Cross-Border Lending: Current Development and Opportunities Ahead

The initiatives defined in the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area, released by the State Council in February 2019, follow two broad objectives. First, to enhance the connectivity between cities in the Greater Bay Area, and second, to build closer economic ties between Mainland China and overseas markets by promoting the circulation of people, goods, capital and information. The combined end results will be the further opening up the Mainland China market to overseas businesses while encouraging Mainland companies and talents to “go global”.

According to the latest data from the Ministry of Commerce of the People’s Republic of China, there were 1.012 million Chinese citizens working overseas as of October 2019, representing a year-on-year increase of 19,000 workers. Conversely, there are over 950,000 foreigners working in Mainland China.

The Greater Bay Area Development Plan will drive cross-region, cross-industry and cross-system flows of funds and human resources. To support this, cross-border financial services are expected to become vital in supporting Mainland companies' efforts in “going global” and driving business growth while simultaneously facilitating the ease of living and doing business for foreigners living in Hong Kong or Mainland China. The demand for cross-border financial services will be driven mainly by corporates in need of cross-border remittances and opening overseas bank accounts as well as individuals seeking overseas investment, property mortgage loans and consumer financial products, such as credit cards and personal loans.

Personal credit information forms an important base from which financial institutions provide cross-border financial services to foreigners and locals alike. But, financial institutions may have difficulties tracking the complete credit history of cross-border financial service users, due to the fact that foreigners and locals do not always have full credit and repayment records in the locality where they are situated.

Know Your Customer is set to become the cornerstone of cross-border financial services

Cross-border credit risk management will play an important role in cross-border financial services, helping individuals to access services provided by financial institutions. Cross-border credit risk management can help a financial institution verify the identity of individual customers, re-enact the full picture of one's credibility, and detect illegal activities such as money laundering.

As a prevailing regulatory requirement, Know Your Customer (KYC) is a mandatory part of cross-border financial services. But it can be a manual, resource-intensive process. TransUnion sees eKYC, or digitalization of KYC, as the solution of choice. Not only will it support and facilitate full expansion of cross-border financial businesses with comprehensive identity verification capability, it will also provide a secured and seamless user experience to cross-border clients.

TransUnion has developed IDVision with iovation – a solution that combines Anti-Money Laundering (AML) and eKYC capabilities. IDVision with iovation is able to meet the operational and regulatory requirements of cross-border financial institutions with features such as Identity Verification (IDV), Digital Verification (DV), Identity Authentication Knowledge-based Exam (IDA), Optical Character Recognition (OCR), and ID document authentication. In addition, its facial recognition functions can improve the overall robustness of the identity verification process and support all government-issued ID document types from over 190 countries.

Through IDVision with iovation, TransUnion aims to provide lenders in Mainland China with identity verification and credit information services targeting their foreign clients, and help Chinese citizens access financial services outside Mainland China. Rooted in Hong Kong and oriented towards the Greater China region, TransUnion is guided by the conviction that the services it provides to cross-border financial institutions and individuals will help enhance connectivity in the Greater Bay Area, build a global credit economy linking up businesses and consumers, and achieve the ultimate goal of "Information for Good".