Jurisdiction - China
China – Alibaba Draws On ‘Big Data’ To Launch Credit-Scoring System.

4 February, 2015


The finance arm of China’s Alibaba Group, the Ant Financial Services Group, has launched a credit-scoring service to draw on “big data technology and customer behaviour analytics, to help make credit more available to millions of consumers across China”.

According to Alibaba, the Sesame Credit Management Co Ltd is the first credit agency in China to use a scoring system based on online and offline data to generate individual credit scores for consumers and small business owners. “These ratings provide lenders, merchants and other companies with a reliable tool for assessing their customers’ creditworthiness, hence giving more consumers access to a host of borrowing services such as home loans, mobile-phone service contracts, car loans and other types of instalment credit.”


Sesame Credit’s chief data scientist Yu Wujie said: “Sesame Credit is focused on those who may have little credit history at traditional credit agencies. They may have never obtained bank loans or applied for credit cards. However, they might be active internet users who shop online a lot, e-pay their utility bills on time, have a stable residential status and have been using their mobile phone numbers for a long time. We will take these and other factors into consideration when assessing consumers’ creditworthiness.”


Sesame Credit is able to tap into Alibaba’s “vast online eco-system… to collect data from more than 300 million real-name registered users and 37 million small businesses that buy and sell on Alibaba Group marketplaces including Taobao Marketplace and Tmall.com”, Alibaba said. “Payment histories are also available from Alipay, a subsidiary of Ant Financial that is China’s largest online payment provider. Sesame Credit is also working actively with public agencies, financial institutions, and various types of merchants to obtain more data that can effectively reflect consumers’ creditworthiness.”


According to Alibaba, “Sesame Credit’s services are expected to be applied in a slew of daily life scenarios”. “For example, landlords will be able to check potential tenants’ credit scores, employers will be able to make better hiring decisions by checking the credit histories of job applicants and users with good creditworthiness can rent a car without paying a deposit.”


In addition, Sesame Credit “is testing the service with some of China’s hotels, which are allowing travellers with superior Sesame Credit ratings to book and stay without paying in advance”, Alibaba said. “Sesame Credit is also conducting a test programme with a Chinese online dating site that allows suitors to check their potential dates’ credit ratings to make sure they are not meeting someone who is dishonest or untrustworthy. The credit information can only be accessed with candidates’ permission.”


Alibaba said all data will be collected “only with the knowledge and consent of the individual subjects of the information”. “All data is encrypted and segregated. Access to a specific subject’s credit scores can occur only with the authorisation of the subject.”


China’s state-run Xinhua News Agency said the People’s Bank of China issued a report in January 2015 that allowed eight institutions to conduct personal credit reports, including Sesame Credit and Tencent Credit Co., which is operated by Chinese internet giant Tencent.


According to Xinhua, industry observers say Alibaba’s new service “mainly targets Chinese internet users, including students and those without a credit card and thus uncovered by traditional credit scoring methods”.


However, professor of finance with Zhejiang University Wang Wei told Xinhua the effect of the new service remains to be seen. “Whether it can reflect a person’s credit conditions largely depends on whether there is sufficient data on his or her behaviours.”


Pinsent Masons


John Salmon, Partner, Pinsent Masons

[email protected]


Jon Fell, Partner, Pinsent Masons

[email protected]


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