Ladies and gentlemen. I feel honored to be amidst intellectuals from across the globe gathered here in Cambridge today. I am grateful to Professor Barry for the invitation and opportunity to share Hengchang’s practices and achievements in financial counter-fraud. Like many Chinese people, I was acquainted with Cambridge through Xu Zhimo’s poem, Saying Goodbye to Cambridge Again. I fell in love with Cambridge as soon as I set foot on it, which I believe is more beautiful than the one depicted by Xu Zhimo. However, at this moment, what touches me more is this gathering of intellectuals for sharing wisdom, which I value more than any scenic beauty.
Digital Inclusive Finance Propels China’s Economic Development
China’s Internet finance has developed at a strikingly rapid pace over the last decade. In terms of service users and the scale of working capital, China is definitely a leader in the field. Digital inclusive finance based on innovative financial technology and applications is increasingly empowering China’s economy. The governments of developing countries, represented by China, have released a variety of policies for developing inclusive finance and bringing more people under its ambit, so as to allow the masses to avail truly innovative and convenient services.
In the process of industrial development, financial anti-fraud has been an integral part of constructing risk control systems of Internet financial enterprises. In recent years, Chinese enterprises, including Hengchang, have demonstrated that the application of fintech is fundamental to financial anti-fraud.
Hengchang Realizes Leading Business Scale after Six Years of Efforts
I founded Hengchang six years ago. Based on the Internet as its main channel, Hengchang provides a wide range of services for borrowers and lenders (creditors) for realizing direct lending, such as information collection, information release, credit evaluation, information interaction and lending promotion. As a fintech enterprise engaged in innovative financial services, Hengchang has played a leading role among other enterprises with a similar business scale. So far, Hengchang has promoted loan exchange of more than RMB 30 billion in total, covering more than 300 cities in over 20 provinces, municipalities and autonomous regions.
We have found that the real source of bad debts and losses lies in defrauding customers rather than subprime customers. Our top priority of risk control in Internet finance is to prevent fraud. Overseas fraud rate is roughly 20%, but China’s rate is much higher. The fraudsters these days cannot be equated with the thieves who used to work alone in past times. Using the Internet, several developers, camouflage kit providers, trainers, implementers and cash-out personnel have made their nexuses with complete underground industrial chains. In response to increasingly professional fraudulent conducts, manly platforms have constructed an anti-fraud management system.
Application of Fintech Constantly Improves Hengchang’s Anti-Fraud Abilities
With the rise of artificial intelligence and rapid development of big data, knowledge mapping, machine learning, etc., we can increase the accuracy and coverage of risk control system based on adept rules and training models of mass historical data by controlling risks with objective data. As a practitioner of financial innovation, Hengchang has proactively developed and taken advantage of financial technologies to improve risk control, especially for anti-fraud. Our anti-fraud measures involve equipment identification technology, which can guarantee accurate identification of the behaviors and intention of borrowers. We also use anti-fraud API services, which can identify library hitting, high-risk and fraudulent persons, coupled with authentication, account risk identification and anti-fraud against “Wool Group”, among others.
For example, knowledge mapping technology ensures accurate identification of the behaviors and intention of borrowers. Hengchang has constructed a graph data system based on big data. As the core of anti-fraud measures, a man should be judged by the company he keeps and not by what he describes himself to be. A person has little chance of creditworthiness if he is surrounded by deadbeats or punks. Therefore, the essence of graph database is to measure the characteristics of a person from the people surrounding him (even the environment at N levels). It should be mentioned that graph data storage is the most convenient and suitable storage mode, and construction of graph database has become inevitable for anti-fraud. Based on this, Hengchang has integrated various data, such as data for respective stages of the main service lines in operation system and user authorization data, besides forming a graph database covering hundreds of millions of entities and billions of relationships. The data increases as the number of users increases. Relying on knowledge mapping technology based on graph database, a variety of information can be connected, forming a network of relationships without the barrier of fragmented information. In addition, new data sources can be added with ease and such visualized content can help credit auditors (to) analyze the potential risks in complicated relationships more effectively.
Hengchang Looks Forward to Global Cooperation on Financial Anti-Fraud
Furthermore, Hengchang has applied AI’s biometric identification and other technologies to the anti-fraud system. For example, anti-spoofing is used to judge the client’s honesty, coupled with face recognition. Similarly, voiceprint recognition can also identify the person just like fingerprint. At present, our technical platforms cover customer disconnection repair, engine for anti-fraud rules, fraud ring investigation, etc., with early risk warning and other technologies which shall be updated in the near future.
Internet finance is bound to be globally influential. I hope the experience from Hengchang can provide some reference for fintech enterprises in financial anti-fraud through such a forum of global influence. I also hope our technical team can contribute more to global financial anti-fraud through ongoing efforts.
90 years ago, Xu Zhimo wrote in Saying Goodbye to Cambridge Again, “Very
quietly I take my leave, as quietly as I came here”. However, I will not leave
Cambridge quietly but with greater responsibility, for I have gained a lot
during this exchange. I am already looking forward to the meeting next year
where I hope to share latest technological updates and other business stories.