The Hong Kong Monetary Authority (HKMA) is looking to bring lending into the digital age, allowing banks to forgo traditional credit checks on some personal loans in favour of big data analysis.
Under new guidelines, banks can carve out a portion of the personal lending portfolio (no more than 10% of their capital base) and apply different standards for online and mobile loan applicants.
Instead of collecting borrowers’ income proof to assess their repayment ability, banks may adopt new credit risk management techniques, "such as big data and consumer behavioural analytics", to approve and manage the related credit risks.
Arthur Yuen, deputy chief executive, HKMA, says: "The new guidelines will enable banks to be more innovative and adopt more financial technology in personal lending business in order to improve digital customer experience. This is also a major development in banking supervision."