China’s central bank wants a say in fintech’s future as it grants new personal credit ratings license to state venture with internet firms
- The People’s Bank of China gives the green light to Pudao Credit Rating, a venture between Beijing Financial Holdings Group with JD Digits and Xiaomi
- The move highlights the urgency to increase the scrutiny of online lending, whose sprawling growth has raised concern among top leaders
Personal credit rating firms collect data from financial institutions, and share the data with and provide risk assessment reports to entities that sign up for the service. On top of the financial data, such agencies can also access other data like travel and phone records that are deemed as alternative financial information.
China’s consumer credit market will almost double to 24 trillion yuan by 2025, according to Oliver Wyman. Ant Group has the largest share of the market with 16 per cent, followed by Tencent-backed WeBank with less than 5 per cent, according to the data.
Baihang credit has financial data on 85 million people, obtained from more than 1,700 financial institutions, and has a customer base of almost 1,000 companies, according to its latest report.
Personal credit ratings will also be a boon for Chinese banks whose dud loans have been spiking after advancing a record amount of new loans this year to battle the coronavirus pandemic. The overall bad loan ratio rose to the highest since 2009 by the end of the third quarter, as the worldwide coronavirus pandemic weighed on tourism-related businesses and personal consumption.