Mrs Kan is a distinguished banking executive with more than 40 years of leadership experience across global, regional and Greater China markets. Most recently, she served as Executive Director and Deputy Chief Executive Officer of China CITIC Bank (International), where she spearheaded the bank’s FinTech and digital innovation agenda. Earlier in her career, she spent more than 25 years at Standard Chartered Bank, holding senior leadership roles across Consumer Finance, Product Management, Sales and Distribution, as well as overseeing other major strategic initiatives. With a forward-thinking and agile vision, Mrs Kan played a leading role in driving FinTech innovation in the banking industry and advancing more accessible and inclusive financial services for a broader consumer base.

As digital transformation continues to reshape industries, Mrs Kan’s deep expertise complements TransUnion’s evolution from a pioneering credit reference agency in Hong Kong into a trusted information and insights partner for businesses and consumers. Through a suite of identity-based solutions that enable more informed credit decisions and stronger fraud prevention, TransUnion supports sustainable growth for individuals, corporates and the broader industry. Her appointment will further accelerate the company’s ongoing effort to drive financial inclusion and contribute to a more resilient and robust foundation for Hong Kong’s financial ecosystem.

Beyond her executive career, Mrs Kan has made significant contributions to Hong Kong’s financial and professional communities through a range of leadership roles. She currently serves as Honorary Adviser of the Hong Kong Institute of Bankers, Board Member of the Hong Kong Deposit Protection Board and Member of the Protection of Critical Infrastructure (Computer Systems) Appeal Board. She is also actively involved in education, youth development, women’s empowerment and professional advancement, with governance roles at the Hong Kong University of Science and Technology, as well as serving as a Hong Kong SAR Delegate to the All China Women’s Federation and an Executive Committee Member of the Hong Kong Professionals and Senior Executives Association.

“We are delighted to welcome Helen to the Board as TransUnion continues to strengthen its role as a trusted information and insights partner in Hong Kong,” said Marie Claire Lim Moore, Asia-Pacific Regional President and Hong Kong CEO at TransUnion, “Helen’s extensive experience across financial services, coupled with her innovative mindset and future-oriented vision, will bring valuable perspectives to the company and support TransUnion in advancing our Information for Good mission by enabling more confident, informed decisions, fostering greater trust across Hong Kong’s financial ecosystem.”

Mrs Kan said: “It is a pleasure and an honour to join the Board of TUCIS at a time when trusted information and insights are increasingly important in a highly digital economy. As market needs continue to evolve, TransUnion has expanded beyond traditional credit information by extending its data and analytic capabilities into areas such as fraud prevention and solutions that support growing cross-border financial needs. I look forward to working with the Board and management team to support the company’s next chapter of growth while continuing our contribution to Hong Kong’s position as an international financial centre.”

A new study by TransUnion (NYSE:TU) challenges conventional perceptions of Hong Kong gig workers, revealing them to be responsible credit-active, credit-worthy consumers who require a different approach to risk assessment. Conducted in January 2026 among 500 gig workers across various industries, the study explores the scale and economic role of gig workers in Hong Kong and highlights opportunities for lenders to engage this growing segment.

The gig economy describes a work environment where individuals take on part-time, freelance or project-based jobs to earn an income, or extra income. Recently, the term has become closely associated with digital platforms that connect service providers directly to customers for tasks like delivery and ride-hailing.¹

The study, “The Gig Economy in Hong Kong: Rethinking Credit Risk, Inclusion, and Market Opportunity”, to be presented at TransUnion’s annual 2026 Hong Kong Financial Services Summit, found that gig workers make up approximately 13% of Hong Kong’s workforce, with nearly nine in ten (89%) earning a salary or hourly wage from full-time employment in addition to their gig income. One in five (20%) gig workers earn at least half the median household income in 2025 (over HK$10,000 per month)² through gig platforms. This workforce is predominantly Millennial (47%) and Gen X and older (31%)³, with a slight male majority (53%).

“Gig workers are a material and growing borrower segment who are often mistakenly perceived as having riskier, volatile income trends and inconsistent payment behaviours,” said Weihan Sun, senior director of research and consulting for Asia Pacific at TransUnion. “They face significantly higher friction, such as higher interest rates, lower credit limits and process complexity during credit applications as gig income is often excluded from formal assessments – but our findings show that perceptions about these consumers may be misplaced.”

Gig Workers Are Not Inherently Higher Risk

The study reveals that gig workers’ repayment behaviour aligns closely with the broader market, with no evidence of structurally higher risk. Among surveyed gig workers, 95% reported being in the prime and above⁴ credit risk tiers, compared to 90% of the general credit-active population. Their repayment behavior is also comparable to the broader market, with 82% meeting their payment obligations without difficulty, compared to 80% of the general population who said the same.

Chart 1: Hong Kong Gig Workers’ Credit Repayment Behaviour Compared to All in Hong Kong

Source: TransUnion Gig Economy Survey Hong Kong 2026

TransUnion Consumer Pulse Study Q1-Q4 2025

“This finding underscores that gig workers’ credit profiles and repayment behaviour are broadly consistent with the rest of the Hong Kong market,” said Sun. “This suggests that outcomes are more closely linked to income and borrowers’ individual characteristics than employment type alone.”

Gig Workers’ Appetite for Credit Exceeds the Broader Market, Despite Application Challenges

Gig workers demonstrate strong demand for credit, with 32% applying for new credit or refinancing in the past six months and 37% planning to do so in the next 12 months, compared to 30% of all credit-active consumers who have similar plans. They also exhibit higher uptake of several mainstream credit products: 28% hold mortgages (compared to 15% of the general population) and 22% have personal loans (compared to 9% of the general population). Notably, 9% of gig workers have auto loans, far exceeding the 0.3% observed across all credit-active consumers, likely because so many gig workers participate in transportation-based services.

Chart 2: Credit Products Held by Gig Workers, Compared to Total Population

Source: TransUnion Gig Economy Survey Hong Kong 2026

TransUnion Credit Information Services consumer credit database

However, despite their active participation in the credit market, gig workers face significant barriers when applying for new products. Across generations – Gen Z (44%), Millennials (48%) and Gen X and older (46%) – almost one in two reported difficulties applying for credit. Their challenges fall into two main categories. Under process-related barriers, nearly half (45%) cite unfavourable pricing and 41% point to complex application procedures. Under documentation-related constraints, 36% report being unable to provide required documentation such as pay slips, and 31% say fluctuating income led to questions or rejection.

“While gig workers show strong demand for credit products, the study indicates that many are not served to their full potential by lenders. This is despite the fact that a large share of gig workers already hold credit products and demonstrate positive repayment behaviours that are mostly in line with the performance of credit‑active consumers,” said Sun.

Gig Work Is Becoming a Durable Income Component

While often viewed as a temporary solution, gig work is increasingly becoming a sustained part of household financial planning and should be included in lenders’ credit risk and financial inclusion strategies. With 72% of gig workers not planning to leave this type of work in the near term, nearly half (44%) of surveyed gig workers plan to maintain their current gig hours, with almost one in five (18%) even intending to grow or expand their participation in the gig economy.

Workers value the flexibility (65% citing this as a benefit), earning potential (35%), and enjoyment of gig work (31%) the most. However, challenges remain, with reasons for low satisfaction with this earnings strategy including 43% feeling they do not earn enough, 33% reporting insufficient work opportunities, and 29% saying they must work excessively to cover expenses.

“With the continued growth of the digital economy, and ongoing needs to cope with high cost of living, gig workers represent a consistently expanding and high-potential borrower segment. The latest TransUnion study shows that many of these consumers are already credit-active and credit-worthy rather than inherently high risk,” said Sun.

“As gig work has become an ongoing supplementary income source for many, the wider credit industry has an opportunity to rethink how these consumers are evaluated and to broaden credit inclusion by refining how non-traditional income is assessed within existing risk and process frameworks. Adapting to consumers’ evolving profiles by including alternative data, for example, could better meet the needs of more Hong Kong consumers while driving sustainable, long-term growth for lenders,” he concluded.

¹ Office of the Government Economist: An introduction to the gig economy

² Census and Statistics Department: Report on Annual Earnings and Hours Survey

³ Generations are defined as follows: Gen Z, born 1995–2004; Millennials, born 1980–1994; Gen X, born 1965–1979; and Baby Boomers, born 1944–1964 

⁴TransUnion CreditVision® risk score: super prime = AA; prime plus = BB; prime = CC; near prime = DD to HH; subprime = II to JJ

With three decades of experience in financial services, Tim has a strong history of shaping strategies and driving growth across multiple markets. During his career, he spent over 20 years with HSBC across Hong Kong, the United Kingdom, Korea, Taiwan and Malta. Most recently, he held the position of Market Leader for Hong Kong, Korea and Taiwan at PayPal, where he drove merchant growth and enhanced seamless payment experiences for consumers. Complementing his professional accomplishments, Tim holds a Master of Engineering in Chemical Engineering from Imperial College London and a Bachelor of Science in Finance from the University of Manchester.

Drawing on his leadership experience in digital payments, Tim’s knowledge of customer journeys, payment ecosystems, FinTech innovation, and business enablement positions him well to spearhead the adoption of TransUnion’s data‑driven solutions as the company expands beyond core credit to provide broader identity-based insights. TransUnion will continue to empower financial institutions, businesses and consumers with trusted data and actionable insights through broader industry collaboration to promote greater financial inclusion and stability.

“Tim joins us at a transformative moment for TransUnion Hong Kong as we continue to demonstrate our leading stewardship of identity-based insights in supporting a healthy and sustainable financial ecosystem for the city,” said Marie Claire Lim Moore, Asia-Pacific Regional President and Hong Kong CEO at TransUnion. “Tim’s proven track record of expertise in digitalisation, innovation and multi‑market leadership will sharpen our go-to-market execution and position us to capture emerging growth opportunities. With his appointment, TransUnion is well placed to advance our ‘Information for Good’ mission, reinforcing market resilience and strengthening Hong Kong’s position as an international finance centre, as we continue to serve as the trusted information and insights partner in the market.”

Commenting on his appointment, Tim said: “Having worked extensively across diverse markets, I share TransUnion’s vision of combining global capabilities with meaningful local expertise to deliver trusted, data‑driven solutions for today’s dynamic financial ecosystem. As the industry continues to evolve, I look forward to contributing my expertise and experience to support TransUnion with an even more comprehensive lens on the ecosystem and operations of financial institutions, supporting responsible innovation and helping individuals, businesses and communities thrive across Hong Kong and the broader region.”

Insights from the TransUnion (NYSE: TRU) Hong Kong Industry Insights Report for Q3 2025¹ show that the volume of credit card originations (new accounts opened) declined by 23.5% year-over-year (YoY) in the second quarter of 2025², with volumes down across all generations and all risk categories apart from subprime³. This was the most significant drop in new credit card originations since the COVID-19 pandemic and follows a 13.0% YoY decline in enquiries in the quarter.

Credit card originations among Gen Z⁴ consumers – who have for years seen significant YoY card growth as their over-18 population numbers increased – decreased by 11.1% YoY. Originations among Millennials decreased 25.8% YoY, and Gen X originations were down by 26.1%. Across the risk tier distribution, subprime was the only tier that recorded a marginal increase in volume (+0.5%), albeit off a low base of the total population accounting for just 1.1% of total originations. Within the subprime tier, growth was driven by money lender card issuers, where volume increased 39.4% YoY. Money lenders have a greater risk appetite than traditional banks and provide an alternative when the market is experiencing a gap between demand and supply among higher-risk borrowers.

This cooling in the Hong Kong credit card market has likely been influenced by the unemployment rate being at its highest level since August 2022, at 3.9%⁵ in Q3 2025, with the labour market affected by economic restructuring and weaker hiring in the construction, finance and social sectors. Graduates entering the market have been the most affected, with 8% of young consumers aged 20 to 29 unemployed – the highest level this year, on an upward trend from 5.4% in January 2025⁶.

In contrast to the slowdown in card market activity, the economy experienced a more positive backdrop of softer food and durable goods prices and stronger GDP growth of 3.8%⁷ YoY. This growth was supported by strong visitor arrivals (up 13.9%)⁸ and robust growth in food, beverage and valuable gift categories⁹, along with steady leasing activity and moderate rental increases¹⁰.

In addition to these positive trends, S&P Global Market Intelligence¹¹ forecasts a gradual decline in the unemployment rate in 2026, potentially dropping to 3.44% on a seasonally-adjusted basis by the end of the year, which could spur a recovery in credit card demand. S&P Global Market Intelligence also anticipates positive GDP growth through 2026 and a modest rebound in retail spending next year after resuming YoY growth in the second quarter of 2025.

The anticipated improvement in the economic environment, as well as a 7% YoY increase in enquiries (credit demand) observed in Q3 2025, may help drive an increase in new credit activity in the last quarter of 2025. This is supported by findings in the Q3 2025 Hong Kong Consumer Pulse Study, where 48% of surveyed consumers said that they plan to apply for new credit or refinance existing credit within the next year – a 10% YoY increase.

“We have seen a sharp contraction in credit card originations as consumer demand has softened and lenders have shifted their strategies in response to some challenging economic indicators. However, pockets of opportunity remain for lenders who are positioned to respond to Hong Kong’s anticipated moderate sustained growth in the coming months and through the upcoming peak shopping seasons,” said Weihan Sun, principal of research and consulting for Asia Pacific at TransUnion. “Gradual improvements in consumer confidence, along with improved business sentiment, will likely support a rebound in demand for credit cards among consumers, along with greater appetite from lenders who wish to resume growth.”

Personal Loans’ Growth Skews Younger and More Digital

Lenders have expanded personal loan originations for three consecutive quarters, with younger borrowers driving higher activity. Total personal loan originations increased by 1.2% YoY in Q2 2025, with the average new loan value remaining steady. However, younger borrowers drove the majority of the activity, with originations among Gen Z consumers up by 14.0% YoY and Millennials up 1.3%. Gen Z borrowers accounted for 16.7% of personal loan originations, up from 14.7% one year ago, indicating their growing preference for this product as well as the continued expansion in the number of Gen Z consumers who are of credit-eligible age (18+).

Amid the mixed macro-economic conditions, traditional lenders remained cautious, with personal loan originations from traditional banks declining by 5.0% YoY with those from money lenders having grown marginally by 1.0%. However, personal loan originations from digital banks grew by 35.0% YoY, albeit off a small base. Digital banks accounted for 7.7% of personal loan originations during the quarter, up from 5.8% one year ago.

TransUnion’s recent study of wallet diversity among Hong Kong consumers found that consumers intending to expand the credit products they held beyond just credit cards were most likely to open new personal loans for that first additional product. The study also found that 58% of consumers who opened a personal loan as their first non-credit card product did so with a lender who was already represented in their wallet.

“Younger consumers are showing more interest in personal loans as their preferred product for addressing short-term credit needs for larger purchases, such as new appliances, or even for home improvements as Hong Kong’s property market becomes more accessible. Digital banks are responding to this demand, with their streamlined digital experiences addressing young consumers’ needs and preferences,” said Sun. “This trend also reflects a potential shift away from Hong Kong’s card-dominated credit market, as consumers increasingly understand that they can benefit from participating in diverse credit portfolios that best suit their life stage and financial needs. The key for sustainable growth for the Hong Kong credit ecosystem is to identify consumer preferences; address those needs responsibly; and help them manage through their life stages proactively."

Q3 2025 Metrics for Consumer Credit Products in Hong Kong 

i. Originations are viewed one quarter in arrears to account for reporting lag.         

ii. Serious-delinquency rates are 90 or more days past due for credit cards and 60 or more days past due for all other credit products.

iii. Delinquency data are reported at an account-level up to 150 days past due, excludes 150+ days past due and charge-offs.

“In the coming months, lenders in Hong Kong seeking to expand their portfolios can focus on more considered segmentation to identify and engage with resilient consumers. Previous experience shows that neither ‘blanket’ acquisition campaigns aimed at all consumers regardless of risk tier or need, nor shutting down credit access in times of economic headwinds, contribute positively to growth – a more considered and personalised approach will yield more profitable and sustainable results,” said Sun.

1 TransUnion's third Industry Insights Report for Hong Kong in 2025 is based on data from the Credit Reference Platform under Credit Data Smart (CDS), following the full migration by the end of November 2024. Future reports will continue to leverage data from this source

2 Origination figures are reported three months in arrears due to reporting lag

3 TransUnion CreditVision® risk score: Subprime = JJ to II; Near prime = HH to DD; Prime = CC; Prime plus = BB; Super prime = AA

4 Generations are defined as follows: Gen Z, born 1995–2004; Millennials, born 1980–1994; Gen X, born 1965–1979; and Baby Boomers, born 1944–1964 

5 Census and Statistics Department: Unemployment and underemployment statistics for July – September 2025 

6 Trading Economics: Hong Kong Youth Unemployment Rate

7 Hong Kong Economy: Latest Developments

8 CBRE: Hong Kong Figures – Retail Q3 2025

9 Government of the Hong Kong Special Administrative Region: Provisional Statistics of Retail Sales for September 2025

10 Midland Realty: Private residential rents rose further in June and are expected to reach a new peak in Q3 (only available in Traditional Chinese)

11 S&P Global Market Intelligence shared subscription-based data with TransUnion Hong Kong

• Hong Kong’s suspected digital fraud attempt rate was 2.7% in the first half of 2025
• The top three predominant causes of fraud losses identified by Hong Kong businesses were third-party fraud, account takeover, and scam or authorised fraud
• Retail exhibited the highest rate and year-on-year (YoY) rate increase in suspected digital fraud from Hong Kong among industries analysed, surpassing all other countries and regions in the study

Insights from the newly released TransUnion (NYSE: TRU) H2 2025 Update to the  Top Fraud Trends Report revealed that 2.7% of all attempted digital transactions where the consumer was in Hong Kong were suspected to be digital fraud¹ in the first half of 2025, lower than the global rate of 3.8%. Compared to a year ago in the first half of 2024, Hong Kong’s suspected digital fraud dropped from 3.8%, indicating positive progress in the city’s efforts to combat fraud.

