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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.
(Editing by Muralikumar Anantharaman)
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