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The International Monetary Fund (IMF) welcomed 6 outstanding FinTech companies from China including Ant Financial, WeBank and XW Bank. In China, as these companies and other institutions powered by trending technology such as big data, cloud computing and artificial intelligence, the traditional financial services have become more internet-centric, digitized and intelligent, making it possible for customers to get access to financial services through devices like mobile phones anywhere, anytime. The Managing Director and Chairman of the IMF, Christine Lagarde showed strong interest in this trend. Mrs. Lagarde found the FinTech development and inclusive finance practice in China quite exciting, while the use of trending technology to control financial risks and the financial support for SMEs is a strong takeaway for the global industry.

However, small and micro-enterprises facing difficulties in financial leveraging has been a common issue on a global scale. Weixing Zhao, President of XW Bank, shared his thoughts on how to use FinTech to break through this issue. Mr. Zhao said “Fundamentally speaking, the reason why small and micro-enterprises find it hard to get financed is the information asymmetry between SMEs and financial institutions”. Evaluating the credit risk of these enterprises in an appropriate and efficient way plays a decisive role in enhancing the situation.

Taking big data as the core and rating customers based on their performance in the ecosystem would aid in automatic loan underwriting process and accelerate loans issuance, leading to a significant diversion effect on commercial banks’ credit business.

“The relatively small sample size of data regarding SMEs available for risk modeling has made it even harder for those who aim to implement risk control using big data“. Mr. Zhao said that now there are 5 types of information being used for risk modeling of small and micro-enterprises, they are – records with the nation’s Industry and Commerce Bureau, business and operation information, tax records, invoice information, administrative and judicial information. At present, XW Bank is exploring machine learning technology especially the combined use of boosted decision trees and  deep learning algorithm, aiming to capture the weak and nonlinear correlation of risk patterns and ultimately be able to conduct risk rating for SMEs.

Mr. Zhao said that since the establishment of XW Bank two and a half years ago, the bank has served nearly 24 million customers with a total of 240 billion Yuan issued in loans. In terms of serving the small and micro-enterprises, with an open banking model, XW Bank has cooperated with New Hope Group, Newland, YYlending, NuoNuo FINANCIAL, Dashu Finance and other platforms to fit the financing needs of industrial customers by offering tailored financial products such as Entrepreneur Loan, SMEs Loan and other small and micro-enterprise loans.

“BaaS (Banking as a Service) is in the near future and by then there will be invisible banking service embedded in various scenarios, enabling individuals and small and micro-enterprises to enjoy 3A (Anytime, Anywhere, Anything) financial services with no physical bank branches present,” said Mr. Zhao. And he added that as the collection and application of the entire industry chains and value chains deepen in the future, financial institutions can use FinTech to improve the efficiency of industrial financing and serve small and micro-enterprises in a better way.