Despite this improvement, fraud continues to pose significant financial risks to businesses in Hong Kong. According to a business survey conducted by TransUnion, which gathered insights from business leaders across six markets — Hong Kong, Canada, India, the Philippines, the United Kingdom and the United States, 200 Hong Kong respondents reported their companies lost an equivalent of 7.1% of annual revenues on average due to fraud in the past year, representing a total of HK$92 billion. In addition to financial losses, more than half (51%) of respondents said they were extremely or very concerned about the impact of fraud on their businesses, underscoring the continued importance of fraud prevention as a strategic priority.

Hong Kong businesses strengthen fraud defences, but confidence in fraud identification remains subdued

Hong Kong businesses are actively strengthening their defences against fraud. According to the same business survey, three quarters (75%) reported optimising their fraud detection models at least quarterly with 21% doing so monthly. Hong Kong also recorded the highest percentage of business leaders among surveyed markets reporting deploying large fraud operations teams with more than 20 analysts. However, these efforts did not fully translate into confidence, with only 56% of Hong Kong business leaders feeling extremely or very prepared to identify fraud attacks involving multiple channels, placing Hong Kong at the lowest confidence level in the study.

To dive deeper into the root causes of fraud losses, business leaders in Hong Kong were asked to identify the main contributors over the past year. Third-party fraud, involving the use of stolen identities to open accounts, was cited by 26% as the leading cause. This was followed by account takeover (22%), where unauthorised individuals take over someone’s online account, and scam or authorised fraud (18%), a dishonest scheme intended to deceive a person into giving up something of value. These findings indicated a strong prevalence of identity theft and unauthorised access.

Phone fraud emerged as a significant concern for both consumers and businesses

On the other hand, fraud also remained a persistent threat to consumers. According to TransUnion’s Consumer Pulse Study for Q2 2025, more than one-third (37%) of Hong Kong consumers reported being targeted by email, online, phone call, or text messaging fraud from February to May 2025, with 4% falling victim. Among those targeted, vishing (fraudulent phone calls meant to trick consumers into revealing data) was the most common scheme, affecting 32% of respondents.

Hong Kong business leaders have also acknowledged concerns around phone-related threats and reported actively monitoring associated risks, as reflected in TransUnion’s business survey. Close to 80% of business leaders expressed being extremely, very or moderately concerned about phones being compromised or taken over by fraudsters during the transmission of one-time passcodes. Similarly, 43% ranked phone number reputation (phone number attributes that may signal fraud such as type of phone, fraud history and identity linked to it) among their top three most important fraud prevention solutions, the highest among all surveyed markets.

“It is encouraging to see Hong Kong making progress in combating and preventing fraud, as highlighted in TransUnion’s latest Top Fraud Trends Report. However, as fraudsters continue to evolve and adapt, our data also showed that both businesses and consumers remain aware of increasingly sophisticated schemes such as identity-based fraud and phone-related scams,” said Devon Sin, chief product officer at TransUnion Asia Pacific. “To maintain vigilance, businesses must tailor their fraud strategies to local realities, striking the right balance across technology, processes and awareness to stay ahead of complex threats. At the same time, individuals should proactively safeguard and monitor their personal information through trusted tools to reduce vulnerability and stay ahead of evolving risks.”

Fraudsters shifted tactics to exploit vulnerabilities across different sectors

Compared to the first half of 2024, financial services demonstrated encouraging progress in fraud mitigation, with the suspected digital fraud rate for attempted transactions where the consumer was in Hong Kong declining by 21% YoY. The improvements were likely supported by the Hong Kong government's continued efforts in cyber defence and public education². However, fraudulent activities remain persistent in the retail industry — a reminder that fraudsters are constantly seeking vulnerabilities and will not hesitate to exploit emerging opportunities. Sustained vigilance across all industries remains essential.

In the first half of 2025, retail recorded the highest suspected digital fraud rate among industries analysed for transactions where the consumer was in Hong Kong at 19.4%, representing a sharp 155% YoY rate increase. This positioned Hong Kong with the highest suspected digital fraud rate and YoY rate increase in the retail sector among all markets analysed. This trend aligns with official data from the Hong Kong Police Force, which shows that the majority of online scams reported during the first half of 2025 were linked to online shopping and job advertisements³. The telecommunications sector recorded the second highest suspected digital fraud rate from Hong Kong at 8.9%, followed by the logistics sector at 7.9%, with notable YoY rate increases of 128% and 117% respectively.

When it comes to the consumer lifecycle, fraudsters targeted vulnerabilities at the early stages of the digital journey, particularly during account logins (such as login attempts and failed login events). The suspected digital fraud rate during this stage stood at 10.8%, more than double the global average of 4.3%, making it the riskiest stage within the digital journey. In contrast, the suspected digital fraud rate during account creation (3.8%) and financial transactions (0.3%) from Hong Kong remained below the global average, possibly reflecting the city’s stronger onboarding controls and robust payment security.

Suspected digital fraud rate from Hong Kong by industry, retail tops in rate and year-on-year change

 Source: TransUnion TruValidate™

"Fraudsters are highly adaptive. Even as awareness among businesses and consumers grows, cybercriminals continue to search for vulnerabilities across sectors and at every stage of the digital consumer lifecycle," added Sin. "Protecting the organisations and customers is non-negotiable. An enterprise-wide approach that leverages smarter fraud detection and breaks down fragmented systems is essential. Ultimately, strengthening each layer of defense and remaining agile to evolve as fast as fraudsters do will help businesses foster long-term resilience, minimise unnecessary customer friction and set the foundation for a more trusted digital economy."

TransUnion came to its conclusions about digital fraud and data breaches based on intelligence from its array of TransUnion fraud prevention solutions. Specific country and regional data in the report includes Botswana, Brazil, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Hong Kong, India, Kenya, Mexico, Namibia, Nicaragua, the Philippines, Puerto Rico, Rwanda, South Africa, Spain, the United Kingdom, the United States and Zambia. Download the TransUnion H2 2025 Update to the Top Fraud Trends Report for more information and insights about the global fraud trends.

1 The rate or percentage of suspected digital fraud attempts reflects those which TransUnion customers determined to meet one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) fraudulent upon customer investigation, or 4) a corporate policy violation upon customer investigation — compared to all transactions assessed. The country and regional analyses examined transactions in which the consumer or suspected fraudster was located in a select country or region when conducting a transaction. Global statistics represent every country worldwide and not just the selected countries and regions.

2 Hong Kong Monetary Authority: HKMA, HKPF and HKAB jointly announce new measures to strengthen the response to fraud and money laundering

3 HK Government Press Release: Remarks by Secretary for Security at media session after Fight Crime Committee meeting (with video) (only available in Traditional Chinese)

Insights from TransUnion’s (NYSE: TRU) Hong Kong Industry Insights Report for Q2 2025¹ show that the credit market experienced growth in personal loans and mortgage originations during the quarter, while credit card and revolving line activities declined significantly. These declines in new consumption-led products were likely driven by consistently elevated unemployment across the population, especially among younger consumers², while older cohorts appeared to shift their focus towards maintaining larger property loans.

Credit card originations during Q1 2025 declined by 17.9% year-over-year (YoY) while enquiries fell by 2.5%³. This signalled weaker demand and, more importantly, increased lender caution towards new card acquisitions. Due to lower originations, total open credit card accounts at the end of Q2 2025 fell 1.5% YoY.

From a borrower risk perspective, new card originations by subprime⁴ consumers rose 9.9% YoY, albeit from a low base and primarily driven by money lenders. All other risk tiers recorded double-digit decreases. A similar trend was observed in the existing credit portfolio, where the volume of cards held by subprime borrowers increased by 8.7% YoY – an unusual scenario in this typically risk-averse market.

“The growth in subprime cardholders may be an indication that lenders are seeing fewer high-quality prospects in the market,” said Weihan Sun, principal of research and consulting for Asia Pacific at TransUnion. “It might also reflect a shrinking pool of borrowers who meet the appetite of traditional lenders, which may warrant attention. At the same time, high credit card ownership among prime plus and super prime segments is further constraining growth opportunities for lenders.”

With growth opportunities narrowing among prime segments, attention is shifting to subprime borrowers. Delinquencies, measured as the percentage of accounts with 90 or more days past due (DPD), remained steadily low at 0.03%. However, the continued growth in new subprime accounts is worth closer monitoring, as these are more likely to carry higher risk of delinquencies in the future.

Delving more deeply into the slowdown in credit card growth, originations among Gen Z consumers⁵ declined by 1% YoY, with only money lenders showing YoY card growth among issuer types. This slowed new card activity among younger consumers was likely, in part, due to youth unemployment having reached a high of 6.8% in Q2 2025² – the highest since December 2022 – as recent graduates entered a saturated job market.

“Elevated youth unemployment is a leading indicator for what lenders can expect of credit market growth activity over the next six to 12 months,” Sun said. “Lenders should revisit their originations strategies in the coming months and identify growth opportunities among the younger generation, given the reduced participation and demand from Gen Z borrowers.”

Revolving lines growth slowed

Following significant growth during 2024, revolving line originations declined by 17.8% YoY in Q1 2025, signalling waning demand, likely brought about by subdued lender campaign activity due to climbing delinquencies. Account-level delinquencies (60+ DPD) were up 14 basis points (bps) YoY to 0.51%, while consumer-level delinquencies over the same period increased 26 bps to 1.06%.

Revolving lines are particularly popular among younger consumers because of their convenience, with quicker applications that enable immediate liquidity, and typically have smaller ticket sizes. Given the product concentration among younger borrowers, Hong Kong’s current youth unemployment situation has likely been a driver of slower growth in revolving lines.

This pullback has impacted the share of accounts issued by digital banks, who have been successful in attracting younger consumers in recent years. Originations by digital banks fell by 45.4% YoY in Q1 2025. Meanwhile, money lenders capitalised on opportunities for integration into e-wallets on online retail platforms, resulting in 44.4% YoY originations growth and reflecting a significant share shift in the second quarter.

In contrast, traditional banks, which do not participate significantly in this product, saw a 34.5% YoY growth in originations off a low base while targeting lower-risk, higher-ticket borrowers: digital banks’ typical revolving lines were between HK$5,000 and HK$8,000, while those offered by traditional banks are usually approximately HK$200,000.

“Revolving line growth by traditional banks is largely driven by consumers seeking flexible liquidity for unforeseen needs. These higher-value loans are typically opened with traditional banks that are more willing to extend larger credit limits. While consumers may not draw down on these loans immediately, they value having access for emergencies or investment opportunities,” Sun said. “Lenders looking to expand in this space should align risk-based pricing with their appetite and strengthen account management using data-driven early warning indicators. A comprehensive toolset that quickly surfaces shifts in risk and opportunity can support better acquisition strategies and inform decisions across credit limits, interest rates and payment terms.”

Mortgage market grew, reflecting increased consumer confidence

The slowdown in consumption-led credit originations for credit cards and revolving lines may be partly attributed to Hong Kong residents responding to policy changes that encourage property sales, such as stamp duty cuts, reduced transaction costs⁶, and the availability of fixed-rate mortgages. These incentives have prompted consumers to redirect their disposable income toward servicing mortgages or to home improvements.

In Q2 2025, mortgage origination volumes increased by 4.6% YoY, while the number of accounts increased by 3.3%, according to the Hong Kong Monetary Authority (HKMA)⁷. However, the average value of new mortgages declined by 9.5%, and total outstanding balances increased by just under 1%.

With thousands of new flats, many attractively priced, expected to be available during 2025, increased activity in the region’s property market is likely to improve consumer confidence.

Modest gains in personal loans

Personal loan originations grew by 2.1% YoY in Q1 2025 as lenders met increasing demand, with total account volumes and outstanding balances showing modest gains of 1.2% and 0.9% YoY, respectively. Among all personal loan accounts, subprime volume increased by 7.8%, likely suggesting greater appetite among higher-risk consumers seeking liquidity or aiming to diversify their wallets.

While lenders are taking on more risk by expanding access to personal loans, their strategy of offering lower value loans (average new loan value decreased by 2.0% YoY in Q1 2025) has contributed to improved delinquency performance: 60+ DPD account-level delinquencies fell by four bps to 0.84%, while consumer-level delinquencies over the same period improved by seven bps to 0.98%. This marks the third consecutive quarter of improvement, reinforcing lender confidence in further expansion.

“Lenders seeking to unlock more value among consumers who hold a single credit product should focus on deepening engagement through retention strategies and targeted cross-selling campaigns,” said Sun. “By embedding early default detection and monitoring tools into underwriting processes, lenders can proactively manage risks and strengthen portfolio resilience, laying the foundation for sustainable growth in a more diverse credit landscape.”

Q2 2025 Metrics for Major Consumer Credit Products in Hong Kong

 i. Originations are viewed one quarter in arrears to account for reporting lag. 

ii. Serious-delinquency rates are 90 or more days past due for credit cards and 60 or more days past due for all other credit products. 

iii. Delinquency data are reported at an account-level up to 150 days past due, excludes 150+ days past due and charge-offs.

iv. Mortgage data sourced from the HKMA

1 TransUnion's second Industry Insights Report for Hong Kong in 2025 is based on data from the Credit Reference Platform under Credit Data Smart (CDS), following the full migration by the end of November 2024. Future reports will continue to leverage data from this source

2 Census and Statistics Department: Table 210-06103 : Unemployment rate and underemployment rate by age and sex

3 Originations and enquiries are viewed one quarter in arrears to account for reporting lag

4 TransUnion CreditVision® risk score: Subprime = JJ to II; Near prime = HH to DD; Prime = CC; Prime plus = BB; Super prime = AA

5 Generations are defined as follows: Gen Z, born 1995–2004; Millennials, born 1980–1994; Gen X, born 1965–1979; and Baby Boomers, born 1944–1964 

6 info.gov.hk: Government welcomes passage of Stamp Duty (Amendment) Bill 2025

7 According to the Hong Kong Monetary Authority releases on mortgage data from April to June 2025

With 20 years of experience in the banking industry spanning both conventional and digital institutions, Devon brings a strong track record of integrating traditional banking with innovative solutions to enhance user experiences through customer-centric strategies. He joins TransUnion from ZA Bank, Hong Kong’s first digital bank, where he was a founding member and most recently served as the Alternate Chief Executive and General Manager of Business Banking and Lending. Prior to that, he also served in leadership roles at Standard Chartered Bank and DBS Bank. Devon holds a bachelor’s degree in International Business from the Business School of the Chinese University of Hong Kong (CUHK).

With a strong focus on innovation and customer empowerment, Devon’s expertise in digital transformation aligns seamlessly with TransUnion’s commitment to delivering cutting-edge, insight-driven products and solutions that expand financial opportunities for customers and consumers in a secure and trusted environment. Under his leadership, TransUnion will further advance its product proposition and analytics capabilities in Asia Pacific, reinforcing its role in promoting financial inclusion through data and insights across the region.

“We are pleased to welcome Devon at a pivotal time for Asia Pacific, marked by the post-Credit Data Smart (CDS) era in Hong Kong and a fast-growing economy in the Philippines,” said Marie Claire Lim Moore, Asia-Pacific Regional President and Hong Kong CEO at TransUnion. “As market dynamics shift, it is essential for TransUnion to scale our product, data and analytics capabilities by leveraging global expertise and advanced technologies to better serve customers and consumer. Devon’s unique perspective as a former customer and partner gives him an unparalleled understanding of how our solutions can effectively address evolving market needs. We are confident his leadership will be a strategic accelerator for our growth and further our mission of delivering Information for Good.”

Commenting on his appointment, Devon said: “It is a true honour to join TransUnion, a global leader with a strong focus on innovation, data integrity and empowering smarter decisions through actionable insights. This is an exciting time, as Asia Pacific undergoes rapid digitalisation and evolving consumer expectations. The demand for trusted, forward-looking credit and fraud solutions has never been more crucial. Having witnessed the meaningful impact of TransUnion’s proprietary data and technology in supporting financial inclusion and resilience, I am excited to expedite innovation to deliver even greater value to consumers and businesses. Together, we will strengthen the region’s financial ecosystem, foster deeper trust and unlock more secure, inclusive opportunities that benefit individuals, institutions and the broader economy.”

• Prevailing economic uncertainties prompted cautious income growth expectations across generations over the next 12 months
• Inflation of everyday goods, economic slowdown and job security were the top three concerns affecting household finances cited by consumers
• More consumers planned to apply for or refinance credit, but accessibility gaps remained especially for older cohorts

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today released its Consumer Pulse Study for Q2 2025. The report revealed that financial confidence among Hong Kong consumers remained cautious and hard-earned. In the face of a complex economic environment, consumers were adjusting their budgeting behaviours through a dual-track approach of short-term caution with long-term planning to enhance financial resilience. While consumers exhibited a greater appetite for credit during times of uncertainty, perceived access still varied by generation, with Gen Z feeling better served than the older cohorts.

