GUANGZHOU, China – Ant Group will share credit data from its consumer lending business with China’s central bank as part of an overhaul of the fintech giant.
Huabei is a consumer loan product from the Ant Group. Data from this loan product will be fed into the Financial Credit Information Database held by the People’s Bank of China (PBOC), Ant said in a statement Wednesday.
The information, including the date the account was opened, the amount of the credit line and the repayment status, will be provided to the central bank. Users will need to authorize it. Specific information such as details on time of purchases or goods purchased will not be transmitted to the PBOC.
Ant Group, which is controlled by Alibaba’s founding billionaire Jack Ma, saw its successful initial public offering suspended in November due to regulatory concerns.
Ant’s lending business operated on a model where it matched borrowers to lenders, such as banks, but the company did not guarantee these loans. Instead, the banks bore most of the risk.
This worried regulators who believed companies like Ant were acting like financial institutions but weren’t regulated like them.
Chinese regulators have ordered a restructuring of Ant Group. In June, the company was given the green light to operate a consumer credit business with outside shareholders. This company houses its Huabei and Jiebei loan products and is called Chongqing Ant Consumer Finance Co. Ant will have to take out more of these loans.
Ant Group is currently in the process of becoming a financial holding company which will be overseen by the PBOC and other regulators.
A logo of the Ant Group is pictured at the headquarters of the company, a subsidiary of Alibaba, in Hangzhou, Zhejiang province, China on October 29, 2020.
Song of Aly | Reuters
The data sharing requirements with the PBOC bring Ant Group closer to other financial institutions in the lending industry who are required to do the same.
Ant Group said some users can already search for Huabei-related records in their credit reports with the central bank.
The company seeks to allay fears that sharing of Huabei users’ credit data will affect their future ability to obtain loans.
“A complete and appropriate set of credit records will allow financial institutions to better understand the creditworthiness of users and to better serve them,” Ant Group said in a statement.
“Therefore, under general circumstances and with the normal use of Huabei and timely repayments, the use of other financial services such as loan applications will not be affected.”
Kevin Kwek, managing director and senior analyst at Bernstein, said the credit data sharing deal with the central bank removes “significant” regulatory uncertainty around Ant Group.
“Data sharing of course erodes Ant’s advantage, but it allows them to gain regulatory blessings, such as obtaining a consumer credit license,” Kwek told CNBC.
“In my opinion, that means the intention is to allow Ant to continue in business, but within the framework of regulations and rules, and if that helps the larger agenda of the consumer credit bureaus.” It is important to note that Ant will continue to be dominant as a very large distributor given its user base, although it must now share some data. “