06 December 17 The Straits Times by LIM YAN LIANG&NBSP;CHINA CORRESPONDENT IN WUZHEN
From meeting the credit needs of a farmer in Jiangsu to those of a start-up being run out of a San Francisco garage, leaders of fintech companies yesterday discussed how technology and data have changed the way banking and finance work.
Technologies like big data and artificial intelligence (AI) are helping to resolve two core issues in lending - providing a better estimate of risk, and in building trust, said industry experts at a panel discussion on the final day of the World Internet Conference here.
Baidu, for instance, has tapped big data and AI to measure the credibility of small and medium-sized enterprises to offer them tailored loans, said the China-based search engine's senior vice-president Zhu Guang.
He cited the example of a crab farmer in Jiangsu who had been advertising with Baidu for eight years. This year, Baidu offered him a loan of five million yuan (S$1 million) to expand his business, and this was promptly repaid after he posted record revenues of over 100 million yuan.
Mr Zhu said: "How did we do this? We did risk management of his operations, and through big data analysis, we made the decision that we could provide loans to him."
He added that the same technologies had also helped less academically inclined students obtain loans to attend vocational colleges that would once have been rejected.
JD Finance chief executive Chen Shengqiang said historic data, such as a farmer's crop yields in the past, had eliminated the need for loan collateral, thus lowering barriers to capital access.
China's digital economy hit this amount last year, ranking second globally, and accounting for 30.3 per cent of the national gross domestic product.
Number of Internet users around the world as of June this year, of which 751 million were in China.
Fintech can also benefit the fledgling start-up. AngelList, a platform that links start-ups to angel investors, discussed how digitisation and analytics helped thousands of freshly minted US firms comply with government filing requirements, even as they were matched with suitable early-stage investors.
Among its early successes was the funding of Uber in 2010, when "it was doing 10 rides a night in the city of San Francisco", said AngelList CEO Kevin Laws.
The speed of change means that there are many more opportunities on the horizon for fintech firms to disrupt traditional banks, said the experts. They pointed to how technology like blockchains - distributed ledgers that are highly resistant to tampering and make all transactions transparent - could make trust easier to build.
"The essence of finance is... how do you give trust to a person you've never met?" said Mr Soul Htite, CEO of online lending marketplace Dianrong. "There's a huge opportunity today because of systems like big data that allow us to predict the future, and systems like blockchain that allow us to write data and never change it."