Macroeconomic uncertainties likely hampered confidence in income growth prospects

In Q2 2025, 44% of surveyed consumers in Hong Kong reported an increase in income over the past three months, which is a significant improvement from 29% recorded in the same period last year. This upward trend was observed across all generations (Gen Z, Millennials, Gen X, and Baby Boomers)¹, with Gen Z leading the way as 56% reported an income boost, marking a substantial year-over-year (YoY) increase of eleven percentage points.

However, confidence in future income growth appeared to have been dampened by macroeconomic uncertainties. Fifty-two percent of Hong Kong consumers anticipated that their income would either remain the same or decrease over the next 12 months. When asked about their top financial concerns during the same period, many cited the ongoing global tariff war.

This cautious sentiment was particularly prevalent among Millennials, Gen X, and Baby Boomers. In stark contrast, 60% of Gen Z consumers expected their income to increase in the year ahead, reflecting that financial progress remained evident within certain segments, which are often led by younger earners carving their own paths.

Financial pressures drove strategic budget adjustments among consumers

According to the study, respondents saw inflation of everyday goods (57%), economic slowdown (55%), and job security (54%) as the biggest concerns affecting household finances over the next six months. These concerns reflect the rise in the territory’s inflation rate during the first five months of the year², and the upward trend in unemployment since February 2025³. Against this economic backdrop, nearly a quarter (24%) of consumers anticipated difficulties in paying at least one of their current bills and loans in full, up from 20% a year ago.

Alongside financial uncertainties, a notable shift in household budgeting behaviour was observed. Over the past three months, 39% of consumers reported cutting back on discretionary spending such as dining out and travelling, indicating a short-term solution to immediate potential financial pressures. Meanwhile, 39% reported saving more for emergencies, 25% increased retirement contributions, and 20% accelerated debt repayment, reflecting a focus on long-term financial resilience.

While challenges remain, the local market continues to exhibit some encouraging signs, including heightened activity in the property sector and significant growth in the stock exchange, particularly with a rebound in IPO activities⁴. Additionally, interest rates in Hong Kong are projected to stay low, and further US interest rate cuts⁵ are anticipated in the second half of 2025.

“Despite ongoing economic uncertainties, Hong Kong consumers are demonstrating a pragmatic and resilient mindset, balancing short-term caution with long-term financial planning. It is clear that consumers are adapting to financial uncertainties through prudent strategies such as increased emergency savings and accelerated debt repayment, which are likely to foster greater financial resilience,” said Weihan Sun, principal of research and consulting for Asia Pacific at TransUnion. “These insights underscore the importance of tailored financial solutions that support consumers across generations as they navigate an evolving economic landscape.”

Credit inclusion improved but access and ease still trail behind demand

In addition to cautious financial strategies, consumers increasingly saw access to credit as essential for achieving financial mobility, particularly during times of uncertainty. A strong majority (96%) agreed that credit and lending product access is important for achieving their financial goals. This sentiment was reflected in consumers’ borrowing intentions, with 42% planning to apply for or refinance credit in the coming year, up from 30% in Q2 2024. While demand is expected to grow further as interest rates decline, a notable increase in credit interest was seen among older cohorts, as Gen X (45%) and Baby Boomers (28%) showed increasing intention to seek new credit over the past five quarters.

Despite rising demand, less than half of Gen X and Baby Boomers (48% and 44% respectively, compared to 55% overall) believed that they have sufficient access to credit and lending products, indicating that access barriers remain. Additionally, 42% of consumers ultimately abandoned their credit application or refinancing plans, primarily due to high costs (30%), burdensome processes (30%), and long decision times (28%). These challenges present clear opportunities for lenders to enhance the overall credit journey and better serve unmet demand.

Adding to this, while 63% of consumers believed they would be approved for a credit or lending product when needed, more than one quarter (27%) still did not know their credit score. This gap underscores how limited credit awareness may hinder consumers’ efforts to maintain credit health and potentially lead to misconceptions about their financial readiness.

“The vast majority of consumers view credit as essential to achieving their financial goals and they plan to engage with credit more than ever in the year ahead,” said Sun. “Yet, a noticeable gap remains between demand and perceived access, with older generations reporting greater challenges. To bridge this gap, lenders could streamline processes and design more inclusive solutions that reflect the diverse needs across age groups. At the same time, with over one in four consumers unaware of their credit score, it is clear that improving credit awareness and encouraging proactive credit health management are critical in helping them to unlock more financial opportunities.”

TransUnion’s Q2 2025 Consumer Pulse Study consisted of a survey of 968 adults 18 years of age and older residing in Hong Kong between 5 May and 15 May 2025. This quarterly study examines shifting consumer attitudes and behaviours based on the dynamics of income, debt, and identity theft. For more information, please view the full Consumer Pulse Study Q2 2025 Report.

¹ Generations are defined in this research as follows: Gen Z, 18–26 years old; Millennials, 27–42 years old; Gen X, 43–58 years old; and Baby   Boomers, age 59 and above

² Census and Statistics Department: Consumer Price Indices for May 2025

³ news.gov.hk: Jobless rate rises to 3.5%

⁴ The Hong Kong Monetary Authority: Recent dynamics in the Hong Kong dollar market

⁵ The Hong Kong Monetary Authority: HKMA’s Response to US Fed’s Interest Rate Decision

• Hong Kong’s suspected Digital Fraud rate remains 10% higher than global average
• Communities, retail and financial services are most targeted in Hong Kong among industries analysed
• With their frequent digital device use, Gen Z (51%) said they’re most targeted by fraud schemes while Millennials reported being most victimised   

Research from the H2 2024 Update to the State of Omnichannel Fraud Report published by TransUnion (NYSE: TRU) finds that 5.7% of all attempted digital transactions where the consumer was in Hong Kong were suspected to be Digital Fraud in the first half of 2024 (H1 2024)[1]. This figure is 10% higher than the global average of 5.2%. The report analysis also revealed the ongoing challenges in combating fraud across industries.

Online forums and dating sites are top targets of suspected Digital Fraud in Hong Kong, mirroring global trends

In H1 2024 the communities industry, which includes web properties such as online forums and dating sites, recorded the highest suspected Digital Fraud rate among sectors analysed globally. It had the highest rate of suspected Digital Fraud in seven of the 19 countries and regions surveyed when the consumer is located in those areas during transaction, including Hong Kong. This sector faced a suspected Digital Fraud rate globally of 11.5%, while Hong Kong experienced an even higher rate of 15% in H1 2024. TransUnion's communities customers worldwide identified profile misrepresentation as the most common type of Digital Fraud they have encountered during this period.

Account creation posed the highest risk in the digital communities customer journey in Hong Kong. In fact, 29% of all attempted digital account creation transactions where the consumer was in Hong Kong were identified as suspected Digital Fraud in H1 2024, increasing 126% from H1 2023. This could be driven by bad actors using synthetic or stolen identities to open accounts. These findings align with recent reports from the Hong Kong police detailing over 500 fraudulent activities linked to fake compensated dating scams in H1 2024 involving losses of HK$243 million[2].

The retail sector reported the second highest suspected Digital Fraud attempt rate in Hong Kong at 9.5% followed by financial services at 5.5% in H1 2024. Financial services saw the largest YoY jump in the rate of suspected Digital Fraud from H1 2023 in Hong Kong among industries analysed at 29%. In the face of escalating concerns, Hong Kong’s central banking institution, the Hong Kong Monetary Authority (HKMA), is moving forward with its proposal to allow banks to share information to combat fraud with legislative amendments[3].

These initiatives are particularly important given the surge in financial losses YoY over the first six months of the year[4], echoing TransUnion’s findings that the volume of suspected Digital Fraud attempts coming from Hong Kong in financial services soared 78% from H1 2023 to H1 2024.

Communities had the highest rate of suspected Digital Fraud in H1 2024 and financial services reported the highest YoY rate increase in Hong Kong

Source: TransUnion TruValidate™

“Findings from our latest report reveal that fraudsters most often seek out targets on online communities such as forums, dating apps or messaging services globally,” said Jerry Ying, chief product officer at TransUnion Asia Pacific. “Despite the good-faith efforts that are being undertaken by local authorities and institutions to identify and prevent fraud to date, consumers and businesses confront increasingly sophisticated cybercriminals who weaponise identity data at scale to execute fraud schemes. This highlights the pressing need for businesses to continuously enhance their capabilities to safeguard consumers from online deception across industries.”

More than half of Gen Z consumers in Hong Kong report having been targeted by fraud schemes

Suspected consumer fraud remains a concern, as highlighted in TransUnion’s Q3 2024 Hong Kong Consumer Pulse Study. This survey of 860 Hong Kong adults from 16-29 July uncovered that 39% of respondents reported being targeted by online, email, phone call and text messaging fraud attempts over the past three months, with 5% saying they fell victim.

Among generations[5] surveyed (Gen Z, Millennials, Gen X and Baby Boomers), Gen Z and Millennials said they were targeted the most. Specifically, 51% of Gen Z respondents reported being targeted in the last three months, a six-percentage point rise from the Q3 2023 Study. This higher percentage than other generations may be attributed to Gen Z's frequent engagement with digital devices, which makes them particularly vulnerable to being targeted. Meanwhile, 41% of Millennials reported being targeted with fraud and had the highest rate across generations of those who said they fell victim at 7%.

Among all generations, of those reporting being targeted vishing (fraudulent phone calls meant to trick consumers into revealing data) was the most common scheme at 36%, followed closely by phishing (fraudulent emails, websites, social posts, QR codes, etc. aimed at stealing data) at 33%.

“While Digital Fraud may fluctuate, the prevailing trends in data breaches and scams have an unmistakable impact on consumers. Despite Gen Z and Millennials being particularly vulnerable demographics in the digital era, all consumers rely heavily on businesses to ensure that they enjoy a secure digital experience,” added Ying. “It is therefore imperative for businesses across industries to employ a strategy of continuous innovation and friction-right fraud prevention through technologies such as identity verification, IP intelligence, device reputation and synthetic identity detection that will all be conducive to enhancing consumer trust and deliver better business results."

TransUnion came to its conclusions about Digital Fraud based on intelligence from its identity and fraud product suite that helps secure trust across channels and delivers efficient consumer experiences – TransUnion TruValidate. The rate or percentage of suspected Digital Fraud attempts reflect those that TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) fraudulent upon customer investigation, or 4) a corporate policy violation upon customer investigation — compared to all transactions it assessed for fraud. 

Download the TransUnion H2 2024 Update to the State of Omnichannel Fraud Report to learn more. Specific country and regional data in the report include Botswana, Brazil, Canada, Chile, Colombia, the Dominican Republic, Hong Kong, India, Kenya, Mexico, Namibia, the Philippines, Puerto Rico, Rwanda, South Africa, Spain, the United Kingdom, the United States and Zambia.

[1] The first half of the year or H1 refers to January 1 to June 30

[2] Hong Kong Police: Online romance scams

[3] HKMA: Conclusions of the Public Consultation on a Proposal for Information Sharing among Authorized Institutions to Aid in Prevention or Detection of Crime

[4] HK Government Press Release: Police Anti-Deception Coordination Centre launches Anti-Scam Month campaign

[5] Generations are defined in this research as follows: Gen Z, 18–26 years old; Millennials, 27–42 years old; Gen X, 43–58 years old; and Baby Boomers, age 59 and above.

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today released its Consumer Pulse Study for Q3 2024 which shows that many Hong Kong consumers expressed a promising financial outlook. In the TransUnion survey of adult Hong Kong consumers in Q3 2024, a growing number of those surveyed (35%) reported that their household income had increased in the last three months – a significant seven-percentage point year-over-year (YoY) jump from Q3 2023.

This optimism is most pronounced among Gen Z¹ consumers, with more than half (55%) indicating an increase in income, compared to 45% in Q3 last year. At the same time, this age group showed a significant drop from 41% to 30% from Q3 2023 to Q3 2024 in those who reported their income stayed the same in the past three months. All these insights indicate that there is a shift among younger consumers toward greater financial mobility.

Looking ahead, growing confidence in future earnings persists among Hong Kong consumers. In Q3 2024, 42% of all respondents anticipated their income will increase over the next 12 months, up seven-percentage points YoY. Conversely, the percentage of consumers expecting an income decrease in the next year dropped three-percentage points YoY to 15%.

Cautious optimism with mixed sentiment

Despite the positive sentiments about income, Hong Kong consumers expressed mixed views about their financial outlook. One quarter (25%) in Q3 2024 said they won’t be able to pay at least one of their current bills and loans in full, up from 17% YoY. This shift highlights a potential growing anxiety about financial stability among consumers, which could be influenced by external economic factors such as inflation and market fluctuations. Although the Hong Kong Monetary Authority (HKMA) has recently reduced the city’s base rate following the decision of the US Federal Reserve², consumers will need to remain resilient and patient until potential further cuts to make the cost of credit more manageable, particularly for borrowers who are struggling. 

To better understand these nuanced consumer sentiments, TransUnion asked respondents to point out their biggest household financial concerns for the next six months. The results show that inflation for everyday goods is the leading concern, with 60% citing it in their top three biggest concerns affecting their household finances in the next six months, followed by a recession (58%) and jobs (49%). Digging a little deeper into the recession concerns, 44% of those surveyed believe Hong Kong is currently in a recession, a five-percentage point increase from the previous quarter.

With concerns around recession and inflation high, 39% of consumers said they saved more in an emergency fund and 23% increased their retirement savings in the past three months, indicating a shift towards prioritising financial security amidst uncertainty. These consumers are well-positioned to benefit from the higher interest rates in Q3 2024, especially in fixed deposits, where recent rate cuts have not affected returns. Consumers also anticipate more controls in spending, with 40% saying that they plan to reduce discretionary spending such as dining out, travel and entertainment. This cautious sentiment is reflected in a 10% YoY decline in business for Hong Kong restaurants during this year’s Mid-Autumn Festival³. 

“Our latest Consumer Pulse Study for Q3 2024 reveals a complex landscape with cautious optimism among Hong Kong consumers. While there is a notable increase in income and confidence especially among the younger generation, we also see rising concerns about financial stability. However, the proactive steps consumers are taking – including prioritising savings and adjusting their spending habits – demonstrate their commitment to maintaining financial resilience in the face of potential uncertainties. This adaptability is a positive sign for a mature market," said Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion.

Stronger credit demand anticipated

In a time of economic uncertainty, the flexibility offered by credit is one of the important opportunities to support financial resilience. In fact, 51% of consumers said having access to credit and lending products is extremely or very important to achieve their financial goals, an increase from 47% in Q3 2023.

Consumers expressed higher interest in credit in Q3 2024, with 38% of respondents saying that they plan to apply for new credit or refinancing existing credit, in the next year, compared to 35% in Q3 last year. Among those who plan to apply for new credit or refinancing existing in the next year, 45% said they’ll apply for a new credit card, and nearly one quarter (23%) will request an increase in available credit for an existing credit card. More than one third (34%) said they’ll apply for a new personal loan and 18% are planning to refinance a personal loan. Gen Z showed the strongest appetite for credit, with close to half (48%) saying they’ll apply for new credit or refinance existing credit in the next year – up from 43% one year ago, while 41% of Millennials, 38% of Gen X and only 13% of Baby Boomers expressed similar plans. With the recent September rate cut, a further uptick in credit activities is expected, as such cuts historically lead to increased borrowing.

The demand for new mortgages increased significantly in Q3 2024 compared to the same time last year. Among Hong Kong consumers who plan to apply for new credit or refinancing existing credit in the next year, one in five (20%) said they’ll plan to apply for a new mortgage, up from 14% a year ago and from 13% in Q2 2024. This increase is a positive sign for the property market and comes following the introduction of countercyclical macroprudential measures for property mortgage loans by the HKMA in February this year⁴.

Despite this appetite for credit, in Q3 2024 more than one third (34%) of consumers said they considered applying for new credit or refinancing existing credit, but ultimately decided not to, an increase from 30% a year ago. The reasons for this abandonment are multifaceted, with 26% citing the cost of new credit or refinancing being too high, another 26% indicating that it takes too long to get a decision, and similarly 26% saying it took too much work to apply. Additionally, 24% of respondents reported finding an alternative funding source.

 “The positive outlook on household income, along with cautious consumer sentiment and an anticipated lower interest rate environment, creates a promising landscape for growth in Hong Kong’s credit market. The increasing demand for new credit products, particularly among Gen Z consumers, presents exciting business opportunities for financial institutions,” said Sun. “However, challenges remain that can impede consumers from applying for new credit. We urge lenders to actively address these barriers to empower more consumers to explore credit options while at the same time enhancing financial inclusion.”

TransUnion’s Q3 2024 Consumer Pulse Study consisted of a survey of 860 adults 18 years of age and older residing in Hong Kong between 15–31 July, 2024. This quarterly study examines shifting consumer attitudes and behaviours based on the dynamics of income, debt, and identity theft. For more information, please view the Consumer Pulse Study Q3 2024 Infographics. 

