How AI and big data helped China’s tech giants dominate consumer finance
- China’s tech giants have the secret recipe that can improve the buying journey and they are applying this to consumer credit
- The aim is to build a much more accurate picture of a user’s credit profile by using a range of online data as opposed to traditional credit scoring
This is the second in a five-part series looking at China’s fintech industry in the wake of the decision by regulators to suspend the initial public offering of Ant Group, which was widely expected to be the world’s biggest capital raising.
China’s tech giants have become experts at using data and then parsing that information with algorithms to continue innovating and improving the customer experience.
Whether it is determining which country you most like to visit and what kind of food you like to eat when you get there, or what brand of shoes or perfume is your favourite when shopping online – China’s tech giants have the secret recipe that can improve your buying journey.
And some of them have been using that expertise to gobble up a bigger share of the consumer finance market – an industry that has always been on hand to fund impulse buys or bigger ticket items that people want to buy now and pay for later.
The AI model of Ant Group, an affiliate of Chinese e-commerce giant Alibaba Group Holding, whose mega IPO was recently put on hold by the country’s regulators, crunches a range of data points on a customer to better gauge risk for lenders, automatically setting credit scores for millions of users. Alibaba is the owner of the South China Morning Post.
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What is Jack Ma’s Ant Group and how does it make money?
Ant has facilitated about 1.7 trillion yuan (US$258.4 billion) in consumer loans with an average 30-day delinquency rate of around 1 to 2 per cent before the pandemic hit, which is very competitive against the average delinquency rate at China’s big four banks.