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Application Status and Development Suggestions of Internet Personal Credit Investigation

（Full Paper）

LI Liuyang*, University of International Business and Economics, Beijing, China, 1176265648@

CHEN Jin, University of International Business and Economics, Beijing, China, chenjin@uibe.

ABSTRACT

The development of Internet finance has given birth to the Internet credit investigation industry, and the emergence of Internet personal credit investigation has expanded the application scenarios of personal credit information from credit finance to the field of credit life. This paper starts with the current situation of the development of personal credit investigation on the Internet in China, introduces the typical enterprises of personal credit investigation on the Internet in China and the users of credit information, and then analyzes the problems existing in the development of credit life service business of personal credit investigation enterprises on the Internet in China, and puts forward possible solutions.

Keywords: Internet credit investigation, Personal credit registry, Credit life.

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*Corresponding author: Liuyang Li

DEVELOPMENT STATUS OF INTERNET PERSONAL CREDIT INVESTIGATION

China's credit reporting agency was first established in 1932 as the "China Credit Information Office". The real development is after the reform and opening up. Later, the 16th National Congress and the 18th National Congress officially proposed the strategic goals and specific requirements for building a social credit system. On March 15, 2013, the “Regulations on the Management of Credit Information Industry” was officially implemented. Since then, the credit information industry has entered the fast lane of legal development.

According to the main body of credit information, the credit information business is divided into enterprise credit information business and personal credit information business. As the name implies, it collects and processes enterprise credit information and personal credit information and provides services.

Although China's credit information industry started earlier, the personal credit coverage rate has been low. The three major credit agencies in the United States, EXPERIAN, Equifax, and TransUnion, cover more than 90% of the population in the United States. Other emerging credit bureaus such as Credit Karma and ZestFinance supplement the basic coverage. National population credit. China's credit information industry is a two-wheel drive development model of “government + market”. According to the data of the People's Bank Credit Information Center, in 2012, the number of natural persons recorded in China's personal credit information system was 820 million, and the number of natural persons recorded in 2015 reached 880 million. On March 10, 2019, Chen Yulu, deputy governor of the central bank, mentioned in a question to Chinese and foreign journalists that the credit information system of 990 million natural persons has been recorded in China's credit information system, and the number of daily inquiries of personal credit reports reached 5.55 million. Compared with the daily average number of inquiries disclosed in 2015, the number of daily inquiries increased by 221%, and the compound annual growth rate exceeded 47%.

In terms of service groups, the US credit industry has developed earlier, and product services have run through the entire life cycle of people. The users of domestic credit information products are mainly licensed financial institutions, and are mainly used for credit services. The main target is 16 - 60 years old.

Credits supported by traditional bank credit records have been unable to meet the needs of the market, and Internet personal credit has become an essential part of the market.With the development of inclusive finance, the coverage of financial services is gradually improved. Especially in recent years, the size of the Internet financial market has witnessed explosive growth, credit risks have gradually upgraded, and the market demand for personal credit investigation business has further increased.

In January 2015, the People's Bank of China issued a notice, requiring eight institutions, including sesame credit management co., ltd. and tencent credit investigation co., ltd. to prepare for personal credit investigation business.

On February 22, 2018, the People's Bank of China approved the establishment of "baihang credit investigation co., LTD", China's first market-oriented personal credit investigation agency. The shareholders of baihang credit investigation are all private capital. Among them, Internet finance association of China holds 36% of the shares. Eight institutions, including sesame credit and tencent credit, each hold 8% of the shares.

The central bank said in October 2018 that it will prudently issue individual credit information licenses to promote the first market-oriented personal credit reporting agency - the misunderstanding development of the 100-line credit bureau and the central bank credit information center, complement each other's advantages, and realize Internet finance and Internet e-commerce. Credit information coverage in other fields. On January 10, 2019, the central bank issued the "Guide to the Service for the Examination and Approval of Credit Information Agencies of Individual Credit Information Business", which clarified the conditions for the establishment and approval of individual credit reporting agencies in China.

Personal Credit Investigation and Preparation Enterprises

The People's Bank of China issued the "Notice on Preparing for Personal Credit Information Business" issued in 2015. The credit data sources, credit evaluation model evaluation scales, credit information services and enterprises provided for the credit preparation. The industries in which they are located are listed in Table 1.

