Nineteen banks unveiled innovative applications on Wednesday under the Hong Kong Monetary Authority’s Interbank Account Data Sharing (IADS) program, which are expected to simplify the borrowing process, enhance financial analysis, and bolster online identity verification.
Seven of the 28 participating banks have already launched these services, while others will follow suit by year-end or next year.
Unlike with usual loan approvals, which can stretch out for weeks after an applicant has submitted the financial documents, banks can now share the applicant’s account data (with the customer’s consent), allowing for a quicker and more comprehensive picture of their financial health to be available.
Industry insiders believe this will particularly benefit small and medium-sized enterprises (SMEs) in urgent need of funding. According to the HKMA, some banks have slashed the approval time for SMEs from several weeks to a few days.
IADS will boost banks’ operational efficiency by alleviating their reliance on paper documentation, and allow customers to stay updated on their financial status at different banks, said Howard Lee, deputy chief executive of the HKMA.
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The Bank of China (Hong Kong) told China Daily that the interbank data sharing program not only speeds up the lending process, but also helps mitigate the risk posed by applicants presenting false financial information, thereby safeguarding the banks’ interests.
According to Hang Seng Bank, corporate clients can authorize the bank to directly access their account information from other participating banks when applying for loans. This eliminates the need for clients to submit additional approval documents.
Under the program, Hang Seng Bank had approved some HK$60 million ($7.72 million) in loans for SMEs as of the end of September.
Similarly, Shanghai Commercial Bank has processed loan applications totaling over HK$50 million for SMEs.
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Based on data from multiple accounts with the participating banks, the SCB will generate financial reports for corporate and SME customers, including transaction histories, cash flow trends, and market developments. This service will be expanded to individual customers from the first quarter of next year.
Moreover, the IADS enables users to keep track of their financial status by viewing their account information from multiple banks on a single online banking platform, without the need to log on to various banking applications.
A recent survey by the Hongkong and Shanghai Banking Corp covering 800 customers found that clients typically hold three or four bank accounts, 80 percent of which reported challenges with managing these accounts, and many expressed a desire for a one-stop solution to view balances across multiple banks. The IADS can help solve these challenges, said Janet Sin, head of innovation, open banking and government initiatives at HSBC.
Since its rollout in January, the IADS covering individual, corporate and SME customer segments has established related rules and standards. It enables the sharing of customers’ deposit account information — such as account status, balances, and transaction histories — between participating banks.
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At Wednesday’s event, the HKMA, in collaboration with the Hong Kong Science and Technology Parks, also announced the launch of the IADS Developer Platform, a one-stop platform that provides testing account data and stimulated application programming interfaces from participating banks.
