An Analysis on China Peer-to-Peer Lending Platform Strategies: Case Study of Lufax

Illustrating with the case of Lufax, the purpose of this study is to examine the success factors and each development phase of P2P lending platforms. This will serve as a reference for future potential P2P platforms. The study analyzes Lufax P2P lending through the following three parts: development strategy, control system and competition strategy. It was found that in the development strategy, Lufax used “investment coupons” to appeal to more users, simplified products and credit guarantee mechanisms to help match users more efficiently and leveraged the “Piggyback Strategy” when it launched. In the control system, not only did Lufax set clear lending rules but also indirectly affected users’ behavior through third-party social forum, Lufaxy. Meanwhile, Lufax collects and analyzes users’ transaction data and also design market mechanisms such as penalty interest to reduce default risk. In the competition strategy, Lufax increases cross-side network effects by screening qualified borrowers through comprehensive risk control systems, enhance same-side network effects by using investment coupons, obligation transference features and information shared on Lufaxy. Through leveraging the information exclusiveness of Lufaxy and leveraging the strong financial support from its parent company, Ping An Group, Lufax was also able to increase the switching cost of its platform, thus creating a strong competitive advantage. Through its three-stage platform transforming, Lufax was able to establish enveloping threats to traditional banking industry.