Ant Group shares client credit score information with China’s central financial institution as regulatory revisions proceed

GUANGZHOU, China – Ant Group will share credit data from its consumer lending business with China’s central bank as part of an overhaul of fintech giant.

Huabei is a consumer credit product from the Ant Group. Data from this loan product will be fed into the People’s Bank of China (PBOC) financial credit information database, Ant said in a statement Wednesday.

Information such as the account opening date, the amount of the credit line and the status of the repayment are made available to the central bank. Users need to authorize this. Specific information such as details of the time of purchase or purchases of goods are not passed on to the PBOC.

Ant Group, controlled by billionaire Alibaba founder Jack Ma, suspended its blockbuster IPO in November due to regulatory concerns.

Ant’s lending business worked on a model of matching borrowers with lenders such as banks, but the company did not write those loans. Instead, the banks bore most of the risk.

This worried regulators, who believed that companies like Ant behave like financial institutions but not how they are regulated.

Chinese regulators have ordered the Ant Group to be restructured. In June, the company received the green light to operate a consumer finance business with outside shareholders. This business houses its Huabei and Jiebei loan products and is called Chongqing Ant Consumer Finance Co. Ant will have to underwrite more of these loans in some cases.

Ant Group is currently in the process of becoming a financial holding company regulated by the PBOC and other regulatory agencies.

An Ant Group logo is pictured at the company’s headquarters, a subsidiary of Alibaba, in Hangzhou, Zhejiang Province, China on October 29, 2020.

Aly song | Reuters

The data exchange requirements with the PBOC bring the Ant Group in line with other financial institutions in the credit sector who need to do the same.

Ant Group said that some users can already see the Huabei-related records in their central bank credit reports.

The company is trying to allay fears that disclosure of Huabei users’ credit information could affect their future ability to obtain credit.

“A comprehensive and proper set of credit records will enable financial institutions to better understand and better serve users’ creditworthiness,” the Ant Group said in a statement.

In my view, this means that Ant can continue to operate under regulatory rules and regulations.

“Therefore, the use of other financial services such as loan applications will not be affected under general circumstances and with normal use of Huabei and timely repayments.”

Kevin Kwek, managing director and senior analyst at Bernstein, said the credit data sharing agreement with the central bank removes “significant” regulatory uncertainties surrounding the Ant Group.

“Sharing data undermines Ant’s lead, of course, but it allows them to receive regulatory blessings such as a consumer finance license,” Kwek told CNBC.

“In my view, this means Ant can continue doing business, but under regulatory frameworks and regulations, and if it helps the broader consumer credit bureau agenda. It’s important to note that Ant will continue to be a very dominant large distributor given his user base, even if he has some data to share now. “

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