Private Firms Given Six Months to Ready Credit Data Businesses

(Beijing) – The central bank has given eight private companies six months to prepare for launching a business based on credit information from individuals and companies, the regulator said on January 5.

They include the subsidiaries of Ping An Insurance (Group) Co. and Internet giants Tencent Holdings Ltd. and Ant Financial Services Group, which is related to Alibaba Group Holding Ltd. and also controlled by Alibaba chairman Jack Ma.

The permission does not guarantee that all of those companies will get a license, a source from Ant said. This was confirmed by a source close to the central bank.

This is the first time the central bank has announced the names of candidates that are likely to be the first running commercial operations based on the gathering and analysis of individual and business credit data. The central government permitted private enterprises to do so in 2013 to diversify services in the field, which have relied overwhelmingly on the central band and are largely limited to basic inquiries about borrower credit history.

Companies like Tencent and Ant have said they could do more. Wu Dan, a senior director of Tencent's payment operations, said last year that the company could offer a new perspective on how likely people are to default on loans, using data that flows through online gaming centers and social networking software.

A big portion of the data, which covers more than 800 million users, comes from people who have no credit history with the central bank, and Tencent can help with their credit ratings, he said.

Likewise, Sesame Credit Management Co., a subsidiary of Ant, has said it can provide credit ratings for people and companies that use Alibaba's services and lend to them quickly based on those ratings. It has access to the data of more than 300 million individuals and 37 million small and medium-sized enterprises.

Yu Wujie, a chief credit data analyst at the Ant, said Sesame processes an amount of data every day that is 5,000 times the size of the national library's digital records. It covers a wide range of fields, including online shopping habits and how people pay their bills, he said.

One issue that remains unclear is how these companies can run businesses without violating a central bank requirement that says a credit data company must collect the information it needs from third parties and sell its products to other firms. This is to prevent conflicts of interest that might arise when firms gather data from their own customers and use it for profit, a central bank official once said.

Critics have also questioned the legitimacy of Ping An engaging in the business. The law prohibits banks from making such investments, but it does not say whether the holding company of a bank, like Ping An, which owns Ping An Bank, should follow the same requirement.

Qiu Han, a Ping An executive in charge of its big data operations, said a firewall will stand between its credit data unit and other parts of its operations.

(Rewritten by Wang Yuqian)