Value of big data to finance: observations on an internet credit Service Company in China
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RESEARCH
Open Access
Value of big data to finance: observations on an internet credit Service Company in China Shaofeng Zhang1, Wei Xiong1*, Wancheng Ni2 and Xin Li3 * Correspondence: [email protected] 1 100Credit Financial Information Service Co., Ltd., Beijing 100089, China Full list of author information is available at the end of the article
Abstract Background: his paper presents a case study on 100Credit, an Internet credit service provider in China. 100Credit began as an IT company specializing in e-commerce recommendation before getting into the credit rating business. The company makes use of Big Data on multiple aspects of individuals’ online activities to infer their potential credit risk. Methods: Based on 100Credit’s business practices, this paper summarizes four aspects related to the value of Big Data in Internet credit services. Results: 1) value from large data volume that provides access to more borrowers; 2) value from prediction correctness in reducing lenders’ operational cost; 3) value from the variety of services catering to different needs of lenders; and 4) value from information protection to sustain credit service businesses. Conclusion: The paper also discusses the opportunities and challenges of Big Databased credit risk analysis, which needs to be improved in future research and practice. Keywords: Big data, Credit rating, Information economics, Value of information, Finance
Background Credit management is the basis of the financial industry (Lin et al. 2015). When lenders provide loans to individuals or companies, they need to assess the borrowers’ credit risk to reduce the possibility of bad debt and decide the amount of the loan. Lenders can collect information on the borrower either individually or from other lenders. Information exchange between lenders can occur voluntarily via private credit service or be enforced by regulation via public credit bureaus (Brown et al. 2009). Such information exchange can significantly reduce the cost of the credit market and make it more efficient. In developed countries, the credit system has experienced over a hundred years of development. In China, the public credit system is far behind its economic growth, which causes some deficiencies in the lending market. The need for credit services has led to the appearance of private credit providers in China. Nowadays, many private credit service providers in China use data collected from the Internet and other data sources. Their practices provide a good example of using Big Data technology to serve the financial industry. In this study, we examine Internet credit services through the practices of 100Credit (www.100credit.com), a new Internet © 2015 Zhang et al. Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a li
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