Ant Financial Credit Reporting

Alibaba's Ant Financial Spins off Corporate Credit Reporting to Serve SMEs

Rebbeca Ren

posted on April 6, 2020 9:38 am

On March 24, Ant Financial, the fin-tech affiliate of Alibaba, has set up a corporate credit reporting company Ant Fi­nan­cial Credit Rat­ing for small and medium-sized enterprises (SMEs), according to National Enterprise Credit Information Publicity System.

With a registered capital of 50 million yuan ($7.06 million), the newly established company offers corporate credit reporting, socio-economic consulting and data processing & storage support. The company was another example of an Ant Financial spin-off, following Zoloz, a startup that provides biometrics authentication in China and Southeast Asian markets.

The new company ties merchant transactions, logistics, import and export data, etc. together to provide support for credit evaluation of SMEs. It demonstrates the importance of corporate credit reporting business to Ant Financial. Shao Wenlan, chairman of Zhima Credit, also serves as chairman of the new company.

Compared with the US and other western countries, the credit reporting business started relatively late in China. After more than 20 years of evolution, a system based on official credit reporting and supplemented by commercial credit service was taken shape. 

Relying on its widely-used digital wallet Alipay, Ant Financial has accumulated massive data and experience in the personal credit reporting sector, making it a top player in the industry. Alipay provides a nationwide credit score system of its user and is used by other third parties across China. 

Previously, Ant Financial's Zhima Credit was an opt-in feature in Alipay that analyzes users' digital financial footprint and assesses their creditworthiness based on five gauges: identity, behavioral preferences, payback capabilities, social networks, and credit history. Third parties can provide based on those information small personal loans, installment payment plans, etc.

Meanwhile, business credit reporting services, mainly state-owned commercial banks, are far from sufficient in China due to legacy systems that lacks real time data, and primarily served prominent companies from the conventional industries prior. Smaller-sized private businesses have long been neglected.

Financial regulators in China are coming up with new methodologies to evaluate the credit profile of SMEs and better facilitate their access to bank loans. As a result, several non-government financial agencies, including Ant Fi­nan­cial, have been authorized in the last few years to provide SMEs' credit information to internet banks, allowing them easier access to bank loans, often with minimum collateral, or sometimes without completely. 

Ant Financial got the license to operate corporate credit reporting from People's Bank of China, the country's central bank, in 2016. The same year, it launched a credit insight system for SMEs named Lingzhi, which provides a full range of high-definition credit portraits.

Since 2017, Zhima Credit has been integrated into Alibaba's enterprise service portfolio and served over 3 million business customers on the e-commerce giant's platform.

According to China's State Council's "Guide to the Construction of a Social Credit System" issued in 2014, the government plans to launch a social credit system nationwide by the end of 2020. Alibaba has participated in building the infrastructure of the official social credit system since 2016.