China’s e-commerce giant Alibaba Group recently launched a new auction platform on Taobao that sells unpaid debts. China Cinda Asset Management, a state-owned bad loan bank, was among the first to post sales listings for commercial unpaid debts. Parkland Chair Professor of Strategy at CEIBS Seung Ho Park believes this newest innovation highlights the need for more discussion about the broader implications of the development of technology and Internet finance. Read on to learn why.

Is there no end to market disruption by online technologies?  It began with traditional book stores and transactions for consumer goods. Now art auctions, car reservations, and loan delinquencies are now handled online.  It’s clear that process innovation and market disruption caused by new digital technologies improves productivity and efficiency, which is a good thing. However the delinquent loan market was a specialized area involving only a few major institutions. It has now been liberalized by the Internet, expanding the playing field from just a few players to the general public. 
 
Who gains from this technological progress? Is this new platform good for society?  Sure, online transactions provide the advantage of transparency and broad exposure, and for traditional consumer products such broad exposure is a good thing. But is it the same in this case? The transparency that comes from involving the public in transactions for things such as bad debts certainly requires more responsibility. If things go wrong, there will be collateral damage involving the public, many of whom depend on returns from small investments. Big financial institutions do not even blink when the delinquent loans they purchase go wrong. But average consumers who have comparatively low incomes will likely lose their life savings when an investment in a product like this goes sour. 
 
Rather than continuously push the boundaries on where next to apply online technologies, we must first think about social responsibility. There are endless economic and technical points of view on where to apply technologies, however there is a social aspect that may, at some point, require us to draw a boundary line.  Though consumers benefit tremendously from the savings and convenience offered by online transactions, they also need to be aware that they should not be drawn into overly risky online investments, and understand how the risk inherent in these debt products amplifies the potential for collateral damage that will have a negative effect on society.