How technology is changing online credit checks

PUBLISHED : Tuesday, 28 March, 2017, 3:58pm
UPDATED : Tuesday, 28 March, 2017, 3:58pm

It generally takes nothing more than a simple click on the ‘yes’ button to authorise an online peer-to-peer (P2P) lender to go through an applicant’s credit history before approving a loan.

But the assessment may in fact go far beyond the borrower’s imagination.

With vast amounts of data at their disposal, the powerful analytical programs behind the screen are often capable of picking up diverse fragments of an applicant’s life story and piecing together a complete picture. And it all happens in a matter of minutes.

A would-be borrower is, for example, unlikely to get through the risk control system “if he has very abnormal living habits, say he sits around with nothing to do during the day time, or spends all his time on the internet during the night, or spends a lot of money on games,” said Dong Qi, co-founder and CEO of Finup, a Beijing-based financial technology firm.

He was speaking on the sidelines of the Boao Forum for Asia in Hainan.

Frontier technologies such as big data, cloud computing and machine learning – a branch of artificial intelligence – are increasingly used by technology firms, and are changing core areas of the online financial industry, like risk management.

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Cloud Atlas, a risk management system developed by Finup, is one such example. After obtaining consumers’ consent to access their mobile contacts book and apps as well as information provided by third-party data agencies, the system is able to carry out a thorough analysis to figure out whether the applicant is eligible for loans on the particular P2P platform.

It differs greatly from traditional credit check methods, which tend to look at basic financial information like housing situation and salary.

The pass rate of applicants for loans under the Cloud Atlas system is well below 10 per cent, as the three-year-old company uses strict criteria.

Finup focuses on big data processing and fintech research and development. It owns several internet-based businesses, such as Iqianjin, an online P2P lending platform with 7.1 million registered accounts, Money Station, an online credit assessment service app for consumers, as well as Finup Credit which provides personalised information services to micro loans applicants.

The company, formally known as Puhui Finance, was named runner-up in Deloitte’s list of the 500 fastest growing technologies in the Asia-Pacific last year after its revenues expanded by 140 times in three years.

Dong believes less than 5 per cent of the total 2,000 or so P2P lending platforms in China are able to provide first-class risk management because of the huge R&D inputs.

Of its 1,000 employees at its Beijing headquarters, about 400 are R&D engineers and 300 are in risk-control related jobs, he said.

The company is considering peeling off its Cloud Atlas as an independent business to provide third-party risk management services to other internet financial enterprises.