are very low, because the customer is too sinking, improve the average parts, and the risk will explode at any time.
The above points are the key reasons why overseas cash loans cannot develop for a long time, the products have not been repurchased, and the service has not been praised, so what is the social value? Without social value, there is naturally a regulatory risk. What's more, regulation may also want to cut your leeks in the first place.
06 A little solution
Overseas cash loans actually do not have the difficulty of card neck, at least not risk control. Take the experience of the past few years, especially the "714 anti-aircraft gun" gameplay, and then do a set of subtractions, because there is less data. I don't understand the release, but it should not be ignored, the release should be regarded as the first risk control, do not think that the risk control only starts from the application for approval. The traffic is not good, and the risk control is useless no matter how good it is.
But I want to try to solve the problem of low retention and low uniformity. It doesn't have to work in your business today, but I think there are always times when it applies in a short lifespan.
The first problem is that high interest rates lead to low retention. The proportion of new users in the monthly loan is high, and the new users must lose money. Where the money comes from, that is, the old users continue to renew and re-lend, and the risk of the old users can be reduced by more than half, and there is no customer acquisition cost. Retention is low, and new users must become old users to earn money from old users, that is to say, living water cannot be broken, and there will be no users when it is broken.
The second problem is that the unit price is low, and the absolute return is not high.
How to solve these two problems? It's about raising the amount. The second problem was naturally solved by the quota increase, and then the quota was high, and some old users who were unwilling to use the loss were also more active, in fact, it can be said that the problem of loss warning was solved. As for those old users who are willing to use it, they have increased their monetization efforts.
Wait, didn't you say earlier that if you increase the average piece, the risk will explode at any time?
We need to have horizontal contributions. Instead of raising the product loan amount from 1k to 2k, not all old users mention 2k, but according to the old user's loan repayment performance, a part of the better user withdrawal amount can be selected. To do a simple behavioral scorecard, I know no one does a B card, believe me, you do it, go test, there will be good results.
But there are still some precautions, the risk of this part of the old users who raise the amount, not to compare with the new users in the same period, at least it should be compared with the old users in the same period, and it is best to compare with the control group that can be withdrawn but has not been withdrawn. The reasonable result is that the risk of the old users who raised the amount is lower than that of the new users, lower than the old users of the same period, and higher than that of the control group. In addition, the amount of increase is at most 1 times, 2 times, do not engage in 5 times, 10 times.
Doing overseas cash loan business, you definitely don't want to do welfare, it's all about making quick money, and one day it will be yellow. In the rising period, in fact, do not worry too much about this problem, the new user's living water is still very motivated, but in the recession period, you can select old users to raise the amount, the last wave of oil and water to clean up.
The overseas cash loan industry is actually a game of drumming and passing flowers, as long as there is a continuous flow of funds into this industry, it will allow some people to quickly earn a lot of money. Only the borrower's labor will be exploited, and there are some bookmakers whose risk control is inferior to others. Whether you can make money or become a receiver, a little more ways, a little more possibility.
07 Future
The reason why overseas cash loans are China's overseas cash loans is because Chinese like to follow the trend in business, and the herd effect is very serious.
As the story goes, a Jew opened a gas station in one place, got rich, and then his relatives and friends came over, some people opened restaurants, some people opened movie theaters, some people opened shops, and the place was developed. Chinese made money by opening a gas station, and then his relatives and friends came over and opened one gas station after another next to it, and finally everyone died.
This value of "first to get rich and then develop" may be the inevitable development of the cash loan industry, just as it is difficult for the economy and the environment to avoid "first develop and then govern". Since we are no longer than desperate, we do not care about the future.
Of course, overseas cash loans can make money. But are there other opportunities overseas? Have it? I'm interested.