BEIJING, Feb 5 (Reuters) – A paper published by China’s central bank on Friday suggested authorities should require internet platforms to fully report credit data to the country’s databases in a move to break up their monopolistic status.
The paper, written by a research group of the financial consumer protection bureau of the People’s Bank of China (PBOC), suggested regulators require all lending institutions to report borrowing and lending data to the country’s financial credit information databases.
It emphasized a focus on big internet platforms, which use consumer financial information in offering user profiling and risk-management services to financial institutions. It suggested an “integration” of the data monopolized by big tech firms into a regulatory framework so that data can be legally shared with other institutions.
By leveraging data collected from millions of users, Alibaba’s Ant Group, Tencent-backed WeBank and JD.com Inc have become powerful third-party intermediaries who draw in borrowers and take as much as a third of lending profit margins. Banks they partner with passively supply the credit and have limited knowledge of their borrowers.
Potential risks in mind, China has started to tighten scrutiny of tech giants, particularly those that have expanded into financial services, by drafting new anti-monopoly rules and guidelines and reversing a once laissez-faire approach.
Authorities have also rolled out a slew of financial regulations lately, including more tighter data collection rules for personal credit-scoring business.
The research came as China follows Europe and U.S. on strengthening data protection for individuals, the paper said, citing the U.S. Federal Trade Commission’s $5 billion penalty on Facebook in 2019.
“The overall situation of financial consumer information protection on the large internet platforms is not optimistic,” wrote the paper. “The top priority for regulation over big internet platforms is .. to help them build an idea of responsible finance.”
The paper, published on PBOC’s official Wechat account, also suggested including data from large internet platforms into macro prudential management.
(Reporting by Zhang Yan, Cheng Leng, and Ryan Woo; editing by Toby Chopra, Larry King)