China lacks a US-style credit scoring system. But big data and AI are filling the gap.

Photo credit: DC Master.

China doesn’t have a centralized credit scoring system like the one in the US. That has left startups scrabbling to find new ways to figure out how much of a risk someone would be as a borrower.

Even China’s biggest search engine is working on the problem. That’s why Baidu today announced it has invested in California-based ZestFinance. The startup uses machine learning to transform vast amounts of complex data into credit scores. The funding amount is not disclosed.

AI IOU

“Artificial intelligence experts and data scientists at both companies will work together to apply ZestFinance’s underwriting technology to Baidu’s search, location, and payment data in order to improve credit-scoring decisions in China,” said Beijing-based Baidu in a statement this afternoon.

It’s turning complex user data into credit scores.

Baidu’s artificial intelligence ambitions cover everything from improved search results to its own self-driving car. Its AI programs are headed by chief scientist Andrew Ng, and comprise its Big Data Lab, Institute of Deep Learning, and Silicon Valley AI Lab.

The well-funded American startup said today that it’s “thrilled to work with Baidu to turn search data into credit data.”

Quite a few Chinese startups are working on similar workarounds for the lack of an easy way to assess credit risk – like the one that digs through an applicant’s social media accounts before approving the pay-by-installments purchase of a smartphone.

The ZestFinance tie-up comes nearly a month after Baidu took part in a US$60 million investment in the China unit of Circle, a US-based blockchain-payments company.

Baidu has its own online insurance company (in partnership with China Pacific Insurance), an online bank (with CITIC Group), and a broader financial services division aimed at ordinary consumers.

Baidu is already using some of its tech in the finance sector. “For example, we can use big data to quickly evaluate credit risk and provide more accurate user profiling, and have begun working with hundreds of educational institutions to provide credit loans to their students,” explained a Baidu representative to Tech in Asia.