Lenders need scale. Peer-to-peer ventures have failed to achieve this individually and collectively. Lufax is the latest to throw in the towel. China’s second-largest online lender is shrinking its peer-to-peer business, while denying rumours of a complete exit. The move signals more withdrawals and consolidation are on the way across the industry.

Explosive growth was halted by a series of scandals. These included lender Ezubao’s $7.5bn Ponzi scheme, which claimed 1m victims two years ago. The ensuing government crackdown brought mass shutdowns. China’s total of online lenders has shrunk by a half from a decade ago. 

New regulations have included a drastic cut in loan amounts and restrictions on marketing. The sector’s workforce has shrunk. Lufax rival Dianrong recently cut thousands of jobs and raised funds to meet higher minimum capital requirements.