Table 1:The basic information of the company for personal credit report preparation

|Name |Basic data source |Evaluation dimension |Services |Industry |

|Sesame |commerce transaction data, |Credit history, |Travel, |Internet |

|credit |online financial data, |behavioral preferences, |accommodation, | |

|management |public institution data, |identity traits, |finance, | |

| |partner data, |commitment keeping ability, |shopping, | |

| |user self-upload data |network |social and livelihood | |

|Tencent |user's WeChat and QQ historical|Commitment history, |Anti-fraud, |Internet |

|credit |data |security, |credit assessment, | |

|information | |wealth, |personal credit application, | |

| | |spending, |risk warning, | |

| | |socializing |post-loan management | |

|Shenzhen |ping an group's integrated |Risk of breach of trust, |Personal credit score inquiry, |Insurance |

|qianhai |data, |behavior characteristics, |Anti-fraud products, | |

|credit |external data partners, |identity characteristics, |credit risk identification, | |

|information |bad credit data reported by |performance ability, |data opening, | |

|center |cooperative financial |consumption preference, |Consulting services, | |

| |institutions |social credit, |intelligent technology | |

| | |growth potential | | |

|Peng |Collect data from third parties|Credit history, |Identity authentication, |Credit reporting |

|yuan |with user authorization |behavior habits, |credit verification, | |

|credit | |identity characteristics, |credit report, | |

| | |income capacity, |credit score, | |

| | |asset wealth, |anti-fraud, | |

| | |public evaluation |automatic risk warning | |

|China |Network open crawling, |Credit history, |Personal credit score, |Credit reporting |

|Chengxin |data exchange with customers, |behavior traits, |personal credit report, | |

|credit |data procurement, |identity attributes, |credit authentication, | |

| |user authorization |performance ability, |risk information inquiry, | |

| | |social information, |Internet authentication services | |

| | |public record information | | |

|China Zhicheng |P2P lending and Internet |Credit history, |Personal credit score, |Credit reporting |

|credit |financial institutions |credit activity, |anti-fraud service, | |

| |specially developed anti-fraud |identity characteristics, |identity authentication, | |

| |cloud platform |performance ability, |credit monitoring | |

| | |credit consumption ability | | |

|Koala |Bank transfer, credit card |Credit history, |Koala individual credit score, |Startup with data|

|credit |repayment and other services, |transaction behavior, |credit certification, |resources |

| |direct access to personal |identity attribute, |credit information query | |

| |credit and debit card use data;|performance ability, | | |

| |Data support from shareholders |social relations | | |

| |and public sector | | | |

| |other industrial cooperation | | | |

| |data | | | |

|Beijing |Bank credit data, |Personal identity information, |Huadao personal credit assessment,|Startup with data|

|huadao |public security and justice |public service information, | |resources |

|credit |data, |traces of personal consumption, |consumer credit information | |

| |operator data, |Internet users and behavior |sharing platform CISP, | |

| |public utilities data, |information |credit service cloud platform | |

| |network trace data | | | |

From the perspective of the industry, sesame credit management and tencent credit investigation for Internet enterprises, shenzhen qianhai credit investigation center for insurance enterprises, peng yuan credit investigation, in good faith and zhicheng for credit investigation enterprises, koala credit investigation and Beijing huadao credit investigation are essentially new companies with data resources.

The nature of the enterprise determines the business model. The different industries and business characteristics of the eight credit investigation enterprises lead to the differences in the credit investigation data sources. The data of sesame credit come from the online transaction data of "ali-affiliated" e-commerce, enterprises with equity participation and alipay (including credit card repayment, water, electricity and coal payment, and interpersonal relationship, etc.). The advantages of tencent credit investigation are users' social data on WeChat and QQ and tenpay's financial data. Qianhai credit information center has the internal data of "ping an department", financial data provided by more than 50 cooperative financial companies, location and speech data from the mobile APP of "ping an department", etc. Pengyuan credit information co., LTD has the support of government data; the advantage of China Chengxin credit lies in more than one hundred small and medium-sized Banks in China (started to help Banks build credit risk control model in 2003). Koala credit has the advantage of more than 400,000 offline convenience stores and so on. Eight enterprises rely on their own advantage data to carry out credit investigation business.

Although there are differences in the advantageous data sources of the eight credit investigation enterprises, their personal credit assessment data dimensions are similar. The company obtains the assessment data from various external sources to improve the accuracy of the credit investigation results. Except sesame credit pays more attention to the application scenes of life, the application scenes of credit information of the other several credit investigation enterprises are almost the same, all of them are more inclined to the financial application scenes.

