Eight pilot credit reporting agencies are out, can blockchain deal with the pain point of the credit reporting industry?

Jack Ma has said that, no matter how much Tmall and Taobao develop, he was not worried about it, but that any sign of disturbance or trouble in the Ant Financial Services Group would make him anxious because he might be put into jail due to it.

Eight pilot credit reporting agencies are out, and the Central Bank of China has suspended the issuance of credit reporting licenses.

In recent years, all kinds of licenses have prevailed in the industry! Many payment licenses and consumer finance licenses have been issued, and the regulators have been glad to see that some businesses operating healthily are run with licenses to facilitate the sound development of the industry.

However, there is always an exception. In the personal credit reporting industry, an essential link within the financial industry, there have been no enterprises to successfully obtain a formally issued license. This definitely makes people raise doubts, “if the whole industry hasn’t obtained the trust of the Central Bank. How did they manage it?”

We believe that all people know that in the current Chinese personal credit reporting market, (hereinafter referred to as credit reporting), the Central Bank’s dominant role in the credit reporting field has not fit the development trend, and it is imperative to transform some “guerrilla forces” into “regular armies”. The Central Bank also bestows great care upon this, and brings all the enterprises that it can trust to the stage.

​In August 2015, the Central Bank published the first batch of eight pilot personal credit reporting agencies: Zhima Credit, Tencent Credit; Shenzhen Qianhai Credit Centre Co., Ltd.; Pengyuan Credit Service Co., Ltd.; China Chengxin Credit; Lakala Credit Management Co., Ltd.; Intellicredit and Beijing Sinoway Credit Bureau.

However, none of these originally “chosen” enterprises obtained licenses as of now. Although the eight enterprises have such features such as finance, internet giants and independent third-party platforms and represent the highest operation levels in their own fields, they still could not obtain licenses.

Solve the data sharing problem with blockchain technologies

During the two-year investigation period, what was it that the Central Bank saw that made it slow to issue the licenses?

According to Data Yuan’s interview with Xuan Benchuan, the CEO of 91 Credit, “there are common defects of the industry and also special problems of enterprises, and the problems are complicated.”

With regard to common defects in the industry, Jiang Qingjun, CEO of Suan Hua Credit also has the same feelings, saying to Data Yuan, “The largest common defect of the industry is that it is very difficult to share the debt information of borrowers in the non-bank credit industry”.

In the past, credit reporting in a narrow sense meant predicting a user’s ability to repay loans in the future according to his or her past behaviors. Traditionally, credit reporting is limited to the range of a user’s housing loans, car loans, credit cards and guarantors. As the internet ecology improves, the range of personal credit reporting has been largely extended, and fields such as online shopping, traveling and online financing can all be considered as factors in credit reporting.

However, this behavior data is monopolized by specific enterprises, such as Alibaba in the e-commerce field, Tencent in the social field and Didi in the traveling field, and thus there is a problem of the data barrier.

MATRIX has proposed a solution for breaking the data barrier in the aspect of objective conditions. MATRIX takes advantage of the distributed storage of blockchain, point-to-point transmission, consensus mechanism, encryption and other technologies to shield the complicated connection establishment mechanism, and makes use of peer-to-peer direct connections, safe communications and anonymous protection to accelerate disintegration of information islands and data silos. This facilitates the convergence and deposition of credit data in all kinds of different industries, while strengthening privacy and protection of user data at the same time. This establishes consensus and trust at a low cost, and motivates the industry to explore new forms and new a driving force, showing wide prospects for development in the field of credit reporting.

How big is the blue sea market with a population of 900 million?

Until September 2016, there had been 2,927 agencies with access to the personal credit reporting system of the Central Bank. There were credit records for 412 million people, which means that there were no credit records for more than 900 million people in China.

According to incomplete statistics, there are more than ten thousand enterprises dealing in credit reporting services today, and there will be more new entrants lining up for admission.

It seems that there is a large imagination space for the future of the credit reporting market.

According to some professional analysis for Data Yuan, with regard to the relatively mature credit reporting market of the United States, at present the three big credit reporting agencies, Equifax, Experian and TransUnion, dominate the credit reporting industry and form a situation of tripartite confrontation, and more than a thousand small credit reporting companies play their own roles in segment markets.

Each of the three credit reporting agencies holds the credit reports of about 250 million Americans, and the population of the United States is over 300 million, which means that these reports cover all American adults and the market is close to saturation. How big is the U.S. credit reporting market? The three companies’ total revenue in the United States in 2016 was about 45.6 billion US dollars, thus we can estimate that the scale of the U.S. credit reporting market is in the range of 50–60 billion US dollars. Extrapolating for the Chinese population and comparing the GDPs of each country, we can therefore estimate that the Chinese credit reporting market will be even bigger.

According to a prediction by BOC International (China), the average number of queries will exceed 2 billion in the next 5–10 years. The Central Bank of China charges 25 Yuan for querying one’s own credit report, once per year, since 2014, and we can estimate that the total revenue from this personal credit query service will be at a level of up to 50 billion Yuan.

The 21st century is the time of credit and also the time of blockchain, and MATRIX will take advantage of blockchain and AI technologies to open the doors of the credit reporting market, addressing every pain point one by one to gradually solve all of the issues that the industry faces with respect to data sharing, accuracy, ownership and privacy.