1 Generations are defined in this research as follows: Gen Z, 18–26 years old; Millennials, 27–42 years old; Gen X, 43–58 years old; and Baby Boomers, age 59 and above.

2 The Hong Kong Monetary Authority: Adjustment of Base Rate, Sep 2024

3 RTHK: Restaurants expect 10pc drop in Mid-Autumn sales, Sep 2024

4 The Hong Kong Monetary Authority: Countercyclical Macroprudential Measures for Property Mortgage Loans, Feb 2024

Consumer demand for new credit cards in Hong Kong remained subdued towards the end of 2023 with consumers holding sufficient cards in wallet to meet their needs. However, growing credit card balances show that they are using their existing cards more, with lenders extending additional capacity to borrowers during the first quarter of 2024. These are some of the findings of TransUnion (NYSE: TRU) Hong Kong’s latest Industry Insights Report, which provides lenders with insights into the current trends driving the local credit market.

Credit card enquiries – a measure of consumers applying for new cards – decreased by 8% year-over-year (YoY) in Q4 2023, and origination volumes decreased by 20% YoY over the same period. However, during Q1 2024, outstanding balances increased by 8.6%, and average balances increased by 7.5%, indicating that consumers are increasingly using their existing cards in the current environment. Enquiry and origination data are reported a quarter in arrears to account for the reporting lag on new accounts opened.

“Consumers continued to leverage their existing credit lines, building balances to meet their consumption needs during the first quarter of 2024, and extending value within those cards’ loyalty programmes rather than seeking to add new cards to their wallets,” said Weihan Sun, principal of research and consulting for Asia Pacific at TransUnion. “This presents lenders with the opportunity to leverage rewards programmes and other retention strategies to attain or retain the position of consumers’ top-of-wallet card, particularly at a time when consumers are using their cards more.”

Money lenders are becoming increasingly dominant in Hong Kong’s personal loan market

Personal loan originations decreased by 8.7% YoY during Q4 2023, despite higher demand for this product as evidenced by a 4.0% YoY increase in enquiry volumes. At the same time, the average new loan amount issued increased by 2.9% YoY as lenders shifted a larger share of new originations to lower risk borrowers, who typically receive larger loan amounts. For personal loans, originations by the highest risk subprime¹ borrowers tier fell 5.6%, while near prime grew by 4.8%. This shift in the borrower risk distribution on new loans might reflect a change in lender appetite as they focus on less risky segments due to a slight uptick in delinquencies for this product. Both account-level and consumer-level delinquencies (measured at 60 or more days past due) increased one basis point YoY in Q1 2024, though overall delinquency rates remain below the 1% level for both measures.

The report looked further at different segments of the personal loan market based on loan origination amounts: loans less than HK$150,000, loans between HK$150,000 and HK$300,000, loans exceeding HK$300,000. Each of these tiers displayed unique characteristics and are served by a different mix of lender types.

The lowest ticket value loan (less than HK$150,000) comprised 17% of active personal loans in Hong Kong in Q4 2023. At the same time, these smaller ticket loans represented 27% of recent originations and 25% of the consumer base holding personal loans – nearly two thirds (62%) of whom are Gen Z². This loan category was mostly serviced by money lenders, who issued 80% of loan originations for the lowest ticket range in the same quarter, while only a 10% share was held by traditional banks and 10% by virtual banks. Within the lowest ticket range, 59% of personal loans were granted to subprime borrowers.

The largest share of outstanding personal loans (67%) was in the mid-size ticket tier (HK$150,000 to HK$300,000), with that tier representing 48% of new originations and 54% of the consumer base holding personal loans – 61% of whom are Millennials. In line with money lenders’ business strategy of attracting customers in this generation, two thirds (66%) of new loans in this middle-size tier were granted by money lenders, with less than one third (27%) being granted by traditional banks and 7% by virtual banks. Of these mid-size ticket loans, 18% were granted to subprime borrowers, a much lower share than for the small-ticket loan tier.

Larger loans, in excess of HK$300,000, were mostly dominated by traditional banks, with 88% of all originations in this tier in Q4 2023, with 11% being issued by money lenders and just 1% by virtual banks. These larger-ticket loans represented 25% of all personal loan originations in Q4 2023, with smaller shares of the total active loan market (16%) and of the consumers holding personal loans (21%). Only 2% of large ticket loans were granted to subprime borrowers, in line with the heavy lender concentration in this segment by banks, which tend to focus on better risk consumers.

Money lenders have actively targeted lower amount loans, aligned to their business model, and have built significant brand loyalty, as evidenced by the number of repeat borrowers choosing their products growing over time, leading to them winning a greater share of the small and mid-size loan tiers.

Chart 1: Origination Share of Repeat Borrowers

“The personal loans space, in particular for small- and medium-ticket loans, is increasingly dominated by money lenders, which represents significant repeat borrowing opportunities as these smaller-ticket loans tend to have shorter durations and turn over relatively quickly,” said Sun. “Furthermore, personal loans remain a sizeable organic new-to-product opportunity, with one in four originations driven by new-to-product consumers – those who have never opened a personal loan previously – as they seek liquidity to meet their growing consumption needs. These needs can include making large purchases or funding home improvements, especially as lower interest rates on personal loans hold more appeal for consumers paying off purchases over time than credit cards, which generally carry much higher interest rates.”

According to TransUnion’s Q1 2024 Consumer Pulse survey, 38% of Gen Z borrowers and 32% of Millennials are planning to apply for new credit or to refinance existing credit over the next year. At the same time, 39% of Millennials who intend to seek credit said that they intend to apply for a new personal loan in the next year, a view shared by 26% of Gen Z survey respondents. This renewed confidence in credit indicates growth opportunities for lenders to build and maintain loyalty, and further expand their existing relationships with consumers who are shopping around for the best interest rates and rewards, and the quickest turnaround time on approvals.

Deteriorating vintages in revolving lines demand continued monitoring

Revolving line of credit, as a product, is more concentrated within near prime and subprime consumers than for other credit products like credit card and mortgage. While higher delinquency rates are expected for these riskier borrowers, the report reveals that recent vintages of new revolving line originations by these riskier borrowers are performing worse, indicating an adverse selection phenomenon.

Table 1: Performance of revolving line originations at 12 months on book

“More recent revolving line vintages for riskier borrowers have performed worse than pre-pandemic 2019 counterparts, likely because consumers are leveraging credit and balances have continued to build, potentially putting a strain on consumers’ wallets. However, we are seeing new lenders with different low-cost models entering the market who are more willing to cater to borrower risk segments that have previously been excluded, with the newer offerings accommodating a wider spectrum of consumers’ needs,” Sun said.

The revolving line landscape has shifted over the last few years, with virtual banks’ share of originations growing from 54% in Q4 2021 to 68% in Q4 of 2023. Over the same time, traditional banks’ share of these originations has declined from 11% to 4%, with money lenders having decreased from capturing more than one third (36%) of this market in 2021 to 27% in Q4 2023.

Chart 2: Origination distribution by lender type

“Lenders continue to seek new opportunities to engage with consumers in the market, which in turn has likely changed the borrower profile as more consumers in higher-risk credit tiers are now participating in products like revolving line,” he added. “Lenders need to be able to price for the additional risk at hand and monitor the early warning signs and indicators to enable greater predictability of delinquencies, and hence sustain smart growth for this product.”

While the risk distribution among virtual bank originations has remained relatively constant over the last two years, it has shifted significantly among traditional banks and money lenders. Above prime borrowers have migrated away from money lenders, seemingly moving to traditional banks instead, which can often offer better interest rates to lower risk borrowers. At the same time, traditional banks have maintained their low exposure to subprime borrowers seeking revolving lines to 1% over that time and reduced their exposure to near prime consumers (from 23% to 17% over the same period), indicating a lower risk appetite.

Chart 3: Risk distribution of revolving line originations by lender type

Consumers continue to leverage their existing credit, leading to greater balance growth with increased spend in retail and travel – retail alone saw increases of 0.9% in January and 1.9% in February, with private expenditure rising 1% YoY in the first quarter³.

“In this context of continued growth in Hong Kong, untapped opportunities remain for lenders to find sustainable growth within their existing portfolios, along with building loyalty that will attract repeat borrowing with the same lender,” said Sun.

¹ TransUnion CreditVision® risk score: Subprime = JJ to II; Near prime = HH to DD; Prime = CC; Prime plus = BB; Super prime = AA

² Generations are defined as follows: Gen Z, born 1995–2004; Millennials, born 1980–1994; Gen X, born 1965–1979; and Baby Boomers, born 1944–1964

³ news.gov.hk - Economy grows 2.7% in Q1

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today announced that consumers can now obtain their free credit report from the company in parallel with the launch of “Credit Data Smart” (CDS), a multiple credit reference agency operating model introduced by the Industry Associations[1].  

Under CDS, each Hong Kong consumer is entitled to receive a free credit report from TransUnion once every twelve months. TransUnion encourages consumers to take advantage of this opportunity and regularly monitor their credit report. Maintaining a healthy credit profile could help consumers to effectively manage their personal finances, access wider opportunities and achieve great things. By staying vigilant through regular monitoring, consumers can make more informed financial decisions and take proactive steps to improve their creditworthiness. This, in turn, enables them to pursue important life goals such as buying property, starting a new business, or finding a new job. Additionally, it also enhances personal data security and serves as a preventive measure against identity theft and fraudulent credit applications.

“Maintaining credit health and understanding is essential when looking to unlock more opportunities at different significant stages of our lives. By engaging in regular credit monitoring, consumers are empowered to build healthy credit habits and better shield themselves against potential identity theft,” said Wingo Wong, Managing Director of TransUnion Credit Information Services Limited. “The launch of Credit Data Smart provides consumers a new starting point to make regular credit monitoring a habit. While obtaining the annual free credit report offered through the new CDS-enabled ecosystem is an important first step in many peoples’ financial journey, we encourage everyone to make it a longer-term habit that supports and aids them throughout their life.”

Free credit report under CDS can be requested through the TransUnion Mobile App or at the TransUnion customer service counter:

1)     TransUnion Mobile App on Apple Store or Google Play:

2)     TransUnion customer service counter:

• Please make an appointment here to redeem your free credit report in person
• Address: Suite 811, 8th Floor, Tower 5, The Gateway, 15 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong
• Office Hours: Monday – Friday 8:30 AM – 5:00 PM. Closed on Saturday, Sunday and Public Holidays

[1] The Hong Kong Association of Banks (HKAB), The DTC Association (The Hong Kong Association of Restricted Licence Banks and Deposit-taking Companies), and the Hong Kong SAR Licensed Money Lenders Association Limited are collectively known as "Industry Associations"

• Credit Data Smart marks a milestone for the credit economy that will strengthen the foundations of Hong Kong’s financial ecosystem
• Evolving credit industry will expedite innovation within the sector, resulting in enhanced experiences for businesses and over 5.5 million consumers
• TransUnion supports the implementation of Credit Data Smart with best global practices learnt from diverse markets which operate with multiple credit reference agencies

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today welcomes the formal Credit Data Smart (CDS) launch on April 26. As a forerunner in Hong Kong’s credit economy, TransUnion supports the multiple credit reference agencies operating model, enabled by CDS, as a new era for the credit industry and the Hong Kong community. It will open the Hong Kong market to greater innovation and financial inclusion which are essential to strengthening the city’s status as an international financial hub. CDS was launched by the Hong Kong Association of Banks (HKAB), The DTC Association (The Hong Kong Association of Restricted Licence Banks and Deposit-taking Companies), and the Hong Kong SAR Licensed Money Lenders Association Limited (collectively, "Industry Associations").

For over forty years, TransUnion has been making trust possible between businesses and consumers in Hong Kong, enhancing financial inclusion and driving growth opportunities across the local community. As the city ushers in a new era in its credit economy, TransUnion also leverages its extensive expertise gained from other global markets which utilise multiple credit reference agencies, such as the United States, the United Kingdom, the Philippines and South Africa. This wealth of local and global experience is important to the formulation of CDS, as TransUnion actively collaborates with Industry Associations at every stage of the process to ensure a smooth transition to the new system.

With the launch of CDS, TransUnion anticipates the evolving credit industry will expedite innovation within the sector, resulting in enhanced experiences for businesses and over 5.5 million consumers. This transformation will also lead to increased economic opportunities and improved financial inclusion to consumers and businesses served by the credit industry and the wider financial sector. Additionally, the introduction of CDS will raise consumer awareness and understanding regarding the significance of credit in accessing more opportunities in life. TransUnion is eager to encourage those taking proactive measures to manage their financial well-being under CDS.

“With an expansive global network spanning over 30 countries and territories worldwide, TransUnion has successfully established a strong presence and reputation across numerous markets that operate with multiple credit reference agencies. The advent of CDS in Hong Kong will open the door for all participants, bringing wider data access, new and enhanced products and more choices to businesses and consumers alike,” said Marie Claire Lim Moore, Asia-Pacific Regional President and Hong Kong CEO at TransUnion. “We are looking forward to empowering financial institutions to bring more innovations to the market with our unique data insights, not only in credit but across various industries, as we have witnessed in other locations. These innovations are the bedrock for the sustained growth of Hong Kong’s financial ecosystem, ultimately benefiting the entire community.”

“As the pioneering credit reference agency in Hong Kong, TransUnion has played a vital role in the development of the local credit economy, forging strong partnerships with the industry over the past 40 years. Our unwavering commitment has always been to leverage our extensive global experience and deep local knowledge in delivering actionable insights and the best solutions for our customers and wider consumers,” said Wingo Wong, Managing Director of TransUnion Credit Information Services Limited. “With the launch of CDS, we remain dedicated to serving businesses and individuals with our time-tested and industry-trusted products and services. Our vision extends beyond Hong Kong as we strive to support the city’s evolving needs by fostering deeper integration across the broader credit economy within the Greater Bay Area, creating greater opportunities for all.”

The newly released TransUnion (NYSE: TRU) 2024 State of Omnichannel Fraud Report, based on proprietary insights from TransUnion’s global intelligence network, found that 6.6% of all digital transactions where the consumer was in Hong Kong were suspected to be Digital Fraud in 2023. This number is 32% higher than the global suspected Digital Fraud rate of 5% over the same time period.

The report further revealed that the volume of suspected Digital Fraud globally grew faster than the actual number of transactions worldwide as well. With the volume of suspected Digital Fraud up 14% year-over-year (YoY) in 2023 and 105% from 2019 to 2023 globally, this growth continues to outpace the growth in overall digital transactions, which rose 6% between 2022 and 2023, and 90% from 2019 to 2023.

Fewer victims in Hong Kong despite a higher suspected Digital Fraud rate

Similar to the global findings, consumers in Hong Kong were regularly targeted with scams or other forms of deception to gain access to accounts. In December 2023, half of the surveyed Hong Kong consumers (50%) reported being targeted by fraudsters through email, online, phone call or text messaging schemes in the preceding three months. However, only 5% of Hong Kong consumers that reported being targeted by fraud said they fell victim – a relatively lower figure compared to the 11% of consumers in the 18 countries and regions surveyed. This lower percentage in Hong Kong might be attributed to rising consumer awareness amid more efforts from local regulators and industry players to provide anti-fraud education, as well as other preventive measures.

Among those who said they were targeted, phishing (fraudulent emails, websites, social posts, QR codes, etc. meant to steal data) was the leading type of fraud consumers reported experiencing both in Hong Kong and globally.

Account login and account creation present highest risk in the customer journey

The report also showed that there might be a shift in tactics by fraudsters hoping to engage earlier in the transactional process along the digital customer journey. For digital transactions where the consumer is in Hong Kong, 11.1% of transactions associated with digital account login were suspected to be fraudulent in 2023. The second highest percentage of suspected Digital Fraud in the customer journey was account creation with 4.9% of all relevant online transactions were suspected to be fraudulent in 2023. Examples of this type of transaction include account signup, registration and loan origination.

The occurrence of suspected Digital Fraud at the initial stages of a customer journey (account login and creation) for transactions where the consumer is in Hong Kong was significantly higher compared to the final financial transaction stage, which had a rate of only 0.2% in 2023. This final stage involved activities such as purchases, withdrawals and deposits, which typically take place towards the end of a customer’s journey.

“This early phase account login and account creation Digital Fraud may represent a paradigm shift of sorts among fraudsters,” said Jerry Ying, chief product officer at TransUnion Asia Pacific. “Being one of the first Asian markets to issue virtual banking licenses in 2019, Hong Kong significantly accelerated the digitalisation of customer journeys across various industries, not just in the banking sector. While this has brought convenience and improved user experiences, it has also created additional touchpoints that can be exploited by fraudsters. With numerous data breaches occurring worldwide and advancements in technologies like deepfakes, it isn’t surprising that fraudsters are now taking advantage of vulnerabilities and increasingly focusing their attacks on the early stages of a customer journey.”

Retail, financial services and travel and leisure among industries most targeted by suspected Digital Fraud in Hong Kong

According to the report, for transactions where the consumer or fraudster was located in Hong Kong, the highest Digital Fraud rate was in retail, at 8.4% in 2023, down 28% from 2022. This was followed by financial services, and travel and leisure which both were 7.8% in 2023. For transactions where the consumer was in Hong Kong, the financial services industry saw the greatest increase in the suspected Digital Fraud rate, up 190% YoY in 2023.

