Jack Ma’s revolutionizing online bank, MYbank is leading a change in the way China lends to small businesses.
MYbank uses real-time payments data and a risk-management system that analyzes more than 3,000 variables. It has so far lent 2 trillion yuan ($290 billion) to nearly 16 million small companies. Bringing ease to the borrowers, they can apply for the credit with a few taps on their smartphone and have access to the required amount in no time after the approval. The entire process takes three minutes and has zilch involvement of human bankers.
The boom of FinTech that transformed China into the world’s biggest market for electronic payments is now altering how banks interact with organizations. With the help of new data being extracted from the payment systems, social media and other sources, MYbank is growing more comfortable with smaller borrowers. “Small and medium enterprises are really the boiler room of the economy," said Keith Pogson, a senior partner in charge of banking and capital markets at Ernst & Young LLP in Hong Kong. “It used to be a segment that banks thought was too difficult and too risky. But now they run their model and work out what the risks are so they feel more comfortable."
As per Cliff Sheng, co-head of Greater China financial services at Oliver Wyman, a consulting firm, China is soon going to take the shape of a world leader in the use of big data and artificial-intelligence technology to make loans. “Our legal framework and regulatory environment — which raise fewer privacy concerns — make it easier to generate a huge amount of data and thus provide an unparalleled testing bed," Sheng said.