China Rapid Finance company, which was established in 2001, has been eyeing China’s millions of consumers outside the formal financial system, and wondering how best to rate them for a loan seeing as they have no credit records.
In an act of pure oriental logic, it has decided that in China rapid finance AKA P2P should be open to anyone who spends above-average time on social media, because they are ‘concerned for their reputation, concerned for their integrity.’ Quite how this connects up may require a Confucius mind.
Hundreds of Millions of Tencent Users Targeted for Loans
The China Rapid Finance company approached internet group Tencent for data on the behavioural patterns of its users, and then inputted everything from Mobile Gaming to Candy Crush Saga to WeChat into its algorithm. It looked for total time spent and frequencies of interfaces with Tencent’s services per individual customer. According to China Rapid’s founder and CEO Zane Wang this is ‘sufficient to establish reliable creditworthiness’.
This is Potential Money in the Bank for China Rapid Finance
Tencent and China’s emerging rapid lender entered into a joint venture six months ago in February. Since then, China Rapid Finance has arranged over three million ‘quick little loans’. According to Wang there are 500 million Chinese consumers who are financially active but are not covered by the current system. ‘This is the gap we are trying to fill,’ he says.
How Morally Responsible is China Rapid Finance Really
The money does not come cheap at around 3% more than credit cards, although the initial loan cap is more responsible at $80, Repeat borrowers may progressively qualify for credit up to $10,000. With over 1,500 P2P lenders active in China, this is another moral trend the Chinese Communist Party’s advisers will be following closely. On the positive side, default rates are at similar levels to credit cards.