Consumer finance companies in China have started to make use of the digital renminbi to issue loans to clients.
Su Xiaorui (苏筱芮), senior financial sector consultant with Analysys, said to Securities Daily that consumer finance companies are the latest sector of the economy to become involved with trials for the usage of China’s central bank digital economy (CBDC), commonly referred to as the e-yuan or the digital renminbi.
“Consumer finance organisations are accelerating their incorporation into the digital renminbi ecosystem,” Su said. “Not only are they providing more diversified lending methods to customers, they are also exploring innovations for expediting consumption.
In July, the consumer finance arm of Postal Savings Bank of China (PSBC) announced that it had successfully made its first consumer loan using the digital renminbi.
PSBC said the loan was made in the Guangdong province capital of Guangzhou with the support of the local branch of the Chinese central bank.
More recently on 14 December, Industrial Bank Consumer Finance (兴业消费金融) announced via social media that it successfully issued its first consumer loan using the digital renminbi. The development arrived after Industrial Bank Co., Ltd. became the 10th official digital renminbi operating institution in July.
“The embrace of the digital renminbi by consumer finance companies is a broad trend,” Su said. “Firstly, the convenience of digital wallets helps them to reach customers with greater use and at lower cost. Secondly, they hope to save on costs in relation to their dependence on channels created by third parties.
“Thirdly, they can ensure the veracity and reliability of the usage of funds provided.”