Baidu to enhance Internet finance services

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China’s search giant Baidu will probe into fintech using its edge in artificial intelligence (AI) technology, an area that the company has bet on to provide thrust in the future as traditional advertising revenues begin to slack.

Baidu is to launch a new loan product in cooperation with the Agricultural Bank of China to contend with frontrunners in the industry like Alibaba and Tencent.

One of Baidu's advantages is huge amount of data generated from searches each day. Even so, that kind of information is less valuable and may reveal less about its users than the kind of transaction and social networking data that rivals such as Alibaba and Tencent have access to.

What it lacks in data, Baidu will seek to make up for in algorithms.

Robin Li, founder and CEO of Baidu, speaks at the 2017 Baidu World Conference on Thursday. Artificial intelligence is the number one topic at the ongoing conference. /Baidu photo.

“Baidu is applying AI technology to user recognition and behavior recognition, and will make major breakthroughs in risk control and artificial intelligence,” said Yu Baicheng, director of Wangdaizhijia Research Institute.

A report from the National Institute for Finance & Development says the size of China's consumer finance market nearly 6 trillion yuan, and will exceed 12 trillion yuan in 2020.

The market is expanding while the number of online lending companies dwindles for the past two years, as tougher government regulation disqualify unregulated firms. That means tech giants like Baidu will rise to meet increasing demand.

Guo Yuqing, Management Consulting Partner of PWC China, believes that technology will be the driving force of future financial services.

“We can see that traditional banks and investment firms are trying to cooperate with fintech companies. Baidu, Alibaba and Tencent and Suning are also trying to set up strategic cooperation with the big five state-owned banks,” said Guo.

VCG Photo.

JD Finance, the financial arm of China’s leading e-commerce company JD.com is beginning to use AI to help assign credit scores and determine a user’s credit. Alibaba’s Ant Financial this June announced that it would share its most AI technology with other financial institutions for a better between the two.

Fan Zhiming, vice president of Ant Financial, noted that AI helps financial institutes understand their clients more profoundly and efficiently.

“AI is able to process innumerable different personal behaviors, so the results could be much more objective than the traditional questionnaires that mostly base assessments on users own answers about themselves,” said Fan.