Credit reporting agency TransUnion ‘a finalist’ in bid for Hong Kong’s next big fintech project despite data security row
- Chicago-based firm competing with IBM-led consortium to manage Know Your Client Utility service for city’s banks
- Firm’s local office earlier forced to halt online consumer credit report services after newspaper said it had accessed data on city’s leader and finance chief
Consumer credit reporting agency TransUnion is on the cusp of securing the right to run Hong Kong’s next big fintech project despite the exposure last week of a gaping security flaw that allowed access to the personal data of the city’s leader.
The Chicago-based company is competing with an IBM-led consortium to become the sole manager of a major new service for Hong Kong banks, according to sources familiar with the situation.
The goal is to provide a centralised digital database of consumers’ personal and credit information to allow for the sharing of data across financial institutions to improve the efficiency and cost-effectiveness of services.
The Hong Kong bureau of TransUnion was last Thursday forced to freeze its online consumer credit report services after a local newspaper said it had gained access to the personal data of Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor and finance minister Paul Chan Mo-po.
The timing of the breach is awkward for the firm as it vies for the fintech contract from the Hong Kong Association of Banks.
The project is called Know Your Client Utility (KYCU) and aims to create a single source of customer data and documents across the industry while addressing newly tightened international standards for anti-money-laundering regulations. Know Your Client is known as the process of a business verifying the identity of its customers and assessing potential security risks.
The new KYCU platform would remove the need for a client to provide KYC documentation to every bank used. It could also improve risk management for banks and other financial institutions while lowering costs and processing time.
“TransUnion and the IBM-led alliance are the finalists in the bid,” a source familiar with the project said. “The Hong Kong Association of Banks is due to make a decision very soon on the winner.”
An association spokeswoman only said the organisation had been working closely with the industry to develop a KYCU platform and would issue updates on the plan in due course.
TransUnion declined to comment other than confirming that its online credit report services remained temporarily unavailable.
The company has been operating in Hong Kong since 1982 and has amassed credit profiles for 5.4 million consumers.
The winner of the bid will be a preferred service provider not only for Hong Kong but for a much bigger market – the “Greater Bay Area”, a project to create an innovation and technology hub comprising Hong Kong, Macau and nine cities in China’s Guangdong province.
The IBM-led consortium is composed of the American IT company and Hong Kong-based technology provider Nova Credit. The mainland-backed firm was set up about one year ago by a former senior official at the Bank of China and counts several mainland and Hong Kong banks as shareholders, including Nanyang Commercial Bank, Shanghai Commercial Bank, Bank of East Asia, Chong Hing Bank and Dah Sing Bank.
Nova Credit on Tuesday declined to comment.
Hong Kong has in recent years been chasing fresh growth in emerging industries, especially fintech.
The city is among the pioneers in Asia in using KYCU. Rival financial hub Singapore has recently faced implementation issues after complications surfaced in streamlining KYCU processes for corporations, making it hard to verify the credentials of shell companies.
In response to queries from the Post, the Hong Kong Monetary Authority – the city’s de facto central bank – said it had been working with the Association of Banks to explore how new technology, including KYCU, could be used to introduce greater efficiency to customer due diligence processes and to improve the customer experience.
“While the authority does not comment on the bidding process, it hopes the [association] will select the vendor with the relevant expertise in order to assist the association in setting out a concrete road map,” a spokeswoman for the authority said.
Lawmaker Charles Mok, who represents the city’s IT sector in the legislature, said the Monetary Authority must be very careful in choosing the winner as the firm would be managing a large amount of personal data.