Understanding Auto-backed Asset in China Richard Yi Wangjin Financial

CONTENTS 1 2 3 Opportunties and Challenges of Auto-backed Loan Wangjin's Success in Auto-backed Loan 2 Risk Management for Auto-backed Loan 3

CONTENTS 1 2 3 Opportunties and Challenges of Auto-backed Loan Wangjin's Success in Auto-backed Loan 2 Risk Management for Auto-backed Loan 3

What's Auto-backed Loan? Auto-backed loan is essentially auto-equity loan, which is rare in US, but getting popular in China among non-prime population Underserved credit needs for small and micro companies Automobiles are common valuable liquid assets, good for collaterals Innovative title loan with “Collateral registration (Lien Recording) + GPS tracking” Why Popular in China? Loan Type Title loan: Requires title collateral registration + GPS tracking but borrower can continue to use their cars during the life of the loan Custody Loan: Cars in custody over the life the loan, used for high credit risk borrowers Asset side Capital side Big-data based risk management Capital side touna.cn

Fast-Growing Market Auto-backed loan (Auto-equity) market is expected to grow by 30% annually in next 5 years Expected Annual Growth Rate from 2019 to 2023: 31% Source: Frost & Sullivan， 1RMB=0.15$ Daiba car loan

Auto-back Loan Industry is consolidating Due to the tightening regulations and competition, the industry is in the process of cleaning up and consolidating Wangjin Asset side Capital side Source: Frost & Sullivan Daiba car loan touna.cn

Major Risks & Challenges The success of a auto-back loan business depends on how well to handle these risks and challenges Risk Challenges Fraud Lack of nationwide pooled data for non-prime population Credit Lack of nationwide credit rating system, lack of effective credit bureau data Collateral Appraisal risk, monitoring, disposal risk Operation Labor intensive, Integrity Funding Lack of affordable funding Regulation Uncertain, rigid, one size fits all Wangjin Asset side Capital side Daiba car loan touna.cn

CONTENTS 1 2 3 Opportunties and Challenges of Auto-backed Loan Wangjin's Success in Auto-backed Loan 2 Risk Management for Auto-backed Loan 3

About Wangjin Mission Vision To make it easy to access credit anywhere Wangjin Financial is a leading TechFin company in China, founded in 2012 and specialized in auto-backed loan business, and provides safe, convenient inclusive financial services for small and micro entrepreneurs and individuals Mission To make it easy to access credit anywhere Vision To develop and promote inclusive financial services, and build a company that lasts at least 100 years while making customers most satisfied Capital side Big-data based risk management Daiba car loan touna.cn

Big-data based risk management Business Model Wangjin has built online platform and offline network to facilitate the auto-back loans efficiently and effectively Wangjin Funding (Investors) Big-data based risk management Asset (Borrowers） Touna.cn Institutions Auto backed Loans

Offline Nationwide Service Centers (170+) Diversified Funding Channels Online Platform+ Offline Network Wangjin has built online platform and offline network to facilitate the auto-back loans efficiently and effectively Offline Nationwide Service Centers (170+) Diversified Funding Channels Wangjin Individual client：middle class and mass affluent class. Touna.cn, a leading online P2P platform Banking institutions, Wangjin Group has already cooperated with a number of banks to help inclusive finance through bank lending and direct banking. Funding (Investors) Insurance institution，Wangjin Group has already cooperated with three insurance companies. It is working with the PICC Auto backed Loans Other instituions，at present, the financial institutions that Wangjin Group has cooperated include financial leasing companies, trust companies, securities companies, guarantee companies and consumer finance companies. Touna.cn Institutions

70.2 billion 5.8 million 7.8 billion 462thousand 71thousand 9.7month Operating Data Wangjin has been one of established top leading players in Auto-backed loan market 70.2 billion Cumulative Loan Amount 5.8 million Registered Users 7.8 billion Loan Balance 462thousand Cumulative Borrowers 71thousand Average Loan Amount 9.7month Average Loan Tenure （Amount in RMB, 1RMB=0.15$, Data as of 3/27）

