
China’s New Lenders Collect Invasive Data and Offer Billions - walterbell
https://www.nytimes.com/2017/12/25/business/china-online-lending-debt.html
======
thisisit
> With Mr. Bai, they have failed.

Sometimes I wonder if people over-estimate the effects of AI/ML. There is a
whole industry out there trying to figure out effective lending practices for
centuries now. But, it seems people thinks huge amount of data crunched along
with AI/ML is enough to solve this problem.

~~~
Brotkrumen
>enough to solve this problem

The goal isn't to solve the problem, as in predict with 100% accuracy. The
goal is to improve by a few percentage points.

Since categorization is what ML does well and credit histories are great
annotated training sets, it seems like a perfect fit.

~~~
nickelbox
It would definitely seem like ML could improve performance here, if they fed
it all the right features.

I feel like outstanding debts (amount, time since last payment) could be
really helpful in this regard so people can't rack up huge debts from multiple
lenders, but that would also be a privacy nightmare.

~~~
gruez
I thought credit reporting agencies already provide this data?

------
heyalexej
Slightly over a year ago there was an interesting post up on HN where lenders
used nude pictures as IOU¹. Wonder if this trend progressed with the companies
they write about in this piece.

[1]
[https://news.ycombinator.com/item?id=13003838](https://news.ycombinator.com/item?id=13003838)

------
appleiigs
In contrast to the other comments here, this isn't a machine learning problem.
Also, not a lending problem. The big issue is privacy.

As I was reading the article, everything seemed fine until I read the lending
companies were stealing private info. Calling contacts, threatening violence
with location tracking.

If lenders want to use battery life and typing speed as as credit indicator,
that's up to them. (By the way, the NY Times probably has that wrong. Battery
life and typing is likely used for for user tracking/fingerprinting. Imagine a
bot borrowing small amounts 10,000 times pretending to be 10,000 different
people. Lender's trying to combat something like that.)

Over-borrowing is a user error. Mr. Bai needs to take some responsibility. (I
fully realize people blame the financial institutions, including for the
credit crisis in US in 2008... we can agree to disagree on that one). Also,
there are ways to protect over-borrowers, such as bankruptcy laws and statue
of limitations. Bankruptcy laws can allow them to start over. Statue of
limitations can put an end to the credit collector hounding.

When it comes to privacy, this article will be an example I'll be mentioning
to people when they say "I don't mind the surveillance, I have nothing to
hide. I'm not breaking any laws".

~~~
reaperducer
Actually, the battery life thing is correct. Shady lenders in other countries
also use that metric.

If you're the sort of person who keeps their battery topped off, it's a signal
that you're responsible or perhaps have a steady job where you can plug in.

If you're the sort of person who's always scrounging for a plug to juice up a
few percent here and there, it indicates a more risky lifestyle.

------
intopieces
>One Paipaidai borrower, a man named Lin in a small town in Fujian Province
called Quanzhou, said he had racked up about $75,000 in loans from 30
different platforms for living expenses and an investment in a shoe store. Mr.
Lin, who asked that his full name not be used for fear of reprisal from debt
collectors, said he received multiple calls a day from them.

Quanzhou has a population north of 8m [0]. Could the author have meant to
mention a town/region inside Quanzhou?

[0][https://en.wikipedia.org/wiki/Quanzhou](https://en.wikipedia.org/wiki/Quanzhou)

------
est
This is huge.

Remember last time you heard China has a high saving rate?

How time has changed.

~~~
mark_edward
China still has a high savings rate, one of the highest actually
[https://data.worldbank.org/indicator/NY.GNS.ICTR.ZS?year_hig...](https://data.worldbank.org/indicator/NY.GNS.ICTR.ZS?year_high_desc=false)

------
jsemrau
Non-traditional credit-worthiness data is mostly only possible in China at
this stage. Looking at the Fico XD score which enhances the traditional credit
bureau score with Lenddo information is quite a game-changer in terms of
banking for the non-banked. There will be people like "Mr. Bai" who start to
gamble with this system and fail. But these people exist everywhere.

~~~
reaperducer
It's happening in India, too. And probably other countries (African nations?)
without robust Western-style banking and credit systems.

------
gcb0
ironically this was not a problem to small banks in small towns before the
conglomerates took over with credit scores.

this is trying to shoehorn the wrong solution to a problem. a local bank would
see very easily that the person the article opens with was developing a
borrowing addiction. they would also not lend to too many people investing on
the same market in the same region, etc. all things that a centralized system
can't kown very well, even if they know everything about your past.

------
thebiglebrewski
Interesting article. I always think it's kind of sad when people who made a
lot of money in tech then use it to start predatory lending companies...

~~~
walshemj
Yes payday loans and scummy lenders that prey on the poor are almost the only
hard NO I have on my CV - Chem and Bio Weapons being the other main area

~~~
farazbabar
I said no to mortgage backed securities in 2006. Beginning to think about
targeted advertising disguised as dopamine driven feedback loops along the
same lines.

