Digital Lending in Asia: Disruption and Continuity

Terry Tse

It seems, as one becomes older,
That the past has another pattern, and ceases to be a mere sequence –
Or even development: the latter a partial fallacy
Encouraged by superficial notions of evolution,
Which becomes, in the popular mind, a means of disowning the past.

T. S. Eliot, Four Quartets

Disruptive technology has transformed the Asian credit market, especially for micro-merchants and small to medium-sized enterprises (SMEs). Advances in data analytics have opened up new horizons in credit risk management, offering credit access to a wide cross-section of borrowers underserved by traditional financial institutions. A new enthusiasm took hold under the new mantra of disruption, gripping investors and entrepreneurs alike, and boasting of conquering the credit cycle and rewriting the rules of finance. At one point, it seemed that the dons of new finance would soon consign banks to the dustbin of financial history.

This new-found enthusiasm was particularly feverish in the People’s Republic of China, until regulatory changes and market forces reasserted the primacy of financial logic. It is thus fitting to open our chapter with the Chinese market.

This chapter