The eight companies have different backgrounds, and their data processing methods are also significantly different. The Internet enterprise, led by sesame credit, was born in the information era and has advanced data processing technology, which can maximize the practical significance behind the credit investigation data. However, traditional financial enterprises that carry out credit investigation business are accustomed to using structured data and cannot respond well to changes in data structure. Therefore, most data processing technologies remain in the stage of big data analysis.

From the analysis of business scope, eight personal credit investigation enterprises are involved in the Internet credit investigation business, the Internet has become an important source of personal credit information. Sesame credit and Tencent credit investigation rely on the massive user data of their parent companies, and take the Internet as the main data source for their credit investigation services.

Baihang Credit

Although the above eight individual credit reporting companies have introduced some innovative products during the implementation of the credit information preparation work, the enterprises still operate their own credit information systems independently. The personal credit information between enterprises is not well flowed, and the credit data still exists. Each enterprise has its own dominant data source as the main credit dimension, and the credit evaluation results are biased, and no effective Internet credit information market has been formed.

Baixing Credit Information was established in March 2018. It is under the supervision of the People's Bank of China. It is managed by China Internet Finance Association and Sesame Credit, Tencent Credit, Qianhai Credit, Pengyuan Credit, China Credit, and Zhongzhi. According to the principle of “co-industry, joint construction, mutual benefit and win-win”, the eight market institutions of Chengzheng Letter, Koala Credit Information and Huadao Credit Information jointly launched a market-oriented personal credit reporting institution with a registered capital of 1 billion yuan. The 100-line credit union united eight companies to try to establish a more comprehensive and efficient personal credit information system. The Baixing Credit Information has formally broken the barriers between the eight enterprises, which is conducive to data sharing between enterprises; however, the huge amount of data and complex data structures of Internet credit data also pose challenges for data sharing. . Users may present different behavior patterns in different platforms. How to deal with these differences is also a problem that data integration companies have to solve.

As of October 2019, the number of bank-based credit extension agencies exceeded 1,200. Among them, 750 organizations have signed information sharing agreements with Baixing Credit Information, and 500 organizations have developed API interfaces and implemented system access in steps. The personal credit information system of Baixing Credit Information has recorded 100 million natural person information subjects, and the number of credit accounts exceeded 120 million. It has successfully launched three personal products, special attention list and information verification and verification products, including individuals. The cumulative number of credit reports exceeded 30 million, with an average daily inquiry of 400,000, and the peak of single-day inquiry reached 900,000. The total number of inquiries on the list and information verification products exceeded 13 million. In the planning and development of the next three years, Baixing Credit Information will be committed to creating a shared and win-win credit eco-sphere and a reciprocal collaborative credit industry chain, which will continuously enrich content and broaden channels in product design and product push. All types of customers need.

As the only market-based credit reporting institution in China that holds a license for business licenses for individuals, Baixing Credit Information will continue to adhere to the concept of “co-industry, joint construction, sharing, and win-win”, and cooperate with various financial institutions and industries. Partners strengthen cooperation and jointly build a credit eco-sphere to further contribute to the healthy development of China's financial industry.

USERS OF INTERNET PERSONAL CREDIT INFORMATION

Currently, the main users of personal credit information in China are credit departments. Besides Banks, other licensed credit institutions and Internet financial institutions, the traditional application subjects also include public utilities and public sectors. The public utility sector has the personal non-financial debt data and is the main provider and user of personal credit data.

With the development of personal credit investigation industry and the wide application of big data and cloud computing technology, the application scenarios of personal credit investigation data are further expanded. Sesame credit score scores individual credit status from five dimensions: credit history, behavior, identity, performance ability and interpersonal relationship. At present, sesame credit cooperation has covered rent, travel, accommodation, communication, finance and other fields. Life service merchants and financial institutions can refer to users' sesame points to provide users with deposit relief, procedures simplification and other services.

Credit finance scenarios represented by banks, as well as public utilities, departments, and innovative application scenarios involving credit life scenarios such as enterprises constitute the main body of personal credit data. The main body of personal credit data usage is summarized in Table 2.

