Jun 26, 2015
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China e-commerce firm JD.com to launch credit-scoring rival to Alibaba's

Jun 26, 2015

China's No. 2 e-commerce firm JD.com Inc is launching a Chinese consumer credit data system as a joint venture with U.S. credit-scoring technology company ZestFinance, taking on a rival service linked to the larger Alibaba Group Holding Ltd.

JD-ZestFinance Gaia, as the joint venture will be known, will use the U.S. firm's machine learning technology to analyze JD.com's online shoppers' data and churn out a credit risk score, according to a joint press release on Friday.

The companies did not disclose details about the structure of the joint venture or the investments by the partners. But they said JD.com will invest an undisclosed sum in ZestFinance.

JD-ZestFinance Gaia and competitor Sesame Credit, part of Alibaba-affiliated Ant Financial Services Group, hope to use the e-commerce sites' vast swathes of shopping data to turn out a reliable credit risk score.

Assigning people and businesses accurate credit risk scores has been difficult in China, in part due to a lack of publicly available data and little information-sharing between financial institutions.

Creating an accurate credit profiling system could potentially be lucrative, both for making safe bets on lending to customers who can then spend more on online shopping, and by selling the profiles to third parties.

"Ultimately opaque credit markets are very hard and we're excited to try to use our technology in that space," said Douglas Merrill, founder and CEO of ZestFinance and a former Google Inc chief information officer, in a telephone interview.

Information, like the cost of items bought and what time of day someone is buying products, can be combined to predict qualities such as whether a person has a job, he said.

The number of credit profiles the joint venture launches with will be "close to JD.com's total customer base" of more than 100 million, the e-commerce company said in an email.

Although JD.com will initially be the credit scorer's first customer, it hopes to expand its clients to include various industries and lenders, including peer-to-peer lending platforms, the company said.

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