After Circle, China’s Baidu Invests in US Fintech Company Again

Baidu invested into Zest, one of the fastest growing fintech startups in the US, to develop a credit scoring platform based on search data.

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After Circle, China’s Baidu Invests in US Fintech Company Again

The Chinese search engine Baidu could be moving towards resuming a strategy that will sooner or later lead it to start accepting Bitcoins - again.

The company is continuing with its growing interest in FinTech in a cross-connection manner between the Asian giant and the leading global market in the US by investing in a second U.S. fintech company in a month.

Baidu recently invested in a US blockchain company, Circle Internet Financial Inc., after the Bitcoin startup announced it had raised $60 million in funding from a consortium which was led by IDG, an American based media, data and marketing services and venture capital organization.

This time, it is investing an undisclosed amount into Zest, one of the fastest growing financial technology startups in the US, to develop a credit scoring platform based on search data to address a Chinese market whose traditional credit systems are broken.

Half billion people’s market in China

The tech platform that applies Google-like math to credit decisions was founded by a former CIO at Google, Douglas Merrill.

Zest uses its platform to make loans to deserving, responsible borrowers that other lenders overlook. Its entry into China will enable lots of people who deserve credit but live in a cash economy with no formal banking service to be served.

According to Zest on its website, there are more than half a billion people in China with no credit history. This lack of data makes it incredibly difficult to determine credit risk but its platform turns shopping data into credit data, creating credit histories from scratch.

The US company will use its platform which is able to consume vast amounts of data to identify good borrowers, enable higher repayment rates for lenders and lower-cost credit for consumers.

It will rely on several mathematical models running in parallel which require no human interaction in the underwriting to make accurate decisions in less than 10 seconds unlike other creditors that take hours or days.

Stopped accepting Bitcoins in 2013

China provides a huge opportunity for Zest because there is no centralized credit bureau like in the US.

Baidu stopped accepting Bitcoins in 2013 after the nation’s central bank barred financial institutions from handling transactions, triggering a drop in the price of the virtual currency.

However, with these moves, coupled with market reports and the various friendly gestures by the Chinese government to Bitcoin-related issues including large scale mining activities in the country, it won’t be misplaced to envisage China’s biggest search engine in a position of readiness to resume a strategy that will sooner or later lead it to start accepting Bitcoins - again. 

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