January 29, 2015

Alibaba’s finance arm launches data-driven credit scoring service

China--Ant Financial has launched a credit rating system that will assess the creditworthiness of Chinese consumers and businesses using the wealth of user data held by its parent company Alibaba.

Alibaba’s finance arm is one of eight companies cleared by the Chinese central bank to establish credit rating services as part of a larger government drive to expand financing for consumers and small businesses.

The credit scoring system, Sesame Credit, will mine user data as well as payment histories from 300 million individual users and 37 million small businesses that buy and sell on the Alibaba platforms, including consumer markeplaces Taobao and Tmall and business-to-business portal Alibaba.com.

Sesame Credit will serve consumers and businesses that may have little credit history in the traditional sense, and may never have previously applied for credit cards or bank loans, the  Financial Times reports. But as active internet users who shop and pay utility bills online, have a stable residential status and have been using their mobile phone numbers for a long time, they provide a wealth of data with which Sesame Credit can create an accurate credit rating.