(Bloomberg) -- Jiayin Group Inc., a Chinese loan facilitator, is in talks with one of the nation’s large state-owned banks for a tie-up as it seeks to strengthen its pipeline, according to Chief Financial Officer Charlie Fan.

The potential tie-up is part of the Nasdaq-listed firm’s efforts to partner up with bigger lenders and phase out ones that could potentially pose risk over the next two years, Fan said in an interview from Jiayin’s headquarters in Shanghai.

Jiayin currently facilitates consumer loans with more than 70 financial institutions, including joint-stock banks, online lenders and private banks. It assesses the credit of available borrowers and then takes a fee on the loans made by the banks. So far, it hasn’t worked with the four largest lenders such as Bank of China Ltd. or Industrial & Commercial Bank of China Ltd.

Banks are expected to gradually boost the share of consumer loans in their books over the next three to five years as they pare back real estate lending, Fan said. The amount of consumer loans indicated by lenders in talks this year have outstripped Jiayin’s target for the year by two to three times, Fan said, declining to give a specific figure.

“Banks are pretty open-minded” toward working with loan facilitation service providers, said Fan. “Their balance sheet recovery and the increasing contribution of the consumption sector to China’s economy will do us good.”

Jiayin’s main source of income derives from the fee it charges on brokering loans. That fee, or take rate, has slid from around 6% of the total loan in 2022 to about 3.8% as of the third quarter last year. Fan foresees more downward pressure as China’s overall lending rates trend lower.

Jiayin, which was founded in 2011, started off as a peer-to-peer lender in China before transforming into loan facilitation services for financial institutions in 2019, the same year it debuted on Nasdaq. It had revenue of 1.47 billion yuan ($204 million) in the third quarter, up 64% from the prior year. Loan volume grew 62% to 24.2 billion yuan.  

Jiayin mainly targets individual borrowers “underserved” by banks. It relies on social media platforms such as Douyin, the Chinese version of TikTok, as well as WeChat, Bilibili and Kuaishou to find customers. Its typical users are mainly 22- to 35-year-old workers with stable monthly incomes and willingness to spend with borrowed money as well as strong motives to repay debt and maintain solid credit records. 

The company is now setting its eyes on loan facilitation and fintech services in Southeast Asia, Africa and Latin America markets to replicate their model in China, according to Fan. 

“Their demographics, economic activity and smartphone penetration rate are somewhat similar to what China had eight to nine years back,” said Fan. “It’d be very easy for us to draw a second growth curve from there, and we’ve made developing overseas markets a key strategy.”

The company is relying on AI technologies and machine learning to help with risk assessment of users, detecting potential frauds and generating marketing content, according to Chief Technology Officer Feng Yi. It has set up an internal GPT lab that connects with Open AI, allowing its staff to explore the use of the service in boosting efficiency.

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