This surge aligns with the increase in fraud cases reported by the city’s central banking institution – the Hong Kong Monetary Authority (HKMA). In 2023, the HKMA received over 1,200 fraud-related banking complaints, more than double the number for 2022. This was in line with a 52% increase in deception cases reported to law enforcement in the first ten months of last year, with estimated losses to victims of about HK$7.2 billion[1].

Retail saw the highest suspected Digital Fraud rate in 2023 in Hong Kong and globally, while financial services saw the highest growth rate in Hong Kong

Source: TransUnion TruValidate™

“In recent years, the global retail industry has consistently been among those with the highest suspected fraud attempt rates. However, in 2023 we saw it placed at the top of the list both locally and globally,” said Ying. “As a result of credentials stolen in data breaches, often in industries other than retail, it has become increasingly easy for fraudsters to perpetuate attacks that leave consumers vulnerable to account takeover at an earlier stage in the customer journey. In response to this emerging shift in fraudulent behaviors, organisations across industries must proactively enhance their protection throughout the entire customer lifecycle. This entails strengthening detection and response capabilities at every touchpoint to ensure comprehensive protection for themselves and consumers.”

TransUnion came to its conclusions about Digital Fraud based on intelligence from its identity and fraud product suite that helps secure trust across channels and delivers efficient consumer experiences – TransUnion TruValidate™. The rate or percentage of suspected Digital Fraud attempts reflect those that TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) determined to be fraudulent upon customer investigation or 4) determined to be a corporate policy violation upon customer investigation — compared to all transactions it assessed for fraud.

Download the TransUnion 2024 State of Omnichannel Fraud Report to learn more. Specific country and regional data in the report includes Botswana, Brazil, Canada, Chile, Colombia, the Dominican Republic, Hong Kong, India, Kenya, Mexico, Namibia, the Philippines, Puerto Rico, Rwanda, South Africa, Spain, the United Kingdom, the United States and Zambia. 

[1] HKMA: How banks can contribute more to the fight against fraud and money laundering

TransUnion (NYSE: TRU) released new findings today highlighting e-commerce fraud trends that occurred during the start of the 2023 holiday shopping season. For Hong Kong, this includes “11/11” and the Black Friday period – from the Thursday before Black Friday, to Cyber Monday. With retailers likely trying to support greater shopping volume by reducing potential friction caused by fraud controls, a decrease in the suspected fraud rate was observed despite nearly three quarters of Hong Kong consumers stating they are worried about falling victim to digital fraud during this festive season.

Based on proprietary insights from TransUnion’s global device risk consortium, 1.0% of e-commerce transactions during that holiday period were suspected to be fraudulent when the consumer transacted from Hong Kong, compared to 6.0% and 6.9% during the same holiday period in 2022 and 2021. Moreover, the average number of suspected e-commerce fraud attempts on any given day within that holiday period when the consumer was located in Hong Kong during the transaction was 9.4% lower than the same period in 2022 and 22.5% lower than the rest of 2023 (1 January 2023 to 22 November 2023, not including 11 November 2023). [1]

The Percentage of Suspected E-Commerce Fraud in Hong Kong during 11/11 and the Black Friday Weekend, Compared to the Rest of the Year

* ^{Includes Nov. 11 for Hong Kong}

The study also revealed the suspected e-commerce fraud rate for each day in the holiday shopping period for transactions where the consumer is in Hong Kong during the transaction. Unlike last year when the suspected digital fraud rate was highest on the Thursday before Black Friday at 9.3%, this year the rate was the highest on the Sunday before Cyber Monday at 2.0%.

The Suspected Digital Fraud Rate Varies for Each Day of the 2023 Holiday Shopping Period

“Just as the holiday season drives consumers online to begin shopping for gifts for their loved ones, so does it become a destination for fraudsters seeking to take advantage of this time for their financial gain,” said Jerry Ying, chief product officer at TransUnion Asia Pacific. “Anecdotally, we hear that payment card issuers tend to use a different model during holiday shopping periods to allow more authorisations to complete quickly. It seems that a similar tactic is being used by retailers concerned that any friction may drive consumers away, reflecting the elevated competition to ensure greater shopping volume.”

Consumers express concern this holiday season

The unusual decrease of suspected digital fraud during the traditional busiest days of the holiday shopping season contrasts with consumers’ continued concern about being victimised during this popular shopping period. TransUnion’s Q4 2023 Hong Kong Consumer Pulse Study found that most Hong Kong consumers (72%), are extremely, very or moderately concerned with being victimised by online fraud this holiday season — an increase of 18% from 61% in 2022.

These consumer concerns are indeed valid. Criminal organisations look forward to this period of lax fraud controls knowing that guards are lowered, they commit account takeovers to empty loyalty points programmes and make purchases using the hijacked customer’s existing payment wallet, for example. For retailers that allow guest checkouts, fraudsters will transact using stolen payment cards they have purchased from the dark web or have previously harvested from other data breach attacks.

While online sales numbers for retailers are now known, retailers will have to wait and hope that fraud losses do not pile up. The challenge is that they would not know for some time; merchants will have to wait for an uptick in chargebacks, returns, and customer disputes before that becomes clear.

As part of this analysis, TransUnion also determined the top indicators of fraudulent e-commerce transactions during the holiday shopping season globally. This year, transactions per IP (triggered with an unusual volume of activity from a single Internet Protocol [IP] address to a customer’s site in a short time) and transactions per device (triggered with an unusual volume of activity from a single device to a customer’s site in a short time period) were the leading indicators for potential fraud attempts.

“The holidays mark the biggest shopping season of the year for retailers, but equipping themselves with the proper tools to detect fraud at the first warning sign is a year-round priority. Online retailers must ensure that consumers shopping their sites are at the same time protected from fraud in the most seamless and friction-right way possible anywhere, anytime,” said Ying. “A critical way to minimise fraudulent transactions while at the same time protecting legitimate ones involves implementing holistic fraud solutions that can verify customer identity and authenticity at the very beginning of a transaction, including both account creation and login.”

TransUnion came to its conclusions primarily based on intelligence from its identity and fraud product suite, TransUnion TruValidate™, which helps secure trust across channels and delivers efficient consumer experiences. The rate or percentage of suspected digital fraud attempts reflect interactions which TransUnion customers either denied in real time due to fraudulent indicators or determined to be fraudulent after a manual review process—compared to all transactions it assessed for fraud.

To find out how this data varies by select countries or regions and more, TransUnion’s holiday fraud insights can be found here. 

[1] For Hong Kong, all holiday analysis also includes Nov. 11

Cardholders are continuing to leverage their credit cards at a time when Hong Kong’s economy is showing signs of revitalisation in a context of stabilised economic indicators and encouraging interventions by the government. Average consumer credit card utilisation increased across all risk tiers during Q3 2023, compared to the same quarter in 2022, leading to strong card balance growth. At the same time, the number of new-to-credit consumers in Hong Kong increased by 32% year-over-year (YoY), the most significant rebound since the pandemic, indicating solid growth momentum in consumer credit participation.

These insights are part of the Q3 2023 Industry Insights Report published by global information and insights company and Hong Kong’s leading credit reference agency, TransUnion’s (NYSE: TRU), providing lenders with insights into the latest trends that drive the credit market.

Cardholders leveraged their credit lines for rising spend demand

Although credit card origination volumes—a measure of new accounts opened—declined by 12.2% YoY, the average credit limit issued on new cards during Q2 2023 was 10.1% higher than in Q2 2022*, reflecting an increase in lender appetite to make credit available to meet rising spend patterns. This increase in consumer spending was also reflected across existing card accounts, as outstanding balances increased by 15.9% YoY in Q3 2023 and average balances per consumer increased by 14.0% YoY in Q3 2023, while the total credit limit on existing cards increased by 2.7% over the same period.

Average consumer credit card utilisation increased across all risk tiers[1] during Q3 2023 YoY, although the greatest increases were seen in the subprime (5.5 percentage points higher) and near prime (3.2 percentage points higher) risk tiers. Cardholders in the super prime segment were more conservative, increasing their utilisation by only half a percentage point.

This increased utilisation and higher card balances were likely driven by higher levels of retail spending. The value of retail sales increased in nominal terms by 13.7%[2] YoY in August 2023, while the value was provisionally estimated to have increased by 19.3%[3] YoY for the first eight months of 2023. This spending increase could have been encouraged by the Base Rate remaining stable since July 2023, along with inflation remaining at a low rate of 1.8%– 2.0% over the quarter[4].  

Other contributing factors to the increased card utilisation may be enhanced cash-back reward programmes offered by lenders seeking to capitalise on the retail resurgence. While those campaigns came to an end during Q3 2023, more are likely to follow during the upcoming festive season.

“The substantial card balance growth has been driven by increased spending capacity, well supported by limit increases on new and existing cards issued over the past quarter,” said Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion. “Lenders seeking further confident growth opportunities could consider the untapped potential of new-to-credit consumers, consisting of younger consumers coming of age and consumers who are new to the Hong Kong region, particularly as companies are increasing their efforts to attract international talent in a post-COVID-19 environment.”

Younger consumers entering the credit market have been a driver of the recent growth trends—TransUnion’s data shows that the share of new account originations from Gen Z consumers increased to 17.4% in Q2 2023 from 14.7% in Q2 2022. The fourth quarter has historically been the one in which Gen Z has consistently shown the greatest contribution to new card volumes over the last four years, highlighting that lenders could attract further growth by creating personalised offers that appeal particularly to this generation, along with a seamless onboarding experience, which is important to this segment.

Table 1: Summary of growth in unsecured lending products Q3 2023                 

^# Originations reported one quarter in arrears due to data lag and reflects Q2 2023 volumes. Growth reflects movement between Q2 2022 and Q2 2023 for year-over-year comparison.
 

Mortgage originations grew off the back of falling property prices    

After a long period of relative stasis, mortgage originations increased by 18.7% YoY in Q2 2023, with the Hong Kong House Price Index having consistently fallen each month since its 2023 high in March this year[5] – although property prices remain on average near highest levels in Asia.[6]

Looking forward, mortgage originations are likely to continue to grow significantly, following the 2023 Policy Address made by the Chief Executive, John Lee, on 25 October 2023, with measures to be introduced to address affordability concerns expressed by the market.

The halving of buyers’ stamp duty to 7.5% for non-permanent residents and for residents buying a second home, and the waiving of the 10% of home price stamp duty for owners who resell within two years of buying, are both likely to stimulate activity in this sector. The cutting of these costs provides more liquidity for consumers wanting to enter the property market, as they will have more capacity for a deposit or more money available to spend on home improvements once they purchase a home. Furthermore, it could also enable people to apply for mortgages more confidently, knowing that they will have additional capacity to service any debt obligations.

Additional stimulation is likely after the Capital Investment Entrant Scheme is launched to help attract investment to Hong Kong by facilitating entry for residence.

Revolving lines grew, unsecured loans declined

Revolving line originations continued to grow off the back of the resurgence in retail shopping and was supported by lender campaigns, particularly from virtual banks. Originations increased by 22.3% YoY in Q2 2023, although average new account balances decreased by 11.2% YoY over the same period. This decrease reflects caution from lenders as they assigned lower limits at origination, given that this product is most frequently taken out by higher risk consumers.  

Origination volumes of unsecured personal loans decreased by 6.8% YoY in Q2 2023, although the average new account balance increased by 10.6% YoY over the same period. As a result of these higher value new loans, outstanding balances increased by 5.0% in Q3 2023, and average balances per consumer increased by 4.8% in Q3 2023.

The market share of new personal loan accounts by lender type saw a shift, with banks originating 39.4% of new loans, a slight decrease from the same quarter previous year (40.2%), while moneylenders and virtual banks grew their market share, reflecting evolving strategies and consumer preferences. The distribution of outstanding balances across lender segments revealed that, despite having fewer accounts, bank-issued loans dominated the market with 72.2% of the total outstanding balances, down slightly from 73.7% in Q2 2022, underscoring banks’ significant role in the personal loan market and greater focus on lower risk borrowers who typically receive larger loan amounts. In contrast, non-bank money lenders and virtual banks contributed smaller, yet substantial, portions to the total balances –23.3% and 3.9%, respectively–both slightly higher than the same quarter, previous year.

“Growth in these products is primarily due to supply-side pricing and promotions over the past three quarters, and while many of these campaigns have run their course, consumers are more aware of the choices available to them and will likely continue to seek out offers that reward them meaningfully for their loyalty,” Sun said.

For more information about the TransUnion Hong Kong Industry Insights Report, register for our webinar on December 6, 3pm HKT by clicking here.

* Originations are viewed one quarter in arrears to account for reporting lag. 

[1] TransUnion CreditVision® risk score: super prime = AA; prime plus = BB; prime = CC; near prime = DD to HH; subprime = II to JJ. Prime and below = BB to JJ
[2] news.gov.hk - August retail sales up 13.7%
[3] Press Releases Detail (censtatd.gov.hk)
[4] Hong Kong Inflation Rate (tradingeconomics.com)
[5] Hong Kong House Price Index (tradingeconomics.com)
[6] Price per Square Meter/Square Foot in Hong Kong compared to Asia (globalpropertyguide.com)

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today released its latest quarterly Consumer Pulse Study for Q4 2023. It reveals Hong Kong consumers have emerged from the pandemic shadow with a positive change in household income over the previous quarter in general and are optimistic about their income looking ahead to 2024.

The new survey conducted in October 2023 found a large group of Hong Kong consumers experienced an income increase in the last three months regardless of income level. Overall, 38% of surveyed consumers reported that their household income had increased, up 17 percentage points from Q4 2022, indicating widespread financial improvement. Additionally, a similar percentage of respondents said their current household finances are better than planned (39%) or as planned (38%) in the past three months.

Rising incomes benefit Gen Z and Gen X the most

Looking across generations, the improvement in income was felt most strongly by Gen Z and Gen X respondents. More than half (57%) of surveyed Gen Z consumers reported an income increase in the past three months, up 19 percentage points compared to the same period last year. Forty-four percent of Gen X respondents also experienced a rise, which is a 30% year-on-year (YoY) increase. Both Millennials and Baby Boomers also enjoyed rising incomes but the rise was lower YoY (32% vs. 25% and 15% vs. 8%, respectively).  

Despite the positivity, around a quarter (26%) of those surveyed still expressed concerns about meeting their bill and loan obligations. To navigate these financial hurdles, 40% of surveyed consumers said they had cut back their discretionary spending in the last three months. Additionally, 45% are concerned about inflation. These data show that taking cautious approach towards financial management amidst evolving economic conditions is still a priority for many. In an effort to alleviate some of these consumers constraints, the government announced additional financial relief in its latest Policy Address[1], such as reducing or exempting stamp duties for certain types of property buyers and distributing HK$20,000 to parents with newborns.

Consumer optimism towards household finance in 2024

The survey indicates a general optimism among Hong Kong consumers on their income level in 2024. Close to half (46%) of consumers surveyed are optimistic about their household finances in the next twelve months, which is a 10 percentage point YoY increase. On expected income levels next year, 43% expect a rise while the same percentage predict their current level of income could be maintained. Across generations, Gen Z are the most optimistic with more than two-thirds (68%) expecting a positive 2024, up 19 percentage points YoY.

"As 2023 draws to a close, it has been a year when Hong Kong citizens emerged from the pandemic shadow with visible household income rises and optimism looking ahead to next year. Strong momentum among Gen Z suggests a brighter future for the financial sector and society, as they are the new growth engine in the Hong Kong economy,” said Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion.

Consumers value credit products but application challenges hinder access

The survey also discovered a positive shift in attitudes towards accessing new credit. Forty-one percent of respondents said they plan to apply for new credit or refinance existing credit which is a 10 percentage point increase YoY. This is being considered most strongly among Gen Z (56%) and Gen X (47%) ahead of Millennials (37%) and Baby Boomers (14%).

Findings show encouraging market signals that consumers recognise the importance of credit and lending products in achieving their financial goals. Nearly half (49%) think access to credit and lending products are very important – up from 42% in Q4 2022 – while around one fifth (18%) said it is extremely important. This recognition is once again stronger among Gen Z and Gen X at 62% and 51% respectively, compared to less than half (46%) of Millennials and about one-third (34%) of Baby Boomers. However, barriers like high costs, cumbersome processes and fear of rejection deterred 40% of respondents from applying, revealing an area that may need addressing to further enhance financial inclusion.

“As consumers, especially Gen Z, increasingly recognise the importance of credit in healthy financial management and expressed their interest in obtaining more credit products, financial institutions must seize the market momentum for proactive customer acquisition and upselling. This requires addressing the conventional challenges associated with credit application. Only by leveraging advanced analytics, modelling and technologies, institutions can stay ahead of consumer preferences and promptly respond to the growing and evolving market demand,” added Sun.

TransUnion’s Consumer Pulse Study surveyed 925 consumers in Hong Kong during October 3–12, 2023. This quarterly study examines shifting consumer attitudes and behaviours based on the dynamics of income, debt, and identity theft, with respondents ranging from Gen Z (born 1995-2004), Millennials (born 1980-1994), Gen X (born 1965-1979), and Baby Boomers (born 1944-1964). For more information, please view the full report of the Consumer Pulse Study Q4 2023. 

