Ant Changes How Consumers Borrow Money

Beijing issued a policy in December 2020 for Ant Group to “correct” its business, which might have been the world’s biggest initial public offering. Regulators ordered Ant to restructure its credit division, among other things, making it subject to the same rules as financial institutions. In other words, calling oneself a “tech” company no longer allows Ant to avoid complying with regulations.

Almost a year after that, the Alibaba-affiliated fintech behemoth demonstrated that it has almost completed reshaping its well-known consumer credit services. According to Ant’s prospectus filed last year, credit loan goods accounted for around 40% of the company’s income during the six months ended June 2020.

The two primary items are Huabei (Spend), which was released in 2014 and allows consumers to use their smartphones like virtual credit cards to make purchases. Jiebei (Borrow) was launched as a credit product for bigger consumption transactions one year later.

Under the old method, Ant originated loans that were then underwritten by third-party lenders and other financial institutions. According to the company’s prospectus, as of June 2020, roughly 98% of Ant’s credit balance was underwritten by its partner banks or securitized using its platform.

Users first reported that Jiebei had divided itself into two brands on Monday. On Alipay, the credit lines extended by third-party banks are referred to as Xinyong Dai (Credit Loan) now, according to users. Those provided by Ant’s consumer finance firm, which was established at the request of regulators, will continue to be branded as Jiebei.

Huabei has begun a process of reform, with Huabei announcing that it will consolidate loans extended by banks and Ant’s consumer finance business. According to the company, Huabei will focus on “small-ticket” day-to-day transactions.

“Following the brand differentiation, users applying for credit loan services will have more information about their credit providers to avoid brand confusion.”

Huabei also revealed that it is now sending consumer credit data to a central bank-supervised database. It began the practice in September, when it launched its consumer credit firm, which, like banks, must submit their credit information to China’s central bank.