Consumer finance has gained popularity in China with Millennials and Gen Z the primary force of credit-based consumption in China.

Unlike the elder generations who refrain from making purchases until they have saved enough money, the younger generation's conception of finance and consumption has shifted significantly. They are keen to upgrade their consumption habits and improve their quality of life through consumer loans. Some e-commerce platforms have either established their own consumer finance models or collaborated with third parties to provide installment services. Ant Financial, the financial arm of e-commerce giant Alibaba, has set up Ant Check Later in 2015 to provide installment loans for consumers.

Compared with traditional loans offered by banks and credit card services, consumer finance is more flexible with a faster approval process and fewer approval criteria. A bank requires information about a customer's educational background, marital status, housing status, job and financial health when deciding whether to issue a credit card.

However, companies that provide installment loans for consumers should guide young people to use their services appropriately to prevent risk and ensure personal fiscal stability. Ant Check Later has set a limit for its customers under 22 years old with a maximum spend of 2,000 yuan ($289).

The consumer finance industry will begin to self-regulate as competition eliminates weaker players and new requirements are put in place.

(This is an edited excerpt of an article published in Oriental Outlook on November 8)