[1] 2023 Policy Address

TransUnion (NYSE: TRU), a global information and insights company and Hong Kong’s leading credit reference agency, today revealed that the Hong Kong personal loan market has rebounded compared to the previous year with more customers, higher origination volumes and an increase in the total new loan amounts year-over-year (YoY). However, the rising rate of delinquency and write-offs¹ for money lenders over the same period also underscores the imperative for strengthened risk management in fostering the continued sustainable growth.   

TransUnion drew these conclusions from a study it conducted on the personal loan market between March to August 2023, compared to March to August 2022, across hundreds of financial institutions in Hong Kong. The study shows a 7% increase in origination volumes and a 4% growth in the total new loan amounts in 2023 compared to the same period in 2022.

The trend aligns with improved consumer sentiment regarding the economy shown in TransUnion’s Q3 Consumer Pulse Survey. Conducted in July this year, the survey found the percentage of respondents planning to apply for new credit or refinance existing credit in the next 12 months had rebounded to 35%, reaching its highest level since Q2 2022. 

More robust growth for total new loan amount among money lenders

Over the period studied, banks outperformed money lenders in the number of total customers holding personal loans. While banks increased their customer number by 7% YoY, money lenders saw their customer base contract by 1% over the same period. However, both banks and money lenders grew origination volumes (a measure of new loans opened), with banks growing at a slightly faster pace. When comparing total new loan amount, money lenders outperformed banks in the pace of growth.

Table 1: Year-over-Year Personal Loan Growth by Lender Type²

Tier 1 and Tier 2 money lenders lead the industry, with Tier 2 shifting to prioritise larger loan sizes³ 

Within the money lenders segment, large Tier 1 players are leading the market. With a bigger customer base and market size in terms of total new loan amount, Tier 1 money lenders took the largest share of YoY growth in origination volumes (9%).

Tier 2 money lenders follow a different strategy compared to their larger competitors, focusing more on personal loans with a higher ticket size. This resulted in a 27% YoY growth in their total new loan amount, albeit off a much smaller total value – only 17% of that of Tier 1 money lenders.

Table 2: Year-over-Year Money Lender Personal Loan Data Tiered by Loan Amount²

Rising delinquency and write-offs bring greater risks

Alongside improving consumer sentiment and an increase in origination volumes across the industry, personal loan delinquencies and write-offs also rose among money lenders YoY, bringing more risk to their business. Irrespective of the market size, the escalating risk is pervasive, particularly impacting Tier 2 and Tier 3 money lenders. Annual write-off rates of Tier 2 and Tier 3 money lenders recorded increases of 3.3% and 3.4% YoY, respectively.

Table 3: Year-over-Year Money Lender Personal Loan Perfomance²

“Money lenders, while catering to a comparatively smaller customer base in absolute terms, are demonstrating substantial growth in total new loan amounts. This trend signifies their ability to extend increased lending to a concentrated group of consumers,” said Wingo Wong, Managing Director of TransUnion Credit Information Services Limited.

“With many personal loan providers focused on specific consumer segments, in particularly money lenders, it's important to have advanced and robust risk management capabilities. A forerunner in Hong Kong’s credit economy, TransUnion has decades of experience in the local credit market and is committed to supporting Hong Kong’s financial ecosystem. Our proven industry trusted data, insights, technologies and solutions enable financial institutions to effectively navigate potential risks, today and in the future. These are the tools we use that are the foundations of managing market risks while driving smart business growth,” Wong added.

¹ Personal loan day past due reaching 120DPD+ and uncollectible will be considered as write-off

² Data as of March to August 2023, newly opened account

³ Tier 1 ML: > HK$1B existing portfolio amount

  Tier 2 ML: > HK$0.1B – 1B existing portfolio amount

  Tier 3 ML: <= HK$0.1B existing portfolio amount

As consumers and businesses continue to use digital transactions as a way to engage in commerce, fraudsters are increasingly using them for their own benefit. A new TransUnion (NYSE: TRU) analysis finds that suspected global digital fraud is up in the first half of 2023 (H1 2023), and while retail and video gaming were among the most targeted industries globally during that timeframe, digital fraud affected all businesses.^1&2

In H1 2023, the global suspected digital fraud rate stood at 5.3%, up 18% when comparing to the same period in 2022. The volume of global digital fraud attempts increased 27% during that same time period. When the consumer is located in Hong Kong during the transaction, the suspected digital fraud attempt rate stood at 18.3% in H1 2023 – the highest among all markets and regions studied. The volume mirrored this rise, with a 57% increase in suspected digital fraud attempts originating from Hong Kong in H1 2023 compared to the same period last year. ²

Highest Suspected Digital Fraud Attempt Rate in Retail Globally, in Travel & Leisure for Transactions from Hong Kong

Retail, video gaming and telecommunications saw the highest rates of suspected digital fraud globally among industries analysed at 10.6%, 7.0% and 5.3% in H1 2023. Looking at sectors from a global digital transaction growth perspective, gaming (online sports betting, poker, etc.) stands out, showing an increase in total transactions of 85% from H1 2022 to H1 2023. Across the world, insurance and logistics were the industries with the lowest suspected digital fraud attempt rate in H1 2023.²

For transactions originating from Hong Kong, travel & leisure, and communities (online dating, forums, etc.) had the highest suspected digital fraud attempt rate among industries analyzed in H1 2023 at 8.1% and 4.8% respectively. With travel resuming, it’s not surprising that TransUnion found the travel & leisure industry saw the largest growth in the number of digital transactions from Hong Kong with a 243% increase from H1 2022 to H1 2023. ²

“It’s not enough to look at fraud rates alone when attempting to measure the impact of digital fraud on any one particular industry or another,” said Jerry Ying, chief product officer at TransUnion Asia Pacific. “There are other factors that need to be taken into consideration. These include the overall size of the industry in question, in addition to if the aforementioned industry is growing and if so, how quickly. Only then can one endeavor to develop a more comprehensive perspective on how digital fraud is impacting these industries. In addition, this can help projecting where fraudsters may be focusing their efforts moving forward.”

Travel & Leisure Saw the Greatest Suspected Digital Fraud Attempt Rate and YoY Growth in Digital Transactions Coming from Hong Kong

Source: TransUnion TruValidate™ data

38% of Hong Kong Consumers Report Having Been Targeted by Fraud

This new TransUnion analysis comes on the heels of its recent Q3 Hong Kong Consumer Pulse Study which explored, among other things, consumer awareness of being targeted by any online, email, phone call or text messaging fraud attempts in the last three months. The TransUnion survey of 973 Hong Kong adults was conducted between 10-19 July.

The survey revealed that 32% of respondents indicated that they had been targeted by fraud but did not become a victim of it, and 6% had been targeted and fell victim. Among those targeted, vishing (fraudulent phone calls meant to trick people into revealing data), at 34%, was the most frequent fraud scheme by which they reported being attacked, followed by phishing (fraudulent emails, websites, social posts, QR codes, etc. meant to steal data) at 31% and smishing (fraudulent text messages meant to trick you into revealing data) at 29%.³

“The increasing acceptance of digital services and prevalence of spam calls has significantly contributed to the growth in fraud loss. As consumers rely more on online platforms, they have higher expectations for businesses to protect them from fraudulent activities and proactively identify suspicious accounts. In response, businesses regardless of their industry shall allocate sufficient resources towards enhancing their data, analytics, and technological capabilities to identify potential fraud in a more accurate and efficient manner,” added Ying.

TransUnion came to its digital fraud findings based on intelligence from its identity and fraud product suite, TransUnion TruValidate, which helps secure trust across channels and delivers efficient consumer experiences. The rate or percentage of suspected digital fraud attempts reflects interactions which TransUnion customers either denied in real time due to fraudulent indicators or determined to be fraudulent after a manual review process – compared to all transactions it assessed for fraud.

Download the Omnichannel Fraud in H1 2023 Infographic for more findings including the rate of suspected digital fraud from select markets and regions globally, and the growing problem of synthetic fraud. Specific market and regional data in the analysis include the United States, Brazil, Canada, Chile, Colombia, Dominican Republic, Hong Kong, India, Kenya, Mexico, Namibia, Philippines, Puerto Rico, Rwanda, South Africa, Spain, United Kingdom and Zambia.

¹ The first half of the year or H1 refers to January 1 to June 30

² TransUnion TruValidate data (January 1 to June 30)

³ TransUnion Consumer Pulse Survey

Credit activity in Hong Kong continues to grow strongly, with originations across major products increasing by 32% year-over-year (YoY) for Q1 2023¹, led by extraordinary growth in credit card originations.

This is according to global information and insights company and Hong Kong’s leading credit reference agency TransUnion’s (NYSE: TRU) Q2 2023 Industry Insights Report, which provides lenders with insights into trends driving the credit market.

Credit card originations grew most significantly, by 45% YoY, with card originations among sub-prime² consumers growing by 391% - albeit off a low base. However, the average new card limits on these sub-prime originations are 30% lower than the average new card limit offered to consumers in this risk tier during the same quarter of 2022. The total credit limit for newly originated credit cards increased by 73% YoY during Q2 2023, with sub-prime limits having increased by 242% YoY.

Diagram 1: Credit Card Origination Growth – YoY

Source: TransUnion Hong Kong consumer credit database

These increases in originations are in a market that showed significant optimism in the context of a 2.7% GDP growth³ recorded in the first quarter of the year, subdued inflation at 1.9%⁴, and low unemployment at 2.9%⁵. Ascribing the surge in originations as local market optimism is supported by the findings of the TransUnion Hong Kong Q3 2023 Consumer Pulse Survey, in which 45% of respondents said that they were optimistic about their household finances for the next 12 months, and 35% saying that they are planning to apply for new credit or refinance existing credit within the next year. Despite the high interest rate environment, 58% said that current rates would have little or no impact on their decision on whether to apply for credit in the next year.

“Consumers are actively re-engaging with the newly re-opened economy, seeking out offers from lenders that include appealing benefits and lucrative loyalty programs,” said Marie Claire Lim Moore, Asia-Pacific regional president and Hong Kong CEO at TransUnion. “Lenders have invested heavily in promotions driving acquisition and spend, through a variety of mechanics, including reward currencies in return for choosing a particular airline or retailer.”

“Consumers are making the most of their renewed opportunities to transact with an increased confidence in Hong Kong’s economic growth – they’re travelling and shopping, and they’re actively seeking the most lucrative rewards and return on their spend while exercising their significant buying power. This is a reassuring sign for lenders and an opportunity to stay relevant and gain prominence to capture a growing share of spend amongst existing customers and prospects", she said.

Virtual banks leading market share of revolving line originations

In Q1 2023, revolving line originations grew by 15% YoY with new credit limits for this product growing at the same rate. The most significant growth in originations was observed (35%) among sub-prime consumers, who are expanding their wallet of credit products to take advantage of the additional liquidity and convenience that these products offer.

For the first time since their entry, virtual banks recorded 49% of all revolving line originations, making them the leading provider of this loan type. Virtual banks are particularly popular among younger borrowers, with these FinTech platforms designing their banking experience to be more engaging for this target segment.

Diagram: Revolving Line Origination by Lender Type

Source: TransUnion Hong Kong consumer credit database

Virtual banks are enjoying increased market share across risk tiers as they can offer almost all the banking services available at conventional banks, but via digital solutions that offer speed and convenience. They are supported by purpose-designed security mechanisms and are obliged by Hong Kong regulations to accept all interested clients without setting any minimum account balance⁷.

When asked whether they held any type of virtual banking products, 56% of respondents in the Q3 Consumer Pulse Survey said that they held a loan from a FinTech firm or digital bank.

“Competition is intensifying in the revolving line market. To stay competitive and capitalise on the growth in this market, lenders need to offer a friction-right verification and onboarding process for their customers, who expect fast, pleasant, and personalised experiences,” Lim Moore explained. “With two-thirds⁶ of respondents saying that they would switch brands for a better digital experience, FinTech platforms are well positioned to leverage consumer identity solutions that support smooth customer onboarding and retention, enabling trust between businesses and consumers.”

Demand for personal loans benefits from sustained growth

Personal loan originations grew by 5.2% YoY, with most demand in the prime and below risk tiers. Balances grew by 8% YoY and continue to stay at higher levels than pre-pandemic observations.

As seen with revolving lines, virtual banks are gaining share in this market, holding 9% of personal loan originations, compared to 7% in the same quarter in 2022. Banks’ share of this product type decreased from 44% of the market to 40% over the year, while money lenders’ share grew by three percentage points to 51%.

“Demand for personal loans continues to grow at a steady and sustained level despite the current high interest rate environment,” Lim Moore said. “Lenders are promoting attractive interest rates to stimulate demand for this product, which along with credit cards is one of the first products opened by consumers as they start their credit journey and build their risk profile.

“Even though inflation, high interest rates and other macroeconomic trends will continue to influence how consumers manage their finances for the rest of 2023, they are regaining confidence in the local economy and will likely seek out the most appealing offers from lenders as they re-engage with hospitality, retail, and travel in the coming months,” she added.”

For more information about the TransUnion Hong Kong Industry Insights Report, register for our webinar on September 19, 3pm HKT by clicking here.

¹ Originations are viewed one quarter in arrears to account for reporting lag.

²  TransUnion CreditVision® risk score: super prime = AA; prime plus = BB; prime = CC; near prime = DD to HH; subprime = II to JJ. Prime and below = BB to JJ

³ Hong Kong: quarterly GDP growth 2023 | Statista.

⁴ Hong Kong Inflation Rate - July 2023 Data - 1981-2022 Historical - August Forecast (tradingeconomics.com)

⁵ Hong Kong Unemployment Rate - July 2023 Data - 1981-2022 Historical - August Forecast (tradingeconomics.com)

⁶ 2022 Global Digital Fraud Trends Report (transunion.com)

⁷ 8 Virtual Banks in Hong Kong: How Do They Compare? | Statrys

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today released insights from its latest quarterly Consumer Pulse Study. It reveals that Hong Kong consumers anticipate increasingly using financial technology (FinTech) firms and virtual banks.

The new Q3 2023 Hong Kong consumer survey conducted in July 2023 found most had better or as planned household finances and incomes increased or stayed the same. Overall, almost a third (29%) of respondents reported better than planned household finances, and 44% reported said their household finances were as planned. Additionally, 55% of respondents reported stable household incomes over the past three months and 28% said it had increased.

Financial technology and virtual banks received noticeable upward trajectory

During the COVID-19 pandemic, the FinTech sector in Hong Kong defied the global trend, establishing itself as a frontrunner in Asia Pacific and ranking ninth worldwide in The Global Fintech Index 2021. With over 800 FinTech companies operating in Hong Kong, the sector has demonstrated remarkable resilience and innovation in the face of adversity¹. The survey findings reveal that 56% of consumers reported holding FinTech or virtual bank loans or credit cards, and this figure is expected to rise further as 64% of consumers plan to engage with FinTech firms or virtual banks for credit activities in the coming year.

While traditional banks continue to dominate the credit market with 29% of respondents selecting their existing traditional bank where they have an account and 22% any other traditional bank or financial institution as their preferred option for a digital loan application, consumers are also choosing alternative funding options. In fact, 24% of respondents prefer applying for a new digital loan with a FinTech, or neo, digital or challenger bank. Furthermore, 24% said their preferred option for applying for a new digital loan is any entity which offers them the lowest rate of interest.

The recent Gen Z Study and Q1 Industry Insights Report conducted by TransUnion further validate the rising popularity of virtual banks in Hong Kong. The studies revealed that Gen Z borrowers accounted for 22% of personal loan originations from virtual banks. This younger demographic has become a key target for virtual banks, as evidenced by the fact that 30% of all unsecured revolving lines originated by virtual banks in 2022 were allocated to Gen Z consumers.

"Current consumer behavior, especially Gen Z, has been shaped by the digital age, shifting financial landscapes, and the global pandemic. As technology continues to reshape the way we approach financial services, it is clear that FinTech and virtual banks are playing a vital role in driving financial inclusion and meeting the evolving needs of consumers in Hong Kong," said Wingo Wong, Managing Director of TransUnion Credit Information Services Limited.

Demand for new credit services rebounded with young consumers dominant

In a promising sign of economic recovery, consumers in Hong Kong are increasingly showing interest in applying for new credit services, with young consumers leading the way. The Consumer Pulse Survey found the percentage of respondents planning to apply for new credit or refinance existing credit in the next 12 months has rebounded, reaching its highest level since Q2 2022 at 35%. Across generations, 43% of Gen Z planned to apply for new credit or refinance existing credit in the next year – the highest percentage among age groups.

Among those planning to apply for new credit or refinance existing credit, there has been a notable shift in the types of credit. The demand for new credit cards has increased the most, rising by 15 percentage points from Q2 2023 to 59%. Buy now, pay later payment services are the second most in demand credit type and second fastest growing type behind new credit cards, growing five percentage points in that same time period to 33%.

"The rebound in consumer credit interest, particularly among young consumers, indicates a growing optimism and a desire to access financial resources for various purposes. With the aid of advanced analytics and modeling, financial institutions can gain valuable insights into consumer preferences and effectively cater to their evolving needs," added Wong.

TransUnion’s Consumer Pulse Survey of 973 adult Hong Kong consumers was conducted July 10–19, 2023 in partnership with third-party research provider, Dynata. This quarterly survey examines shifting consumer attitudes and behaviors based on the dynamics of income, debt, and identity theft. Respondents range from Gen Z (born 1995-2005), Millennials (born 1980-1994), Gen X (born 1965-1979), and Baby Boomers (born 1944-1964). For more information, please view the full Q3 2023 Consumer Pulse Study Infographics.

