Hong Kong's financial regulator wants banks to forgo traditional credit checks and utilize big data analytics to assess borrowers’ credit risks.
The Hong Kong Monetary Authority (HKMA) is encouraging banks to adopt new credit risk management processes. Under a new HKMA guideline banks can now collect big data or other information to fully access the credit risk of internet and phone applications.
Currently, personal loan appraisal requires applicants to prove their income and address. Under the proposed HKMA guideline for personal loans applied for online or via mobile phone, borrowers will not be required to provide proof of income or an address.
Still Negotiating the Parameters
While the loan sizes will be smaller than for established credit, HKMA did not say by how much smaller that will be. The regulator said it was still negotiating the parameters with individual banks.
«The new guidelines will enable banks to be more innovative and adopt more financial technology,» Arthur Yuen, deputy chief executive of HKMA said.