Table2: personal credit data users

|User |Instance |Classification |

|Bank |Commercial Banks, rural credit cooperatives, etc |The financial credit |

|Other licensed credit |Consumer finance, small loan, guarantee, financial leasing, etc |The financial credit |

|institutions | | |

|Internet financial |Internet banking, Internet consumer finance, P2P lending, Internet small loan |The financial credit |

|institutions | | |

|Public utilities |Telecommunications, power grids, etc |Credit in life |

|Public sector |Social security, industry and commerce, taxation, court, public accumulation fund |Credit in life |

|Innovative application |Free of charge, post-payment, priority, sharing economy application enterprises |Credit in life |

|scenarios | | |

It is worth mentioning that the use of innovative scenes has brought convenience to the lives of residents while creating profits for enterprises. Taking the shared bicycle exemption as an example, the multi-dimensional credit data of the residents is collected by the credit reporting company, depicting a complete user portrait, reflecting the overall credit level of the user. Residents with a high level of credit will receive a shared bicycle-free ride, and residents can start riding without paying a deposit. At the end of the ride, they only pay for the bicycle during the ride. The bicycle exemption service makes it easier for residents to accept the sharing of bicycles, which is convenient for sharing bicycle service providers to explore the user market. At the same time, the non-exempt service is a service based on the results of credit evaluation. The service that can obtain this service must be a resident who performs better in the evaluation of the credit model, that is, the resident with higher credit level, and the default risk of such residents. It is relatively low, and the risks faced by service providers are relatively controllable. As can be seen from the above, the non-exempt service is beneficial to both users and manufacturers, which is why this business model has been accepted by the market.

PROBLEMS EXISTING IN THE APPLICATION OF INTERNET PERSONAL CRESIT INVESTIGATION

Credit Data Collection has a Wide Range of Social Problems

Insufficient privacy and data security protection. As credit assessment gets involved in personal life, more personal data and information will be collected. However, currently, Internet credit investigation is still in its infancy, and supervision is insufficient. How to guarantee the privacy and safety of users has become an urgent problem for the Internet credit investigation industry.

The openness of the Internet itself also brings challenges to the protection of credit enterprise user data. Take sesame credit as an example, its data source is mainly the user transaction data of "ali department" enterprises and platforms, most of which contain the user's bank card number, id number, mobile phone number and other sensitive data. In addition to its own data, part of sesame credit's data comes from a third party. In addition to mutual benefit, how to ensure the safety of this part of data in transmission and use is also an issue that sesame credit must consider.

The credit coverage of the credit information preparation enterprises is insufficient, and the model is not uniform, which leads to doubts about the validity of the credit information.Sesame credit relies on user transaction data for personal credit evaluation; Tencent inquiry USES the data of individual social data and wealth tenpay financial review user credit, credit reporting companies respectively according to their own advantage resources to design the credit evaluation standard, communication between each other is few, the evaluation results unavoidably exist deviation, whether the evaluation standard to show the user's real credit level is still questionable.

Untrue credit data may be used for credit evaluation even if data is collected.In order to improve the credibility of credit score, some Internet personal credit investigation enterprises led by sesame credit have published their credit evaluation dimensions and their respective proportions, but the virtual nature of the Internet still makes the reliability of credit investigation data questioned. Individuals may deliberately beautify their credit data in order to obtain better services, resulting in inaccurate credit score results.

Credit Data Processing Capacity Needs to be Continuously Improved

Lack of universal evaluation model in credit evaluation market.Although the various Internet personal credit enterprise credit evaluation dimensions are similar, but the evaluation dimensions in the evaluation model of different proportion, the credit reporting company still mainly rely on their own advantages provide credit reporting service data, evaluation results vary, lack of generality on the market of Internet personal credit evaluation model, is not conducive to efficient operation of the personal credit market.

The analysis technology of non-Internet enterprises for massive unstructured credit data still needs to be improved.Traditional financial credit investigation businesses mostly rely on structured financial data, and the addition of Internet data puts forward higher requirements on the data processing technology of credit investigation enterprises. Headed by sea before the AD of Internet companies have not yet fully adapt to the data characteristics of the Internet era, still is given priority to with big data analysis, data processing in the AD business, from the Internet a vast amount of unstructured data will inevitably encounter problems, not fully the essence of data mining, which requires the Internet personal credit reporting companies to raise their level of data analysis technology, in response to the change of its own data source.

