Chinese Lenders Struggle to Access Consumer Data

SHANGHAI — Unlike in other Asian markets, there’s an abundance of consumer data in China, however, lenders have difficulty tapping into it because it’s controlled by two companies — WeChat and Alipay.

Access to data is one of the major challenges panelists at Auto Finance Summit Asia identified for lenders in the Chinese market, but there are ways to overcome it.

“There is an abundance of data — the trick is not getting access to data, it’s getting access to the right data,” Wei Lin, a partner at KPMG Strategy Group, said during one of the conference sessions. “How do you then build the technology interface that can [utilize the data]?”

Chinese consumers, in particular, are guarded about their data and require express permission to hand it over, unlike in the U.S., where credit agencies work with financial institutions to aggregate spending and payment behaviors.

“There are a lot of challenges to convincing consumers to give consent to access that data,” Mark Mackenzie, managing director of the Asia Pacific region for Lenddo EFL, said during the session. “The people who own that data want to hold it tight, particularly WeChat.”

While there could be regulations to open up that data, the industry should still make new “building blocks” to diversify its dependence away from these two centralized companies that control the vast majority of consumer data, said Ali Aurangzeb, head of global marketing at NETSOL Technologies Ltd.

One way to do that is by re-signing consumers a company has financed in the past because it already has their data on file.  

“There needs to be a focus on retention because there is a high cost to pay to acquire new customers as opposed to retaining old ones,” Aurangzeb said, noting the difficulties of having the data locked up in WeChat. “There needs to be more attention toward a retention group for the customers whose data already resides in our systems.”