Less than two weeks ago, we reported that China’s regulator was threatening to break up Ant Group’s AliPay into two separate businesses; one to continue with the provision of financial services focused on payments, and the other would focus on the business’ lending operations. Before that time, Ant Group and its subsidiary businesses have been one of the companies that regulators have been probing for various reasons such as consumer data privacy, etc.
The global giant has been required to share its credit data from its consumer lending business Huabei with China’s central bank. Huabei is a consumer loan product with which Ant Group provides loan services. The company said on Wednesday that data from its lending product will be uploaded into the financial credit information database operated by the People’s Bank of China (PBOC). According to Ant Group, the information that will be given to the apex bank includes the date that customer accounts were set up, the amount in the credit line, and the repayment status of loans, but users will need to authorize this. Information such as details of purchases, time of purchases, etc., will not be given to the apex bank.
Ant Group has had a long relationship with regulators. The company’s IPO, scheduled for November last year, which promised to make history was suspended over regulatory concerns. Since then, it’s been one regulatory concern to another. The latest concerns spin from fears that companies like Ant Group were acting as financial institutions while not being under the radar of regulators. Ant Group, however, is making progress regarding becoming a financial company and the process is being overseen by the People’s Bank Of China and other regulators in the country.
Users are worried that sharing information with the apex bank will leave them disadvantaged as they may face limits when requesting future loans. Addressing this fear, Ant Group said that “a comprehensive and proper set of credit records will enable financial institutions to better understand users’ creditworthiness and to better serve them. Therefore, under general circumstances and with the normal usage of Huabei and timely repayments, the use of other financial services such as loan applications will not be impacted”.
Financial expert and Managing Director at Bernstein – Kevin Kwek, mentioned that the decision is actually of great importance as it will erase the regulatory uncertainty that Ant Group is engulfed in. “Sharing of data of course erodes Ant’s edge, but doing so allows them to obtain regulatory blessings, such as getting the consumer finance license. In my view, this means the intent is to allow Ant to continue its business but under regulatory purview and rules, and if it helps the broader consumer credit bureau agenda. It is important to note that Ant will continue to be dominant as a very large distributor given its user base, even if it now has to share some data”, he said.