CreditEase sticks to inclusive finance
- By Chen Boyuan
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E-mail China.org.cn, May 30, 2016
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Professor Ba Shusong, chief economist for the China Banking Association, explains key points of the report "The Practice of Inclusive Finance in China: Technology Drives Forward Innovation" on Sunday, May 29, 2016 in Beijing. [Photo by Chen Boyuan / China.org.cn] |
As inclusive finance expands, the threshold for such services drops, leading to new problems such as difficulties of cost control, the coexistence of regulatory overlapping and regulatory absences, as well as financial and credit risks which are also found in traditional financial services.
Inclusive finance, which is characterized by small-and-micro loans, tends to be internet-based. Online operations, from credit validation to loan issuing, based on metadata, often proves more efficient and convenient than those issued at a bank counter. But Professor Ba Shusong, chief economist for the China Banking Association, warned that metadata shouldn't be the sole criteria in new finance.
The reason is that metadata relies on one's online financial activities, and for those who seldom make online transactions, such as elder people, their credit level may be analyzed incorrectly.
"In our simulations, we found an affluent man who doesn't really shop online has a far lower credit than his collegiate daughter who takes his money to buy from Taobao shops all the time. This man laughed, admitting that it wasn't fair," said Professor Ba, explaining why the metadata in new finance should not be completely independent of the audit in traditional finance.
While defects cannot belittle virtues, inclusive finance in China has been granted full support for its development from the country's top authorities. In October 2015, the Fifth Plenum of the CPC's 18th National Congress stated that China should "develop inclusive finance, and enhance financial services to SMEs, rural areas and especially in poverty-stricken areas." Central documents issued later all reflected this similar message.
Currently, the CreditEase network has spread to 244 cities, including Hong Kong and 93 townships in China. The company chief Tang hopes that metadata, the financial cloud, the internet of things and other technological and financial innovation would allow more people to enjoy the coverage of CreditEase.
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