OUR RURAL FINANCE PRACTICE A Snapshot of China’s Rural Finance Environment 4:1 3.05 329:1 29.4% Urban vs. Rural Trillion RMB Urban vs. Rural Number of people that have Funding shortage Number of people employed Availability of formal credit a credit record in rural areas by FIs per 10,000 people in rural areas Note: Data as of Dec 2015 Key Pain Points Key Issues Limited Information & Demand-side Assets Rural Borrowers Credit Constraints in Rural Finance High Operating & Risk Costs Supply-side Rural FIs Key Pain Points Integrated Solutions Data Limited Information & Demand-side Assets Rural Borrowers Rural Finance Model High Operating & Risk Costs Supply-side Rural FIs Tech ANT FINANCIAL • Ant Financial is a technology company that brings inclusive financial services to the world. • Ant Financial was officially founded in October 2014 and originated from Alipay, founded in 2004. • Ant Financial is dedicated to bringing the world more equal opportunities by building a technology- driven open ecosystem and working with other financial institutions to support the future financial needs of society. Ant Financial & Rural Finance Business Rural Areas Rural Finance Agriculture Integrated solutions Farmers Ant Insurance A Roadmap of Ant Financial Rural Finance Phase 1: 2015-2016 Phase 2: 2016-2018 Phase 3: 2017-2018 • Rural Taobao: Rural Taobao • Households breeding cattle, pigs, • Mass rural residents in county partners and their customers or poultry (New model of level or below • CFPA Mircofinance: Covering Agriculture Households) 85% of poverty-stricken counties • Downstream rural dealers and 82% of women in villages Online lending model Online + offline lending model Supply chain finance model Digitalized platform model Development phase of Ant Financial rural finance Phase 1: 2015-2016 • Rural Taobao: Rural Taobao partners and their customers • CFPA Microfinance: Covering 85% of poverty-stricken counties and 82% of women in villages Online lending model Online and offline lending model • Ant Financial uses big data and AI algorithms to provide loans to SMEs and rural farmers called the “310” model: 3 minutes to apply for credit in bringing convenience to people, 1 second to approve based on substantial background analysis, and 0 people involved in the decision that to make sure the process is fully automated, • In counties and villages that with limited access to established financial services, we work with offline acquaintances such as Alibaba Rural Taobao partners and CFPA Microfinance and provide users with various of financial services including loans. The initiative has introduced across China including some poverty-stricken counties. Ant Financial rural finance concept 1 Inclusive concept 2 5 Charitable Power of mentality ecosystem 3 4 Commercially- Technology- oriented driven principle innovation Development phase of Ant Financial rural finance Phase 2: 2016-2018 • Households breeding cattle, pigs, or poultry (New model of Agriculture Households) • Downstream rural dealers Supply chain finance model • The supply chain finance model is to lead agricultural material & implements with high quality to rural areas, and agricultural products with high quality going to urban. • By connecting the management system of agri-enterprises, we lend to the customers who have long term business relationship with the big enterprises with non-cash Loan. The borrower can only use such kind of loan to purchase raw material online. There is no guarantee needed, no insurance involved, and it is also 310 experience. Development phase of Ant Financial rural finance Phase 3: 2017-2018 • Mass rural residents of county level and below Digitalized platform model (inclusive finance in rural areas) • Work with financial institutions to build a Joint Loan platform with digital risk management capability that is designed for residents of county-level and below, so as to extend financial institutions’ footprint to grassroots and promote the growth of inclusive finance. • Work with county-level governments to build a platform to provide local public services. The financial services are embedded in it. With the spreading of platform by local governments, inclusive finance get well known as well. Ant Financial rural finance-Inclusive finance at county-level Fee payment Visit doctor Public Housing Social insurance Smart transportation Utilities Inclusive finance in rural areas Entertainment • Neixiang County, Henan • Xintai County, Shandong Local official hotline • Lankao County, Henan • Qixia County, Shandong • Sheqi County, Henan • Zhucheng County, Disaster alert • Fengqiu County, Henan Shandong Education Smart • Ningling County, Henan • Zoucheng County, food market • Yucheng County, Henan Shandong • Yongcheng County, • Cao County, Shandong Henan • Badong County, Hubei • Anji County, Zhejiang • Lichuan County, Hubei • Tongwei County, Gansu • Yuanan County, Hubei • Linyao County, Gansu …… Rural finance focuses on farmers and agricultural industries offering tailor-made financial services to them Online lending model Online + offline lending model Data input Risk control Product and R&D management Farmers Agricultural Industry Supply chain Digitalized finance model Resource Financing platform model integration …… THANK YOU.