Current Situation Of Local(China) and Global Credit Systems
1a) Small coverage and low openness of credit investigation in People’s Bank of China
In 2006, the People’s Bank of China (PBOC) established a national database for financial credit information. Developed in a short period of time at a later stage of policymaking, the PBOC’s system is incomplete and lacks consistency. Currently, there are 300 million individual credit profiles in the PBOC’s system, but limited accessibility to the system poses difficulties for non-government institutions to upload or search for credit reports.
1b) Fragmented credit information
Currently, credit data in China is isolated and distributed across various banks, firms offering small loans, as well as lending platforms. This results in fragmented data collection with no standardisation.
1c) Lack of punitive measures in existing credit system
There have been many cases of dishonesties such as commercial fraud, breach of contract, tax evasion, deferred debts and sale of counterfeits in China due to the lack of punitive measures. As China’s credit industry started late, its people have low levels of awareness when it comes to credit.
1d) Much support is needed for the development of the credit industry in China. Currently, there are more than 1,500 problematic lending platforms, most of which have been dragged down by liquidity crises. At the same time, the market needs a new type of credit platform that features actual data, transparency and has a wide coverage to support the growth of the credit industry.
2a) While financial systems in South-east Asia are largely incomplete, rapidly development means there are great opportunities for credit businesses
For example, in Indonesia, less than 30% of its 300-million population has a bank account. Less than 6% of its people are credit card users. In comparison, the percentage of bank account holders in China, Hong Kong and India are more than 80%, 96% and 50%, respectively.
2b) There are underdeveloped credit systems and inadequate credit data.
3a) Governments have the burdens of developing and investing in credit systems
Governments have to invest heavily to establish credit databases, which require high maintenance and operation costs.
3b) There is little room for market-oriented operations, limiting the services that can be offered
Public credit is not conducive for the integration of various types of credit information.
3c) The current traditional credit system provides limited support to the local economy
The consumption market in Europe is relatively weak and it will benefit from a more flexible and advanced credit system.