Lu-International is the global beachhead of Lufax, Shanghai Lujiazui International Financial Asset Exchange Co., Ltd in short. Lufax is an online wealth management giant in China founded in 2011. Its mother company China PingAn group is a conglomerate who specializes in insurance, banking, and financial services. Ping An Insurance ranks consistently as the world’s top global insurance company. In 2018, Ping An Group is rated as the third most valuable global financial services company in the world. Ping An Insurance is the world’s largest insurer and it is also one of the world’s biggest investment and asset management company.
Lufax is founded in September 2011 and started with peer-to-peer (P2P) lending as the only product. It is the second largest P2P lender in China. Now the company is branching out their business gradually, becoming a much broader platform that work together with funds, insurance companies and financial license holders. The platform makes money by matching borrowers with investors, collecting a 4% fee on each loan. Since the start of the business, the company has arranged more than 200,000 P2P loans that worth a total of $2.5 billion. Currently, Lufax has 32 million registered users and 7.7million active investors as of Sep, 2017. Assets under management (AUM) at end-Sept 2017 worked out to almost S$100 billion. On the P2P lending platform, loans under managemented amount to a total of S$55 billion.
Having launched its Chinese app last October, Lu International is launching its English app at app store, widening its user base beyond the Chinese. “People are used to do groceries, buy clothes, and food online. Financial services are a natural extension,” Lu International CEO Kit Wong told The Business Times. “People are getting more educated, more financially savvy. Look at the number of financial websites teaching people. With tech, it also becomes easier to design products rapidly. Our goal is to find customers who prefer a simple app experience, and prefer the sort of products that we have, which are less complex, yield-based products”
The Lu-international platform is quite straight forward. Without logging in, one can already see the expected yield of 5.5% a year for a 177-day product with a A credited US dollar fund and so on. The app also quite focus on the customer experience, “we’re quite focused on the customer journey. We will continue to experiment, looking at small things, like how do people buy, can I reduce the number of steps to buy, make it more efficient, or display information in a different way,” Mr Wong said. The latest technologies include OCR process to pick up key customer information and store ID documents, a facial recognition process to capture “live” photos to match against identified database, etc.
Its Southeast Asia Goal
Having its office in Marina Bay Financial Centre Tower, Lu-international aims to build largest investment app in Asia by its selection of product that cannot be easily found by individual and products with higher return than those found in conventional investment channels. However, the biggest challenge now is to grow the business fast. Like e-commerce, online wealth management requires significant scale to pull off. After all, Lu International only collects a low flat fee when a customer buys a fund. It also has revenue-sharing arrangements with fund managers. The product providers charge management fees up to 1% of asset under management a year.
When looking at the targeted market in southeast Asia, their targeted customers are who can invest from 10K to 1million USD, who are most likely white collars, small business owners or civil servants. However, to forge a large future customer base, they think university students are the segment should not be overlooked. Therefore, they would also like to engage university students into their marketing campaign. Even if the university students cannot invest immediately and become active investors, it is promising to have them as registered users. The targeted customers of Lu-international for the series marketing campaigns can be summarized as in the table below.
Note: Please limit your answers for both Question 1 and Question 2 to 5 pages (excluding appendix). The text should be single spaced with a font size of 12pt.
(b) Please analyse the competitive dynamics of the wealth management app market in the above three countries.
(a) Please examine the characteristics of representative consumers from each of the segments in each country.
(b) Propose the cities for entry in both Philippine and Indonesia for the marketing campaigns. You may also propose to roll out the marketing campaigns at the national level. Please explain the rational of your proposition.