Page 142 - Special Topic Session (STS) - Volume 1

STS420 Jianhua (Klyment) H.
From the perspective of credit report service targets, the current market
structure for large and medium-sized enterprise has been relatively stable.
However, in terms of individual and small enterprise credit report service is still
underdeveloped. There are two significant challenges for now.
3.2.1 Lack of quantitative ratings
The credit reports provided by CRC mainly includes credit bill overdue
records, but there are no quantitative ratings which indicate an
individual’s credit level intuitively. While most financial institutions use
credit rating model from FICO or the three big credit firms (Experian,
Equifax, and Transunion), many medium and small-sized credit
cooperation, peer-to-peer loan platform could not afford the high cost of
technical development. Therefore, their risks management is weak, and
reviews of loan applications are less productive.
3.2.2 Interoperable credit sharing is not sufficient among financial
institution
Although the P2P Network Financial Information Sharing System
(NFCS) have access to 957 institutions, less than half of the institution have
reported credit data. The total individual who has a credit report in NFCS
is only 4,548,149, which is a small number in a market of 160 million online
debtors. Moreover, credit reports contributed by banks, and the big
financial institutions are only available to private party or data exchanged
partners. Therefore, it is quite difficult for small and medium financial firms
and merchants to acquire complete individual credit reports.
3.3 The key technology and social network contribution for Internet
credit score
With 54 percent of e-wallets penetration rate in China, dominated by
WeChat Pay and Alipay, the companies behind these two wallets, Ant-financial
and Tencent starts to study how to establish a credit score for its users, and
allow its’ ecosystem partners to have better risk control when offering credit
trades. Typically, credit score modeling consists of four steps.
3.3.1 Data preparation
Build a database for data recording, cleaning, and filtering. The
source of data comes from various dimensions including
 Personal identity, such as education, driving license, employer
information
 Credit history, such as credit card repayment history, house
mortgage
 Contact network, an individual’s friends credit can affect his own
as well
 Transaction behavior, such as shopping, borrowing devices, peer-
to-peer money transfer

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