Profitable since 2016, even in turbulent 2018 Successful Risk Control Wangjin has put the risk well under control during industry turmoil last year and is well positioned for riding on the future industry growth FPDV4+: First Payment Default (4+ days past due) Profitable since 2016, even in turbulent 2018

CONTENTS 1 2 3 Opportunties and Challenges of Auto-backed Loan Wangjin's Success in Auto-backed Loan 2 Risk Management for Auto-backed Loan 3

Risk Management Principle Small-amount, Collateral, Scattered and Directly-operated(company-owned) Small- amount Collateral Directly- operated Scattered Small-amount： Average 70k RMB Range: 20k ~200k Collateral： Use car title or car as collateral with good liquidity Scattered： Borrowers scattered across regions and industries Directly-operated： Company-owned service centers, better operational control than franchised touna.cn

RMS Risk Management System (RMS) RMS consists of six sub-systems which collectively mitigate the fraud, credit and operational risk effectively RMS Origination System Car Appraisal Anti-Fraud Big Data Platform Collections Decision Engine

Extensive channels of cooperation Full Life Cycle Risk Control Centralized big data risk review system plus offline outlet network ensures effective full life cycle risk control Acquisition Portfolio Management Collections Initial evaluation at offline outlets: outlet underwriters evaluate the risk of borrowers and the value of collateral Big data final review at headquarters：Utilize third-party data to further assess fraud and credit risk and the value of the collateral as needed GPS Monitoring: Proprietary GPS tracking system to detect abnormal activities Internal audit : Regular and rigorous internal audit to ensure the strategies and procedures are being followed correctly Combination of telephone collection, external collection and legal collection: optimize the collection treatment and timing based on delinquency severity and customer situation, balancing the cure rate and customer satisfaction Extensive channels of cooperation >30 Third Parties

Credit Scorecards Illustration of major scorecards. Auto-decisions account for about 65% Anti-fraud scorecard Face recognition Blacklist ID authentication Telecom data Application data Repayment record Online borrowing data Acquisition Repayment behavior scorecard Application data Repayment records GPS data Data Strategies Portfolio management Modeling Decision E D C B A 0-160 161-320 321-480 481-640 641-800 High Medium Medium Low Low Auto Rejected Manual Auto Approval Collections

FinTech Applications Fintech Technology is used to refine the management of full life cycle Fintech Mobile Applications Intelligent Decision Engine Big Data Analysis and Applications Intelligent Applications OriginationAPP Anti-Fraud System Origination System AppraisalAPP Customer Scorecard Intelligent Payment Portfolio Risk Control System Order tracking APP Touna Financial Management Big data credit investigation GPS Tracking System Intelligent Customer Service Intelligent Monitoring Platform Collection GPS

FinTech Strategy FinTech Continues to use FinTech to refine business from the following six dimensions FinTech Scenario Platform Datamation Intelligent Automation Mobility

Membership Compliance Top Compliant Company Compliance is deemed as the top priority while Wangjin has been in compliance with regulations in a timely manner Touna.cn , as one of leading P2Ps, is in the nationwide P2P registration process Touna.cn – Submitted self-inspection report in Oct 2018 and had subsequent onsite inspections done by local authorities in Dec 2018 pursuant to regulations Touna.cn -- TOP2 most compliant P2Ps in 201902 ranked by the leading P2P Portal WDZJ.COM Membership Compliance

Membership Active Members of Industry Organizations Wangjin takes active roles in major organizations to promote the compliant, sustainable business practices 【Boao Forum for Asia】 【National Internet Finance Association of China】---VP Level 【Guangdong Internet Finance Association】------VP Level 【Shenzhen Internet Finance Association】------VP Level 【Guangdong Consumer Finance Protection Industry Association】 【China Auto Loan Alliance】------VP Level Membership

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