With more of China's financial institutions exploring facial recognition, Chinese borrowers will find it easier, and safer, to secure small loans online. Rong360.com, China's self-styled "financial supermarket," will use SenseTime, facial recognition software developed by Chinese scientists, to help link its nearly 10,000 financial institutional clients with customers.
The biggest risk with online transactions of any kind is identity theft, this is the primary obstacle China's online financing services are trying to solve, said Ye Daqing, CEO of rong360.com. Over the past four years, rong360.com has received online loan applications for three trillion yuan (460 billion U.S. dollars), extending loans worth 300 billion yuan.
Although this is a fraction of the nation's total loans, the momentum is inspiring and by the end of the year, China's online loans might exceed one trillion yuan, said Ye. In 2015 alone, financial institutions posted 94 trillion yuan in outstanding loans denominated in yuan, an increase of 11.7 trillion yuan from the previous year, according to the National Bureau of Statistics. "Explosive growth is to be seen in China's online financing market, which has potential exceeding the United States," Ye said.
A special challenge China can not dodge, however, is the brutal reality of an inefficient and less-developed credit system. Improvements will largely depend on the rapid accumulation and sharing of personal credit information. Xu Li, founder and CEO of SenseTime, said through this cooperation, urban commercial banks, share-holding banks and financial service agencies would no longer need to build new outlets. "Soliciting customers through the Internet will be more cost-efficient," said he.
Facial recognition can automatically confirm the identification of a loan applicant, bringing up an applicants demands and credit history, and match their preferences with the products of financial institutions. "The reward for technology developers like SenseTime will be access to data, which will help to improve the accuracy of human facial recognition and improve the application," said Xu.
In December, SenseTime won two first prizes in the ImageNet contest, the "Olympics of the Computer Vision Industry." The first time a Chinese company has won. Apart from online financing, the technology is also used in surveillance security, shopping malls, social media, and hardware. "China's online lending service is set to expand [and] it can bring more financial services to the small business owners who have difficulty in lending from large banks," said Ye Daqing.
In response to the online financing trend, China's central bank, the People's Bank of China, allowed banks to experiment with biometric identification technology for new personal bank accounts, late last year. Apart from human faces, fingerprints, voiceprints, iris and handwriting have all been identified as useful data for programmed computers to verify identification.
But so far, facial recognition is the most ready for commercial due to its accuracy. Ping'an Bank was among the first few banks to integrate facial recognition technology into its counter services, and since last July nearly one million users in more than 30 cities have benefited from it when applying for credit cards.
The technology has shortened the application time from over seven days to around four, while saving several million yuan in annual labor costs, said Zhang Shen from Ping'an's credit card risk control department. "Sophisticated banks will become more competitive if they could make good use of the Internet to break geographic restrictions," said Zhang. But how fast China's online financing market will grow still depends on technical standardization and policy rules of the regulating authorities, said Ye Daqing.