¹ Fact Sheet: Hong Kong Fintech Landscape

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today released its latest quarterly Consumer Pulse Study. It reveals Hong Kong consumers’ rising optimism over household finances despite concerns about market volatility.

The new survey conducted in May 2023 found consumer sentiment improved significantly in the context of more positive economic conditions. Overall, 46% of respondents reported better than planned household finances, a 20 percentage point increase from Q1 2023. Additionally, 42% of respondents reported higher household incomes over the past three months, a similarly significant increase of 19 percentage points from the previous quarter.

Consumer confidence soars as inflation fears and the threat of recession ease

The Hong Kong economy is rebounding thanks to the strong recovery of inbound tourism and domestic demand¹. The survey findings reveal that 62% of consumers are optimistic about their household finances in the next 12 months, up significantly from 34% in the previous quarter. Half (50%) of consumers also expect their household income to increase in the year ahead, up 16 percentage points from last quarter.

The survey showed that consumers still have some concerns despite improving economic conditions, with inflation (58%), the threat of recession (44%) and stock market volatility (37%) leading unease, followed by rising interest rates (35%). Concerns over stock market volatility and rising interest rates have grown by seven and five percentage points quarter-over-quarter, respectively. Comparatively, concerns over inflation and the threat of recession have reduced by 10 and seven percentage points, respectively.

Against the backdrop of generally improved consumer sentiment, more than a quarter (27%) of those surveyed said they had increased their discretionary spending, and over a third (34%) of consumers also added or expanded their digital services, subscriptions and memberships in the last three months – an increase of 15 percentage points compared to last quarter. The proportion of consumers that plan to increase household spending increased, with almost a third (30%) of consumers intending to increase their discretionary spending (e.g., eating out, travel, entertainment) in the upcoming three months, compared to 25% in the last quarter.

"There is no doubt that inflation, rising interest rates and stock market volatility will all continue to influence how consumers manage their household finances, but with its post-pandemic economy turn-around, Hong Kong’s residents are clearly gaining confidence about their financial outlook,” said Kevin Chen, principal, Financial Services Research and Consulting at TransUnion Asia Pacific.

Younger consumers drove demand for new credit services

Across generations, Gen Z* (37%) has the most interest in new credit services, although less than one-third (29%) of Hong Kong consumers plan to apply for new credit or refinance, unchanged from the previous period. However, across all demographics, over half (57%) report that rising interest rates have a moderate to high impact on their decision around seeking new credit, an 11 percentage-point increase from the last quarter.

Despite concerns regarding higher interest rates, more consumers planned to apply for new home loans (16%), the first increase in a year, up three percentage points from the previous quarter. Consumer appetite for car related credit activity saw the biggest increase in the survey. Plans for a new car loan or lease and car loan refinancing rose seven and eight percentage points to 16% and 13%, respectively.

“As consumer interest in new credit starts to rebound, financial institutions should capture opportunities in the market to grow their business. By using advanced analytics and modeling, they can better tailor their offering to the emerging needs of an increasingly positive consumer base,” added Chen.

TransUnion’s Consumer Pulse Study surveyed 910 consumers in Hong Kong during May 4–17, 2023. This quarterly study examines shifting consumer attitudes and behaviors based on the dynamics of income, debt, and identity theft, with respondents ranging from *Gen Z (born 1995-2004), Millennials (born 1980-1994), Gen X (born 1965-1979), and Baby Boomers (born 1944-1964). For more information, please view the full report of the Consumer Pulse Study Q2 2023.

¹ https://www.info.gov.hk/gia/general/202305/12/P2023051200392.htm

Small and medium-sized enterprises (SMEs) need greater lending support to recover from the economic disruptions of the past three years but many still lack access to financing, according to a study conducted by TransUnion (NYSE: TRU), a global insights and information company and Hong Kong’s leading consumer credit reference agency. The study aimed to gain an understanding of SMEs’ financing needs and challenges, and provide insights into how financial institutions can better serve this important business segment. The study was presented earlier at the TransUnion Hong Kong Financial Services Summit 2023.

The SME sector plays a pivotal role in Hong Kong’s economic rebound as it comprises 360,000 or 98% of all businesses and employs 44% of the private sector workforce¹. Fostering a more financially inclusive ecosystem where small businesses can better access the financial services they need has never been more vital, with 61% of SMEs having needed greater access to credit to capture economic opportunities during the last year, including 25% needing more working capital.

Traditional banks are the primary source of loans

In Hong Kong, SME originations overall declined by 16% year-on-year (YoY) in 2022, possibly due to lenders’ tightened risk appetite during the pandemic and challenging macroeconomic conditions. Despite the first three quarters recording a decline, there was a strong rebound with 13% growth YoY in the last quarter of 2022, when Hong Kong began to reopen its borders and experience a revival of economic activity.

Traditional banks remained a key source of financing for SMEs, funding 70% of SME originations in 2022. At the same time, virtual banks gained some traction, with 4% of SME originations coming from this emerging group of lenders in 2022. At the same time, money lenders saw a gradual decrease in SME originations to 26% in 2022, compared to 28% in 2021 and 31% in 2020.

In terms of loan amounts assigned at origination, there was a significant shift from larger to smaller loans for SMEs, as lenders tightened their belts and pulled back on new loan originations during the protracted pandemic period. Among the SME loan originations in 2022, more than half (56%) were smaller loans of HK$500,000 or below, up nine percentage points from 2021; whereas less than a third (29%) were larger loans of HK$1 million or above, down six percentage points from 2021.

Nevertheless, virtual banks provided greater loan sizes for SMEs. Among new SME loans offered by virtual banks in 2022, more than half (58%) amounted to HK$1 million or above, a noticeably higher rate than traditional banks (35%) and money lenders (7%). In contrast, smaller loans of HK$500,000 or below only accounted for 15% of new SMEs loans from virtual banks in 2022, a significantly lower rate than traditional banks (49%) and money lenders (81%).

A recent TransUnion commissioned study showed that 32% of SMEs were unsatisfied with manual and lengthy application processes. The same study also showed 44% of financial institutions reported a lack of adequate analysis tools to assess SME creditworthiness.

“Despite being a major driving force in Hong Kong’s economy, many still feel that they lack sufficient access to the financial services they need,” said Jerry Ying, chief product officer at TransUnion Asia Pacific. “Even in today’s digital age, SME lending is often associated with lengthy and frustrating manual processes. To change the status quo, digital innovation is key. Financial institutions can adopt digital technologies and data analytics to optimise onboarding and credit assessment processes, contributing to a more financially inclusive ecosystem for emerging small businesses.”

Younger SMEs have relatively lower credit access

The study took a deeper look at SMEs’ credit access in relation to the length of their credit histories. The research showed that credit was generally more available to mature SMEs with longer credit histories than younger SMEs with shorter track records. Among SMEs that gained new credit in 2022, the majority (60%) were those with a credit history of five years or more, followed by SMEs with three to five year credit histories (16%), one to three year credit histories (15%), and less than a year of credit history (9%). This may indicate prevailing challenges in accessing credit among newer SMEs, presenting an opportunity for financial institutions to rethink their processes to better serve the growing needs of these customers.

While most SMEs obtained their financing from traditional banks, those with shorter credit histories increasingly turned to money lenders and virtual banks for financing. According to the study, 25% of SMEs with credit histories of less than five years obtained their financing from money lenders, and 6% from virtual banks in 2022. At the same time, SMEs with longer credit histories of five years or more were better served by financing from traditional banks (74%), and less likely to obtain their financing with money lenders (23%) and virtual banks (3%).

“Many SMEs and start-ups may be constrained from accessing the credit services they need by their limited credit history. Harnessing alternative data, such as telco and utility bill payments, helps gain additional insights into a SME’s creditworthiness, enabling financial institutions to better manage risk, potentially giving more small businesses access to credit,” Ying Said.

“Furthermore, including a holistic assessment of the SME owner in a dual scoring approach that combines commercial and consumer credit data to better predict SME performance offers a greater predictive power than a single score. This expands the opportunity for both the financial community and SMEs to grow their respective businesses as the economy rebounds,” Ying concluded.

Source: The data in this study was based on TransUnion’s Hong Kong Commercial Credit Database.

¹ Hong Kong Trade and Industry Department, Support to Small and Medium Enterprises, March 2023

Credit activity in Hong Kong has grown significantly since the post-pandemic economic reopening, with originations¹ across major products increasing by 17% year-over-year (YoY) for Q4 2022 – the first positive growth in six quarters. This is according to global information and insights company TransUnion’s (NYSE: TRU) Q1 2023 Industry Insights Report, which provides lenders insights into trends in the local credit market that help them position for growth.

The most significant growth was among credit card originations, which increased by 28% YoY. The total credit limit at origination increased by 45% YoY, while outstanding balances grew by 18% compared to 7.3% in the previous quarter. Growth is likely to continue on a positive trajectory, based on a nearly 49% YoY growth in credit inquiries – consumers applying for new credit accounts – during Q1 2023.

Source: TransUnion Hong Kong consumer credit database
 

TThe most significant growth in card originations was among super prime² consumers, who account for 66% of Hong Kong’s credit-active population; card originations to super prime consumers were 30% higher compared to same quarter of 2021. Prime plus and prime consumers, who account for 24% of Hong Kong consumers, made up 34% of the overall originations and grew by 24% YoY in Q4 2022, reflecting the growth in demand and supply of new cards among lower-risk borrowers.

The report’s findings are in the context of significant real GDP growth of 2.7% YoY in the first quarter of 2023, with annual GDP growth for full year 2023 projected to be between 3.5% and 5.5%. GDP growth is likely to be near the higher end of the forecast range if the current momentum of recovery is sustained.³

Private consumption expenditure surged by 13% YoY in real terms in the first quarter, and overall investment expenditure reverted to 5.8% growth within the improved economic outlook.³ Consumers surveyed in the latest TransUnion Consumer Pulse Survey supported this sentiment, with 27% of respondents reporting increased discretionary spending. The survey also found more respondents added or expanded digital services, subscriptions and memberships (34% in the most recent survey, up from 19% in the previous edition).

“The credit card sector has turned around from its subdued performance in 2022 and the years before, with two consecutive quarters of significant year-over-year growth. Much of this growth was seen in the lowest risk borrower tiers, signaling a clear return to an upward trajectory for the market,” said Kevin Chen, principal, Financial Services Research and Consulting at TransUnion Asia Pacific.

“Consumers are making the most of their renewed opportunities to transact with an increased confidence in economic growth – they’re travelling and shopping, and they’re seeking the most lucrative rewards while exercising their spending power,” he said.

Younger consumers are the growth engine for the Hong Kong credit market

Originations among Gen Z consumers (born 1995 to 2010) in above-prime risk tiers grew by 27% YoY in Q4 2022, with originations among Millennial (born 1980 to 1994) above-prime consumers growing by 17%. These two generations accounted for the largest portion of growth among prime and below consumers as well, with 23% growth among Millennials and 22% growth among Gen Z consumers.

TransUnion’s recent study into the credit behavior of younger consumers showed that Gen Z consumers have the greatest appetite for credit as they mature into adulthood. In Hong Kong, there are around 500,000 adult Gen Z consumers aged 18 and older, with an additional 330,000 turning 18 and becoming eligible to apply for credit in the next six years⁴.

The study also found that Gen Z consumers were more like to hold credit from non-bank lenders, including money lenders and virtual banks, than Millennials were at the same age in 2016. The percentage of Gen Z (17%) holding non-bank credit cards was almost double that of Millennials (9%) at the same age. At the same time, 91% of Millennials held only cards issued by banks in their wallets in 2016, compared to 84% of Gen Z consumers who did the same in 2021.

“These are consumers who are growing up in a digital age; they are tech-savvy and willing to conduct most – if not all – of their transactions online,” Chen said.

Virtual banks enjoyed breakthrough popularity in the unsecured lending market in 2022

The personal loan landscape has changed significantly since the inception of virtual banks, with their FinTech solutions drawing market share from money lenders. In 2020, virtual banks accounted for 1% of personal loan originations, with their market share of originations growing to 7% in 2022. During this time, personal loan originations from traditional banks grew from 41% to 43%, while originations from money lenders fell from 59% of new personal loans to 50% over the two-year period.

Virtual banks are quite successful at acquiring younger consumers, with Gen Z borrowers responsible for 22% of virtual bank personal loan originations in 2022, up from 16% in 2021. Gen Z were responsible for 9% of traditional bank originations during 2022, and for 13% of originations with money lenders that year.

Virtual banks appear to be targeting younger consumers for unsecured revolving lines too, as 30% of originations of this product by virtual banks during 2022 were to Gen Z consumers. By comparison, just 5% of unsecured revolving line originations by traditional banks were to Gen Z during 2022. In contrast, 47% of unsecured revolving line originations for Gen X (born 1965 – 1979) were from traditional banks, while just 15% were from virtual banks during 2022.

From a zero base in 2020, the number of revolving lines originated through virtual banks reached nearly 120,000 in 2022, surpassing the volume originated by money lenders. Over that same time, the number of revolving lines originated by traditional banks fell from nearly 55,000 in 2020, to just over 31,000 in 2022.

“Virtual banking aligns with Hong Kong’s quick and slick culture, with virtual banks innovating the landscape with technological advancements to provide a new and simplified banking experience,” Chen said. “Their technology-enabled credit risk profiling means that they can make quick credit decisions, extending credit and other financial services to consumers, all via a device in the palm of their hand, wherever they may be and at any time.”

To compete in this changing environment, traditional lenders need to accelerate digitization to provide a friction-right customer lending experience, while preventing fraud. Digitization is not only a key to automation of processing to improve operational efficiency, but also important to deliver a relevant and convenient customer onboarding and lifecycle management experience.

”Strong growth in the card market in particular suggests that there are opportunities for lenders to meet consumers’ rising demand, with re-engaged consumers in the target risk segments indicating potential profitable growth, driven by the products and benefits that they value,” Chen concluded.

For more information about the TransUnion Hong Kong Industry Insights Report, please visit our dedicated website.

¹ Originations are viewed one quarter in arrears to account for reporting lag.
² TransUnion CreditVision® risk score: super prime = AA; prime plus = BB; prime = CC; near prime = DD to HH; subprime = II to JJ. Prime and below = BB to JJ.
³ Economic situation in the first quarter of 2023 and latest GDP and price forecasts for 2023 (with photo/video) (info.gov.hk)
⁴ Hong Kong Census and Statistics Department, Population by Age, 2021

• Gen Z consumers showed the greatest appetite for credit, with 19% saying they planned to apply for new credit or refinance existing credit in the year ahead; a similar number (21%) said they did not have sufficient access to credit 
• Gen Z in 2021 held slightly fewer credit cards than their Millennial counterparts at the same age in 2016, but tended to spend more on credit cards 
• While banks remain the key source for personal loans among Gen Z, more have turned to money lenders to support their personal loan needs 

Hong Kong’s Gen Z consumers (born 1995-2010) have become increasingly credit active as they have continued to mature into adulthood, according to a recent study conducted by TransUnion (NYSE: TRU). The global information and insights company and Hong Kong’s leading consumer credit reference agency presented the findings at its recent Hong Kong Financial Services Summit. The study sought to explore credit activities and trends among Gen Z consumers, and to provide insights into how financial institutions can better serve this emerging credit-eligible group.

Globally, Gen Z represents about 30% of the total population[1]. They are also growing fast in terms of economic power, with their income expected to increase five-fold to US$33 trillion by 2030, accounting for over a quarter of global income and surpassing Millennials’ income by 2031[2]. In Hong Kong, there are around 500,000 adult Gen Z consumers aged 18 and older, with an additional 330,000 likely to turn 18 and becoming eligible to apply for credit in the next six years[3].

“As Gen Z continues to mature into adulthood, there is a need for financial institutions to better understand their unique needs so that they can better serve this emerging group of consumers, and achieve greater financial inclusion,” said Kevin Chen, principal, Financial Services Research and Consulting at TransUnion Asia Pacific. “Gen Z has been shaped by the digital age, shifting financial landscapes, and the global pandemic. They differ from Millennials – the next older generation – in many ways, making it important for financial services providers to understand their nuances.”

Gen Z consumers have a greater appetite for new credit than other generations

The TransUnion study found that among adult Gen Z consumers in Hong Kong aged 18 and older, 71% were credit active in 2021, well over 247,000 people. Their most widely held credit product was credit cards (held by 96% of credit-active Gen Z borrowers), followed by personal loans (12%), revolving lines (11%), loans on cards (5%), and mortgages (4%).

The study also found that Gen Z consumers were looking to open new credit at a higher rate than other generations in Hong Kong. Among Gen Z consumers surveyed in Q1 2023[4], 19% planned to apply for new credit or to refinance existing credit in the year ahead – an intention shared by just 14% of Millennials (born 1980-1994), 8% of Gen X (born 1965-1979), and 5% of Baby Boomers (born 1946-1964). Despite their credit needs and current levels of participation, 21% of Gen Z believed that they did not have sufficient access to credit.

Gen Z hold slightly fewer credit cards in wallet but tend to spend more

In an effort to understand more about Gen Z, the study further compared their credit participation, utilization and risk to their Millennial counterparts. The comparative analysis was drawn between the two generations at different time periods when they were the same age to allow for like-for-like comparison: Gen Z aged between 22 and 26 in March 2021, and Millennials aged between 22 and 26 in March 2016.

