Hang Seng Bank to relax loans rules, using big data and fintech to replace old-fashioned banking

Hang Seng Bank, the 85-year-old Hong Kong lender owned by HSBC, said it will allow existing customers with good credit histories to apply for personal loans, as it uses big data analysis and financial technology to replace old-fashioned banking practises.

The bank will accept online applications for personal loans without requiring borrowers to provide any proof of income or address beginning from the fourth quarter, in keeping with new guidelines issued last month by the Hong Kong Monetary Authority (HKMA).

“Without income proof, we will need to use big data to analyse the behaviour and credit worthiness of the customers to decide if we should approve their personal loans,” said the bank’s executive director and retail banking head Margaret Kwan. “As such, we will only give this service to existing Hang Seng customers, not to the new clients.”

Hang Seng’s customers are increasingly adapting to digital banking, with its population of active mobile banking customers, defined as those who use mobile banking at least once a month, increasing by 50 per cent over the past 18 months, Hang Seng said.

At present, 40 per cent of online securities trading, 50 per cent online personal loan applications and 30 per cent of online forex exchange transactions are conducted through mobile phones, with the rest through desktop computers, Hang Seng said.

Like other lenders, Hang Seng is adapting to fintech to keep up with smartphone-enabled payment platforms that now enable customers to conduct virtually every aspect of their financial needs - from loans to investments, payments to remittances - without ever setting foot in a bricks-and-mortar bank. HKMA, the city’s de facto central bank and the banking regulator, has introduced a number of measures to nudge banks to develop fintech, in the hope of turning Hong Kong into a regional hub for financial and technological excellence.