Big data enables capital to flow to small, micro businesses in more targeted manner
By Qu Xinming, Ouyang Jie, —Thanks to a big data-based online credit service jointly launched by China Everbright Bank Co., Ltd. and an internet restaurant review platform, Weng Ziqi, manager of a catering enterprise in southeast China’s Fujian province, received a 10-million-yuan ($1.43 million) loan earlier this year in less than 24 hours after application, while the process used to take about a month previously.
The bank loan came right in time as the catering company was facing huge strain on cash flow amid the COVID-19 epidemic, when it saw urgent need to pay for the rent of its nearly 100 chain restaurants, the salaries of its employees and food storage.
“Applying for the loan offline would have been neither efficient nor convenient amid the pandemic,” said Weng.
As a matter of fact, big data was key to the speedy credit service.
According to an employee with the China Everbright Bank Co., Ltd., the internet restaurant review platform played a major role in helping the bank make decisions as the massive transaction data of catering enterprises generated on the platform was a vivid reflection of the enterprises’ operation and capital demand.
The cooperation with the review platform enabled the bank to acquire valid and first-hand data on loan applicants and thus greatly improved the efficiency of credit services, the employee added.
Pre-loan investigations are time consuming and costly labor-wise, said Zeng Gang, deputy director-general of the National Institution for Finance & Development, Chinese Academy of Social Sciences (CASS). By conducting cooperation with internet platforms, banks can have a better grasp of the real performance of the applicants, he explained.
The online transaction data generated can truthfully reflect the revenue and state of operation of the catering enterprises, Zeng added.
Besides, such data also help banks evaluate the financing demands and loan repayment capacity of companies and then tailor repayment schedules and methods as well as interest rate levels, thus reducing risks and better ensuring the sustainable development of enterprises.
Regarding small and micro businesses, some emerging internet banks are also using data to make financing easier and less costly.
Qiu Mengyi, who opened a manicure store in Wuhan, central China’s Hubei province, after she graduated from college in 2016, is one of the beneficiaries of the financial services rolled out by internet banks.
Due to the pneumonia outbreak, Qiu closed her store for three months and had no source of income to pay for the rent.
Fortunately, based on the credit assessment results on Alipay, a mobile and online payment platform, Zhejiang E-Commerce Bank Co., Ltd. offered her a loan of 220,000 yuan for which she doesn’t have to pay any interest if she repays the money in three months.
Zhejiang E-commerce Bank Co., Ltd., together with All-China Federation of Industry and Commerce and other parties, launched a program that aims to provide safe and convenient financing services for small and micro enterprises, individual businesses and farmers through online platforms such as Alipay.
As of May 31, the program had provided services for over 13 million clients, issuing loans totaling over 526.3 billion yuan.
Meanwhile, non-commercial banks are also providing funds for Internet banks so that the latter can fully exploit their advantages in data and help more small and micro businesses in need.
By cooperating with non-commercial banks, the Internet bank Sichuan Xinwang Bank Co., Ltd. has initiated a project to help small and micro businesses in southwest China’s Sichuan province solve financing problems.
Chang Huanyu, manager of a sound production service provider in Chengdu, Sichuan, has benefited from the project. As online recreational activities thrive amid epidemic prevention and control, Chang’s company received many dubbing orders on the internet and was in urgent need of capital.
It was with the help of non-commercial banks that Sichuan Xinwang Bank Co., Ltd. enabled Chang to get a loan online, an employee with the Sichuan Xinwang Bank Co., Ltd. Introduced.
Specifically, the Sichuan branch of the Export-Import Bank of China has provided low-cost sub-loans, which are then issued to small and micro businesses through the online financing services of Sichuan Xinwang Bank Co., Ltd..
On May 27, the Sichuan branch of the Export-Import Bank of China issued loans totaling 300 million yuan to 11,337 small and micro businesses through the Sichuan Xinwang Bank Co., Ltd., securing jobs for about 220,000 people.
This year, non-commercial banks will put into over 100 billion yuan more of sub-loans, mainly for small and medium banks, especially internet banks.
More and more commercial banks and non-commercial banks are actively working with internet banks to exploit the advantages of the internet, bringing capital faster to small and micro enterprises and providing more convenient and preferential financial services for them.