A drive by China’s big technology companies to develop credit scoring platforms, originally backed by Beijing, faces growing opposition from regulators, who fear the initiatives may threaten data security and create conflicts of interest. Two people familiar with the process told Reuters that the People’s Bank of China – which in 2015 allowed eight firms including Alibaba’s Ant Financial and Tencent Holdings to develop scoring systems – has quietly pulled back its support.
The People’s Bank of China has shelved plans to turn that initial approval into official licenses, the people said, raising questions over what services the firms can offer and their ability to build fully-fledged credit bureaus.
The impasse also underlines how China’s tech companies with banking ambitions struggle with unpredictable regulation as Beijing weighs the pros and cons of private sector involvement, when it needs to both encourage consumption and control economic risk.
“Clearly there’s a conflict of interest and that’s something the PBOC has realized,” said one of the people, adding the bank felt none of the eight firms was entirely suitable. “They’re not going to stand up and publicly admit they made a mistake; the only power they have is to basically not grant the licenses, which is what they’ve done.”
Unlike leading international peers that only operate credit scoring systems, these Chinese firms have existing businesses in commerce and finance, raising questions about their impartiality, the people said.
Source: Reuters
