China: Ant Financial launches individual credit score data analytics-based credit agency

The credit agency uses a system based on online and offline data to generate individual credit scores for consumers and small business owners. Sesame Credit utilises big-data technology and customer behavior analytics to assess creditworthiness, in order to help companies extend credit to millions of Chinese consumers.

Credit bureaus and ratings agencies provide lenders, merchants and other companies with means of determining the ability of customers to pay their bills, allowing them offer car loans, mobile-phone service contracts and a host of other types of consumer installment credit.

Sesame Credit officials said their goal is to make consumer loans and other credit services more widely available in China, which has an underdeveloped consumer-finance industry compared with many Western countries. At the start of 2014, 320 million Chinese citizens, less than one quarter of China’s population, had credit records in the People’s Bank of China credit reference center, Zhang Jianhua, head of the PBOC’s Hangzhou branch, recently told Caixin magazine.

In the U.S., 85% of consumers have credit ratings. To establish credit scores, Sesame Credit is combining traditional information sources for assessing creditworthiness, such as public records with online data from Alibaba Group, an affiliate of Ant Financial.

Alibaba’s ecommerce ecosystem provides Sesame Credit with data from more than 300 million registered users and 37 million small businesses that buy and sell on Alibaba Group marketplaces, including Taobao Marketplace and Tmall.com. Payment histories are also available from Alipay, a subsidiary of Ant Financial.

In addition, Sesame Credit is working with public agencies, financial institutions and merchants to obtain more data. Information will be processed using big-data analytics, complex software that can evaluate different kinds of data to identify patterns and make predictions such as the likelihood that individuals will pay their debts.

Data is collected only with the knowledge and consent of the individual subjects of the information, and all data is encrypted. Access to a person’s credit scores can occur only with the subject’s authorisation. Consumers will be able to check their credit scores by using Alipay Wallet, Ant Financials mobile e-payments app.