Chinese regulators plan to require major technology giants to share consumer loan data with credit agencies, banks, and lenders in a bid to reduce fraud and excess borrowing in the country’s financial system, as reported by Reuters on January 11. Specifically, PBoC plans to require tech giants including Ant Group, JD.com [JD:US], and Tencent [0700:HK] to feed consumer loan data to nationwide credit agencies that will distribute the data to banks and lenders to help prevent over-borrowing. Specific details about the new policy are yet to be released.
The plan comes as Chinese regulators move to reign in the internet technology industry that has historically enjoyed minimal regulations and scrutiny. The new regulation is likely to pose a considerable impact on the profitability of the internet technology firm’s credit businesses that rely on high service fees charged to banks in exchange for easy access to a large customer base. Ants’ private credit rating business Sesame Credit charges a technology service fee ranging between 30% to 40% of interest on loans charged by banks. The credit firm currently leverages a customer base of about 100 banks. As of end-2019, Tencent’s WeBank micro-loans unit Weilidai has recorded 460m loan drawdowns valued at RMB3.7tr.