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Credit Scores: A Peek into the Future

It’s no longer just about loans.

Conventional wisdom today states that a credit score is a way for banks to determine whether to give a prospective borrower a loan. Should they trust a person with their money? If you have a good score, you will probably be granted credit, if your score is weak or if you don’t have a score at all, jog on pal.

In life, there are many situations in which we are required to trust a person, business or institution that we are dealing with. How do we know whom to trust? We are already using scores for in many other cases; just think of driver and passenger ratings on Uber, seller ratings on Amazon and Ebay, or the ratings we regularly view on TripAdvisor or Zomato. Imagine if there was a way we could know if the person we are dealing with is trustworthy in all cases.

China is taking steps to build a system to do just this. Despite a long stretch of economic growth, the country has been plagued by widespread corruption by government officials and numerous scandals in both the private and public sectors. Problems with shoddy housing, contaminated milk powder, counterfeit goods, to name a few, have eroded public faith in the Central Government’s ability to enforce good behaviour amongst its officials and market agents. In 2014 the Chinese government introduced the idea of “social credit” that rates people on their financial and social behaviour. The stated aim was to build a “sincerity culture” in economic, social, and political activity. Citizens exhibiting “good” behaviour will be rewarded with some expected perks such as better access to credit, prioritisation on government benefits and improved employment prospects in government jobs. Benefits also extend to discounted airline and train tickets, as well as access to luxury hotels. A bad score can impact your ability to travel, your career prospects, or even your ability to find a mate on dating websites. The Government explicitly states that their aim is to

“allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step”

This is serious stuff. It’s not just pure fantasy either; pilot programmes are already being run across more than 30 cities in China. A staggering 6.7mm blacklisted people are banned from flying. An example programme is “Honest Shanghai” which is currently voluntary for city residents. This system uses 3,000 data points collected from nearly 100 government entities. The intention is to introduce non-governmental data such as industry associations, private company data, and social media behaviour. A nationwide scheme has been ear-marked for 2020.

This all sounds very Orwellian to many. Under the guise of fostering sincerity and a greater trust in the system, is this really just a tool through which the government can exert their influence and control on even more aspects of their citizens’ lives?

Such a system immediately raises concerns about the potential for abuse and questions about the integrity of the programme. A few questions immediately come to mind:

· What safeguards are there against abuse?

· To what extent can people opt out?

· What if there are mistakes?

· Can the government change the rules? Who holds them to account?

· How would protestors or dissidents be treated? Are they labelled as “trust breakers” and thus blacklisted?

· What if there is a data security breach?

The list goes on.

Perhaps surprisingly, people in China seem to be in favour of the use of a social credit score. Maybe that is just a symptom of the extent that trust has broken down in society today. It’s not clear what the final programme, if there is one, will ultimately look like. The Chinese Government has allowed a greater level of debate than we usually observe, possibly to see how far they can go.

In India, we also have the building blocks of a sophisticated system that could create the vision that China has to track its citizens. 99% of Indians over 18 are now registered on the Aadhaar database, and through India Stack and other forms of information from private sources, a wealth of information can be monitored for each individual. And let’s not forget that India is witnessing rapid growth in online participation, meaning more information on more people will be digitally recorded.

The good news is that any Indian form of social credit score is highly unlikely to be as invasive as that of our Chinese counterparts. Quite simply, India is not China. Ever since Confucius espoused the virtues of respecting hierarchy and preserving social order 2,500 years ago, the Chinese have lived under an autocratic regime where the Government of the day is regarded with almost paternal authority. They are used to having a much greater degree of Government oversight in their lives. The most common word for privacy “yinsi” didn’t appear in popular Chinese dictionaries until the mid-1990s. India of course is a vibrant democracy, with a cacophony of voices constantly clamouring for attention, expressing opinions on pretty much anything, and staking their claims on resources. Just try reprimanding someone for jay-walking (as they do in China), let alone driving through a totalitarian regime of oversight. It just won’t happen.

Nevertheless, even in India, when there is such a wealth of data that is now available, it is inevitable that it will be used for more decisions. Your score will not just be a reflection of your likelihood of paying off a loan, but potentially a reflection of your “character”, which will have far more wide-reaching consequences. Look at it as a source of empowerment. In this new digital era, you can create a new way of participating in the country. Your score is your digital resume, it’s more important than ever before that you look after it.


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