The Use of Credit Data Needs to be Deepened and Expanded

The second presentation of credit data makes it difficult for users of credit information to know the true credit status of the credited person.Internet credit investigation enterprises integrate various information of users and establish credit portraits of users, most of which are presented in the form of credit scores. Users of personal credit investigation data judge their overall credit status through the size of credit scores. The data shall be reported to the central database by various institutions, and the credit investigation institutions shall conduct secondary processing and presentation of the data. The user of credit information cannot directly read the raw data, and the information obtained from the credit report is very limited, and it is impossible to know the details of each business.

Insufficient exploration of life service application scenarios.Since the development of the Internet personal credit industry, its data application scenarios have expanded from credit finance to credit life, creating a more convenient living environment for creditors. Credit information comes from life and should be applied to life. At present, Internet credit reporting companies have made great attempts in the application of sesame credit in terms of life applications. Other enterprises are still more inclined to provide services for the financial market, and less exploration of life application scenarios.

SUGGESTIONS ON THE DEVELOPMENT OF INTERNET PERSONAL CREDIT INVESTIGATION APPLICATION

Strengthen the Construction of Information Security System

Users in the Internet era pay more attention to personal privacy. Credit information is more sensitive data and must be given enough attention and protection. While building an information security system to defend against external attacks, Internet personal credit reporting companies should also strengthen the privacy protection of internal systems. Users should not use user information for other purposes or use it with other information users without the authorization of creditors. The level of security protection of the system.

Strengthen Government Supervision and Law Construction

Regulatory policy lags are common in emerging industries and markets. The data barriers and data authenticity that are common in China's Internet personal credit information market are essentially due to the lag of supervision and law. To improve the efficiency of the credit information market, we must strengthen government supervision, improve industrial policies, and introduce personal privacy protection as soon as possible. Laws and regulations on credit data sharing and credit data verification.

Improve the Personal Credit Evaluation System

Improving the credit evaluation system is an important way to ensure the validity of credit evaluation results. The key to improving the effectiveness of Internet personal credit reporting results is to establish a universal credit evaluation model. Individual credit information enterprises should actively expand their own data sources, strengthen data sharing among enterprises, enhance the underlying information mining capabilities of data, and continually try to establish a universal personal credit evaluation model that is more responsive to users' true credit levels. A well-developed standardized credit evaluation system.

Improve the Level of Data Processing Technology

Faced with the complex data clusters of the Internet age and the complexity of data structures, data users must improve their adaptability. Internet credit reporting companies must give full play to their data analysis capabilities. Non-Internet credit reporting companies should focus more on data analysis technology and data verification capabilities. Applications of big data, artificial intelligence, machine learning, blockchain and other technologies are Internet individuals. The improvement of the data processing technology level of credit information enterprises and the mining of the underlying information of data provide more possibilities.

Strengthen the Sharing of Credit Data

The secondary presentation of credit data is beneficial to improve the efficiency of credit data. However, in some application scenarios, relying solely on integrated credit data is inaccurate. Different application scenarios may tend to different dimensions of user credit. Different corporate credit data should establish a sharing cooperation mechanism. Under the premise of user authorization, the credit information enterprise can provide the user's desensitization data level interface while providing the user's comprehensive credit score to the credit sub-use main body, and reduce the information asymmetry between the credit information holder and the user. More multi-dimensional data helps to fully describe the user's portrait while also verifying the authenticity of the data, providing users with comprehensive and reliable credit evaluation data.

Expand the Application Scenarios of Credit Investigation Data Life Service

Since the development of personal credit investigation industry, the application scene of credit data has expanded from credit finance to credit life. Credit information originates from life and should also serve life. Internet credit investigation enterprises should actively try to expand the life application scenarios of credit investigation services and provide more convenience for the credit life of credit holders.

ACKNOWLEDGMENT

Supported by National Key Research and Development Program No.2017YFB1400705.

I would like to thank Prof. Chen Jin from the School of Information, University of International Business and Economics for his support during the writing of this thesis. As a graduate tutor, Professor Chen Jin often organizes meetings to discuss the progress of the papers and provide constructive guidance, which provides many suggestions during the research. Data and data support. Professor Chen Jin’s professional and rigorous scientific research attitude left a deep impression on me.

At the same time, I am very grateful to the members of the team for their support and encouragement. As classmates, they often give me some descriptive suggestions. The project team members often discuss the issues in the writing of the paper together. I hope that everyone will have a good academic year and the paper will be published successfully.

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