The traditional way of meeting a client and understanding his or her business and finances to make a call on loan assistance entails significant costs for financing companies.
Not surprisingly, this has prompted most lenders to think twice about serving microloan borrowers.
However, there is change on the horizon, thanks to the so-called big data.
Mybank, which is majority-owned by Alibaba Group’s Ant Financial unit, explains how this is working.
“Traditional banks cannot, for example, track the frequency of an e-tailer updating its inventory. Even if they can, they won’t be able to dig much information out of it,” a Mybank manager told the China Securities Journal.
“But we will follow a large group of vendors in the same business and compare each of them against the average. If a company updates it stocks far slower than the norm, it may indicate trouble.”
Mybank conducts numerous data mining exercises to tell good borrowers from the bad ones.
The best thing is they can keep monitoring the clients after the loans have been extended, a thing that is relatively difficult for traditional banks to do given the forbidding manpower costs.
That said, harnessing the power of big data does not come free. Extensive information technology investments are needed.
That is why Mybank is still striving to break even despite fast-growing business volume.
In the future, artificial intelligence and virtual reality technology will also be deployed in serving the clients and streamlining the loan administering process, the company official said.
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