FROM CREDIT INFORMATION TO CREDIT DATA REGULATION: BUILDING AN INCLUSIVE SUSTAINABLE FINANCIAL SYSTEM IN CHINA

A lack of information about potential borrowers is a major obstacle to access to financing from the traditional financial sector. To prevent fraud, increase access to finance, and support balanced sustainable development, countries aroun6d the world have moved over the past several decades to develop credit information reporting requirements and systems to improve the coverage and quality of credit information. Until recently, such requirements mainly covered banks. However, with the process of digital transformation in China and around the world, a range of new credit providers have emerged, in the context of financial technology (FinTech, TechFin,and BigTech). Application of advanced data and analytics technologies provides major opportunities for market participants-both traditional and otherwise-as well as for credit information agencies. By utilizing advanced technologies, these participants and credit reporting agencies can collect massive amounts of information from various online and other activities ('Big Data'), which contributes to the analysis of borrowing behavior and improves the accuracy of creditworthiness assessments. Thereby,enhancing availability of finance and supporting growth and development while also moderating prudential, behavioral and conduct related concerns are at the heart of financial regulation.Aligning withtheinternational trend, China hasdeveloped a regulatory regime for credit information reporting and businessover the past decades.However, this development has not come without its problems, even in the context of traditional banking and credit. With the rapid growth and development of FinTech, TechFin,and BigTech lenders, opportunities to leverage credit information and data, and challenges around its regulationhave emerged. For example, due to fragmented sources of borrower information and the involvement of several actors, difficulties arise in clarifying the business scope of credit reporting andcustomer protection.Moreover, inadequate incentives for credit information and data sharing pose a challenge for regulators inpromoting competition and innovation in the credit market.Drawing upon the experiences of other jurisdictions, including the United States, United Kingdom, European Union, Singapore,and Hong Kong, this paper argues that China should establish a sophisticated licensing regime and set out differentiated requirements for credit reporting agencies in line with the scope and nature of their business, thus addressing potential for regulatory arbitrage. Further,this paper argues that China should formulate specific rules governing the provision of customer informationto credit reporting agencies and resolving disputes arising fromaccuracy and completenessof credit data. An effective information and data sharing scheme should be enactedto help lenders make appropriate credit decisions and facilitate access to financing. The lessons from China's experience hold key insights for other jurisdictions as they move from credit information to credit data regulation in theirfinancial systems.