Can you spare some AI? Ping An OneConnect says it has the powerful tools to help other banks manage risk

Ping An OneConnect, the financial technology arm of Ping An Insurance which was awarded a virtual bank licence by the Hong Kong Monetary Authority (HKMA) last month, plans to provide the technology to help other financial institutions in the city manage fraud and loan default risks.

Jeffrey Ng, head of fintech solutions at Ping An OneConnect, said technologies such as micro-expression recognition and natural language processing could be used to enhance the customer due diligence process, especially when lenders are struggling with a lack of access to information on clients.

“Professional services are the missing part of Hong Kong’s fintech ecosystem, we are trying to improve the relevant technologies through the fintech services we will be providing,” Ng said on the sidelines of a banking conference in Hong Kong on Tuesday.

Before granting the first batch of virtual banking licences in March, the HKMA issued draft guidelines which specified the need for applicants to focus on services to retail clients and small and medium-sized enterprises.

Ng said Ping An OneConnect would over time be in a position to help other financial institutions with their daily operational needs.

He said natural language processing technology, a form of AI, could be used to help other banks or financial institutions during their loan collection process. For instance, the technology could be used to help automated collection officers monitor the language and tone used by delinquent borrowers.

Ping An OneConnect is developing a Cantonese version of the natural language processing technology targeting the Hong Kong market.

Ng said other technology such as big data and blockchain could also be used to provide supply chain financing to buyers and sellers of products.

“The challenge for banks currently in providing [the supply chain financing] in Hong Kong is that banks are making their lending decisions based on the credit profile of the procurement buyer … What we introduce to the market are services that are based on data,” Ng said.

He said blockchain could be used to secure counterparty confirmation, based on which the bank could provide financing to suppliers.

Ping An OneConnect was awarded a virtual banking licence in May, alongside Ant Financial Services’ unit Ant SME Services, a Xiaomi-AMTD Group venture called Insight Fintech HK, and the Infinium consortium that includes Tencent Holdings, the Industrial and Commercial Bank of China (ICBC), and Hong Kong Exchanges and Clearing (HKEX).

These four licensees plan to launch virtual banking services in six to nine months.

The latest permits add to the four that the monetary authority has already issued to spur competition and innovation, where the city of 7 million residents is already being served by 160 licensed banks.

Earlier this year, Ping An Insurance (Group), China’s largest insurer by market value, was making plans for an initial public offering of OneConnect in Hong Kong that could raise up to US$1 billion, according to a Bloomberg report, which cited unnamed sources.