China based internet search provider Baidu has made a strategic investment in Los Angeles based ZestFinance, reports Deal Street Asia. The US company uses machine learning to transform complex data into credit scores. The terms of the investment are undisclosed.

According to a media statement from Baidu, data scientists from both firms will work together to apply ZestFinance’s technology to Baidu’s search, location and payment data to improve credit scoring decisions in China.

“This investment from Baidu will help our mission in the fast growing Chinese credit market. We are thrilled to be turning search data into credit data with Baidu.” comments Dogulas Merrill, CEO of ZestFinance.

Given that mainland China sees a distinct lack of credit scoring systems, this is a crucial gap that needs to be filled as the Chinese economy grows. 

By taking on this initiative, Baidu is not only giving itself a competitive advantage, but also helping to solve an infrastructural problem for China. China’s financial system lacks a centralized formal credit history database, with Beijing and other central governments making efforts to bridge this gap and extend financial services to citizens who are unbanked.

There are a lot of people in China who deserve credit but live in a cash economy without a formal banking system to service them. -Douglas Merrill, CEO of ZestFinance

In markets such as China, and other parts of Asia, consumer credit data is generally unavailable. Baidu’s rich user data will be valuable for loan services and assessing credit risk.

The ZestFinance platform is highly applicable to emerging markets because it accurately underwrites people who lack credit history.

A version of this appeared in Deal Street Asia on July 28. Read the full version here.