JD Finance is stepping up big data efforts

JD Finance's exhibition booth attracts many visitors in Nanjing, Jiangsu province. [Photo provided to China Daily]

JD Finance, the financial subsidiary of China's second biggest e-commerce player JD.com Inc, is ramping up efforts to leverage its big data, cloud computing and artificial intelligence to better serve financial institutions.

Liu Qiangdong, founder and CEO of JD.com, said AI is a kind of technology and a way of thinking, as well as a core force to make innovations in various industries in the next 20 years, adding that the financial sector is an important application field for AI.

"We define JD Finance as a partner, but not a subverter, to the financial institutions. We help banks improve their efficiencies in credit authorization by more than 10 times and reduce the costs by 70 percent, and by virtue of our AI technologies, the ratio of bad loans and capital loss rate is about 50 percent lower than the industry average," said Liu.

Liu Qiangdong, founder and CEO of JD.com. [Photo/China Daily]

Earlier in November, JD Finance launched an enterprise-level cloud services platform to use AI technologies, such as face recognition and graph calculation, to enhance work efficiency for financial institutions.

The cloud service will not only provide public and private clouds, but also offer intelligent risk control, intelligent investment advice and intelligent payment, among other services.

Cao Peng, vice-president of JD Finance and general manager of its tech research and development department, said the cloud-based service will empower financial institutions with enhanced precision marketing and risk management capabilities.

"JD Finance aims to build up an ecosystem based on its capabilities in big data and AI."

Chen Shengqiang, CEO of JD Finance, said in an earlier interview that JD Finance provides enterprise services to financial institutions instead of conducting financial business.

Chen said the company would like to connect its data with application scenarios, which are prerequisite for using AI.

"The financial industry is one of the best industries in which to apply AI as it is highly digitalized. AI could serve financial institutions in the fields of identity authorization, risk control, market analysis and investment strategy planning," said Shen Nanpeng, founding and managing partner of investment company Sequoia Capital China.

JD completed the spinoff of JD Finance in June after first announcing its intentions to do so in March this year, which is expected to pave the way for the latter's eventual listing.

Analysts say JD Finance's spinoff is seen as a preparatory move toward its listing on a domestic stock exchange, as well as obtaining more financial licenses.

Established in 2013, JD Finance offers sophisticated financial solutions, including supply chain finance, consumer finance, wealth management, crowd funding, insurance and security. The company is applying for financial service licenses as the country's middle class surges in size.

In 2014, it launched an internet credit product - Baitiao - which offers users the option to "buy now, pay later". During Singles Day 2015, the number of customers who used Baitiao increased by 800 percent compared to Singles Day 2014.

In January 2016, JD Finance raised 6.65 billion yuan ($1.01 billion) from investors such as Sequoia Capital China, China Harvest Investments and China Taiping Insurance.

Apart from JD Finance, Ant Financial Services Group, the financial affiliate of e-commerce giant Alibaba Group Holding Ltd, also enables individuals and businesses to execute payments online in a secure manner.

It operates payment service Alipay and other digital finance products, such as Huabei, giving selected users a credit consumption quota.

Ant Financial was split off from Alibaba and obtained business independence in 2014, making it a powerful financial player.

The number of mobile payment users in China has exceeded 520 million, according to Ant Financial.

According to the People's Bank of China, Chinese banks dealt with 8.6 billion payments from mobile services in the second quarter of this year, up 40.5 percent from a year ago.