Introduced by the Chinese government two years ago, the Social Credit system consists, in part, in recording the financial information of the Chinese citizens, so that The People's Bank of China (the central bank of China), could build a credit scoring system. While 600 million people have seen their information collected, many didn’t and can’t get a loan or a credit from formal banking system. Some also have low income which prevent them from accessing to that kind of loans or even mortgages. Because of the huge demand of short-term finance needs, plenty of P2P and internet financing platform has emerged recently. In fact, last year, the industry was worth $100 billion in China.
One of the most striking example is Alipay’s small loans services, Jiebei. For the last years, it has grown so fast because Alipay can leverage the huge database of Alibaba Group, which are collected from Taobao and Tmall, the two biggest e-commerce platforms under Alibaba Group. Last year, Jeibei delivered loans worth US$43.4 billion to 12 million users. With the development of Alibaba ecosystem, every action and information people did in the ecosystem such as purchasing online, transferring money and repaying credit card can be collected and analysed by its own credit score system: sesame score. The key contribution of sesame score is that the system covers millions of users who have no credit record in banking system and provides them short-term loan with reasonable rate, which kill the pain points of the Grassroots.
In the next years, the development of data systems will be key to the foundation of the most competitive P2P businesses in China. Big online payment giants might stand out in the sector as they are currently making Chinese people trust online brands to the point that they might prefer to put money online instead of in the banking system.