Overall, Gen Z consumers in 2021 tended to be more credit active than their Millennial counterparts in 2016. The comparative analysis showed that there were more credit-active Gen Z consumers as a percentage of total population in 2021 (71%) than there were Millennials in 2016 (67%), presenting an opportunity for lenders to capture the growth potential in the emerging Gen Z credit market.

Across credit products, credit cards were the most widely held among both Gen Z and Millennial consumers, both at 96%. While these two generations were both highly engaged in the credit card market, Gen Z consumers held slightly fewer cards in wallet, with 2.7 cards on average, compared to an average of 2.8 cards among Millennials when they were at the same age. While this difference was very small, it likely reflects the lower levels of demand for new credit cards seen in the early 2020-2021 period of the pandemic.

Gen Z consumers were also more likely to hold credit cards from non-bank issuers, including money lenders and virtual banks, than Millennials at the same age. This shift was likely driven by the emergence of virtual banks starting around 2020. The percentage of Gen Z (17%) holding non-bank credit cards was almost double that of Millennials (9%) at the same age. At the same time, 91% of Millennials held only cards issued by banks in their wallets, compared to 84% of Gen Z consumers who did the same.

When it came to credit card spend, Gen Z consumers generally had higher spend levels than their Millennial counterparts at the same age, potentially reflecting a higher cost of living driven by inflation as well as the shift to online transactions seen during the pandemic. However, despite their higher spend levels, Gen Z consumers had similar average card balances to Millennials’, with Gen Z’s lower revolve rate (meaning the percentage of cardholders not paying their balances in full) likely contributing to keeping balances at a similar level.

More Gen Z turn to money lenders for personal loans

Personal loans were the second most commonly used credit product among Gen Z and Millennials. Gen Z appeared to have greater appetite for new personal loans, with 7% having opened a personal loan between March 2021 and March 2022, higher than their Millennial counterparts’ 5% rate over a similar 12-month period starting March 2016.

Among those with a personal loan, banks remained the key source for personal loans among Gen Z – 56% received at least one personal loan in wallet from a bank, compared with Millennials (70%). Yet, money lenders were increasingly gaining a bigger share in personal loans among Gen Z, with 44% holding personal loans only with non-bank lenders, compared to Millennials (30%) when they were at the same age. However, when looking at the personal loan amounts, it appeared that Gen Z consumers were generally receiving slightly smaller personal loan size than Millennials at the same age, which may be a sign of shift in risk appetite among lenders.

The comparative analysis also looked at the risk profiles of the two generations. It showed that Gen Z consumers generally had a better risk profile than their Millennial counterparts did: 72% of Gen Z were in prime plus or super prime risk tiers, while 65% of Millennials were in the same tiers at the same age[5].

“There tends to be a misconception that Gen Z consumers fall into less desirable risk categories by default, given that they are new to the credit market and do not yet have much history of positive credit payment. However, data in this study, as well as our previous new-to-credit study, show that these younger consumers are not necessarily risker than others. It’s for this reason that lenders should turn to advanced, reliable data analytics and technologies to help them manage credit risk, while at the same time enabling them to capture younger consumer segments that hold significant potential for the future,” Chen added.

[1] World Economic Forum, How Gen Z Employment Levels Compare in OECD Countries, 2021

[2] BofA Global Research, OK Zoomer: Gen Z Primer, December 2020

[3] Hong Kong Census and Statistics Department, Population by Age, 2021

[4] TransUnion Consumer Pulse Study Q1 2023

[5] TransUnion CreditVision® risk score: super prime = AA; prime plus = BB; prime = CC; near prime = DD to HH; subprime = II to JJ

• The flow of new consumers entering the credit market for the first time remains subdued and is still well below pre-pandemic levels, presenting opportunities for lenders to serve more new customers. 
• Credit cards are the first product of choice among Hong Kong’s new-to-credit consumers, followed by personal loans. 
• New-to-credit consumers are not all younger generations – a smaller but still significant proportion are Gen X and Baby Boomer consumers, requiring a more customised strategy from lenders. 

The number of new-to-credit consumers entering the market in Hong Kong has not yet rebounded to pre-pandemic levels, according to a new global study “Empowering Credit Inclusion: A Deeper Perspective on New-to-Credit Consumers” released by TransUnion (NYSE: TRU), a global information and insights company and Hong Kong’s leading credit reference agency. This presents an opportunity for lenders to ramp up their acquisition strategies among this emerging segment of consumers, particularly following Hong Kong’s wider reopening and revival of economic activities that are expected to drive GDP growth between 3.5% and 5.5% this year[1].

The TransUnion study included data and insights about millions of consumers in varied global markets, including Hong Kong, Brazil, Canada, Colombia, Dominican Republic, India, Philippines, South Africa, and the United States. TransUnion defined a new-to-credit (NTC) consumer as one with no prior credit history on their credit bureau file who opened their first-ever, traditional credit product such as a credit card, personal loan or another loan unique to individual regions. The study then examined the behaviours and performance of those NTC consumers over the subsequent two years after opening their first credit product.

“A particular focus around the topic of financial inclusion is credit inclusion – the ability of consumers to access traditional lending products, such as credit cards, mortgages and personal loans. These products serve as a means to financial mobility for consumers and can be a gateway to a better quality of life, enabling homeownership, business formation and wealth creation,” said Kevin Chen, principal, Financial Services Research and Consulting at TransUnion Asia Pacific. “The more consumers who have access to credit opportunities in a region, the greater the opportunities for broad economic inclusion. The data from our study demonstrate that new-to-credit consumers are often good risks who are in need of credit and will show loyalty to those financial institutions that offer them their first credit accounts.”

Subdued NTC volumes present lender opportunities

In Hong Kong, the number of NTC consumers each year was largely stable between 2017 and 2019 (prior to COVID-19). The onset of the pandemic resulted in a dramatic drop in the number of NTC consumers in 2020 worldwide, although this drop is not surprising as global lockdowns and significantly reduced consumer spending caused fewer consumers to seek new credit. At the same time, lenders in many markets, including Hong Kong, pulled back on new loan originations, particularly to riskier borrowers.

The number of NTC consumers rebounded sharply in most markets studied in 2021, returning to near-2019 levels. Hong Kong was an exception to this global trend, where volumes grew by just 19% from 2020 levels, along with South Africa which grew by 16%. Additional research showed that this trend continued through Q3 2022 for Hong Kong (latest available data), and through the first nine months of 2022, the number of NTC consumers dipped 2.2% from the already-muted levels seen over the same period in 2021.

Graph 1: New-to-credit consumers in Hong Kong Q1-Q3 2017-2022

NTC consumers are not all from younger generations

NTC consumers are generally younger than the overall credit-served population. On average, across all regions studied, 51% of NTC consumers were Gen Z (born in 1995 or later), and 80% were in the two youngest generations of Gen Z and Millennials (born between 1980 and 1994) combined in 2021. In Hong Kong, 53% of NTC consumers during that same year were Gen Z, with another 25% being Millennials.

In Hong Kong, although the majority of NTC consumers were from younger generations, a smaller but still significant percentage were older, with 21% of NTC consumers being Generation X (born 1965-1979) and Baby Boomers (born 1946-1964) in 2021.

“Clearly, not all NTC consumers are younger, which speaks to the diversity of reasons consumers may become NTC, based on their personal circumstances. Understanding different NTC consumers and their journeys, and tailoring products to meet their diverse needs are essential to attracting their attention and offering relevant products to them,” said Chen.

In the three years before 2020, between 16% and 19% of NTC consumers were non-residents of Hong Kong, and it is likely that many were previously credit served in their prior home country or city. Restrictions on travel during the three years of pandemic led to a decrease in the share of NTC consumers who were people that had recently moved to Hong Kong; this share dropped to 8% in 2020 and 2021, and only somewhat recovered to 12% for the three quarters through September 2022 (latest available data for 2022).

Credit cards and personal loans are the first products chosen by Hong Kong NTC consumers

There is consistency among developed markets when analysing the first products opened by NTC consumers. In all developed markets, the most common first traditional product NTC consumers opened when they entered the credit market in 2021 was a credit card, with 88% of NTC consumers in Hong Kong making this their first choice. This aligns well with the heavy adoption of digital transactions and ecommerce in developed markets like Hong Kong, for which consumers often use credit cards to facilitate payments.

In Hong Kong, personal loans were the second most popular choice as a first NTC product, with 5.1% of consumers opening this product type as their entry into the credit market.

The TransUnion study also examined the subsequent products that NTC consumers opened during their initial two-year journey after entering the credit market. In Hong Kong, 39% of NTC consumers in Hong Kong opened a credit card, 8% took out a personal loan, and 4% took out a loan on card. The fact that credit card is both the most common first product as well as the most frequent subsequent product indicates that many NTC consumers seek to build out their credit wallet with multiple cards early in their credit journey. Credit card issuers can benefit by understanding the needs of NTC consumers and positioning their products to become top-of-wallet early in the consumer’s credit journey, when the opportunity to build long-term loyalty is strong.

“It’s clear that NTC borrowers around the globe and in Hong Kong will play a large role in the growth of many lenders’ books of business,” said Chen. “Even though Hong Kong has a high rate of credit inclusion, even in comparison to other highly developed markets, NTC consumers still present a growth opportunity for lenders, particularly as the NTC sector returns to pre-pandemic levels. Lenders can leverage these insights to boost the growth of NTC in Hong Kong and gain early access to a potentially loyal and profitable portfolio of consumers. Additionally, lenders can leverage enhanced analytics to better serve these consumers and manage their credit lifecycle as they embark on their credit journey.”

[1] The Hong Kong Budget 2023-2024

The study showed that globally, 4.6% of digital transactions analysed were potentially fraudulent in 2022, which was largely in line with the rate seen in 2019. However, despite the easing of digital fraud rate back to the 2019 level, the volume of global digital fraud attempts increased considerably by 80% from 2019 to 2022, alongside a marked increase in digital transactions during the same period. 

In Hong Kong, 17.5% of digital transactions were suspected to be fraudulent over 2022, the highest among all countries and regions studied. When looking at the volume, it generally mirrored the global uptrend, with an 18% increase in digital fraud attempts originating from Hong Kong compared to pre-pandemic 2019. 

“The pivot to increasingly digital transactions since the onset of the pandemic means the overall risk facing consumers and businesses is even greater than before,” said Jerry Ying, chief product officer at TransUnion Asia Pacific. “As cybercriminals and fraudsters continue to evolve and become increasingly sophisticated, businesses need to step up and put in place robust fraud prevention measures to build consumer trust and safeguard their online experiences across digital channels.” 

Logistics industry sees the highest digital fraud rate growth from Hong Kong 

Globally in 2022, the gaming (online sports betting, poker, etc.) and retail industries saw the highest rate of suspected digital fraud at 7.5% and 7.2%, respectively. These were followed by video gaming at 5.4%, financial services at 4.2% and communities (i.e. online dating and forums) at 4.0%. 

For transactions originating from Hong Kong, the logistics industry saw the highest growth rate in suspected digital fraud, up by 219% from 2019 to 2022. The insurance and communities industries also saw a significant increase in digital fraud attempts from Hong Kong, up 204% and 131%, respectively, over the same period. 

Global and Hong Kong Digital Fraud Attempt Rate Change by Industry 2019-2022

Source: TransUnion TruValidate^TM

Phishing, stolen credit cards and vishing are the most prevalent threats facing Hong Kong consumers 

The study found that a large percentage of people are being impacted by digital fraud attempts across a wide range of communications channels. In a TransUnion-commissioned consumer survey across 18 countries and regions globally, 52% of respondents globally said they were targeted by digital fraud via email, online, phone call, or text messaging in the three months beginning September 2022. 

Among Hong Kong respondents, 45% said they were targeted by digital fraud attempts across these communications channels, and 5% of all surveyed fell victim over this time period. Phishing (fraudulent emails, social posts, websites and QR codes meant to steal data), at 38%, was the most commonly reported fraud scheme experienced by Hong Kong consumers, followed by stolen credit cards at 27% and vishing (fraudulent phone calls that induce you to reveal personal information) at 22%. Across generations, Millennials (born 1980–1994), Gen X (born 1965–1979) and Baby Boomers (born 1944–1964) appeared to be most concerned about vishing (at 61%, 64% and 73%, respectively), compared to Gen Z (born 1995–2004) who were most concerned about phishing (40%). 

“The explosion of digital transactions, the accelerated adoption of digital technologies, and increasing appetite for faster access to digital services have all contributed to an increase in fraud losses. At the same time, while consumers want a fast and convenient online experience, they are also expecting businesses to protect their identities and online accounts. Businesses need to employ a strategy of continuous innovation through better data, analytics and technology to more accurately detect potential fraud, while at the same time delivering a friction-right digital experience for consumers,” said Ying. 

TransUnion came to its conclusions based on intelligence from its identity and fraud product suite TransUnion TruValidate that helps secure trust across channels and delivers efficient consumer experiences. The rate or percentage of suspected digital fraud attempts reflect those which TransUnion customers either denied in real time due to fraudulent indicators or determined were fraudulent after reviewing – compared to all transactions it assessed for fraud. Specific country and regional data in the report include Brazil, Canada, Chile, Colombia, Dominican Republic, Hong Kong, India, Kenya, Mexico, Namibia, Philippines, Puerto Rico, Rwanda, South Africa, Spain, United Kingdom, United States and Zambia. 

For more information and insights on global fraud trends, please download the 2023 State of Omnichannel Fraud Report. 

• Hong Kong continued to see a revival of consumer credit activities, fueled by borders reopening and improved consumer sentiment. 
• High interest rate environment caused a higher ratio of credit cardholders to become transactors. 
• Consumers with loans on card tend to hold more credit cards and spend more, presenting growth opportunities for card issuers. 
• Top-of-wallet card holds typically three-fifths or more of consumers’ credit card balances, while fewer consumers hold five or more cards than before. 
   

Credit demand and supply reflected a revival of consumer credit activities during the last quarter of 2022, amid the backdrop of borders reopening, improving labour market conditions, and reviving private consumption, according to the latest Q4 2022 Industry Insights Report released by global information and insights company TransUnion (NYSE: TRU). In Q4 2022, Hong Kong saw its labour market continue to improve with the unemployment rate trending down to 3.4%[1], while at the same time, private consumption recovered to pre-pandemic levels[2]. This was despite the Hong Kong economy overall contracting by 4.2% year-on-year (YoY) during the last quarter, with the consumption growth possibly buoyed by anticipation of an influx of visitors and investors amid a general reopening and relaxation of travel restrictions.

Originations[3] – a measure of new accounts opened – recorded growth in three major consumer credit product lines in Q3 2022 (latest available data for originations): credit cards, loans on card, and unsecured revolving lines. Loans on card saw the most pronounced growth at 29% YoY. Unsecured revolving lines increased by 2.1% YoY, albeit at a slower pace after two years of rapid growth. Credit cards, the most widely held credit product, continued a growth trajectory with 1.8% growth in originations YoY.

When looking at outstanding credit card balances, it grew by 7.3% YoY in Q4 2022. This growth and general resurgence in the credit card market indicates reengaged consumers, largely attributable to improved consumer sentiment and sustained momentum in consumption. According to TransUnion’s Consumer Pulse Study Q4 2022, Hong Kong consumers showed increased optimism in their household finances, with a majority (78%) saying they expected their income to remain stable or increase in the following months.

“In Hong Kong, consumer sentiment seems to have remained unaffected by the current inflation and high interest rate environment,” said Kevin Chen, principal, Financial Services Research and Consulting at TransUnion Asia Pacific. “This positive momentum in consumer sentiment is translating into growth in the major consumer credit products. Lenders need to capitalise on this growth trajectory by better serving consumers’ product preferences and needs as they reengage with the credit market.”

Not all product categories recorded overall growth. Following a strong rebound in 2021, the unsecured personal loan market softened in 2022, with a decline of 9.7% in originations YoY during Q3 2022. This decline occurred across generations, except Gen Z (born in 1995 onwards), where originations increased by 10% YoY, mainly due to the continued increase in the number of adult consumers in this generation each year. Despite the overall origination decline, outstanding balances for unsecured personal loans were up 8.7% YoY in Q4 2022.

Mortgages – the second largest product in Hong Kong’s consumer credit market in terms of number of borrowers – continued to be pressured by an ongoing correction in the housing market and rising interest rates. Origination volumes in Q3 2022 decreased noticeably from the same quarter in the previous year but rebounded from the lower level seen in the prior quarter of Q2 2022.

Q4 2022 Metrics for Major Consumer Credit Products in Hong Kong

Source: TransUnion Hong Kong (except for mortgage data which is from the Residential Mortgage Survey (December 2022) published by the Hong Kong Monetary Authority)

i. Originations are viewed one quarter in arrears to account for reporting lag.

ii. Serious delinquency rates are 90 or more days past due for credit cards and 60 or more days past due for all other credit products.

iii. Delinquency data are reported at a balance level except for mortgages and loan on card, which are reported at an account level.

Consumers shift from being credit card revolvers to transactors amid high interest environment

Hong Kong’s base rate[4] increased seven times during 2022, rising from 0.5% in January to 4.75% in December. The relatively high interest rate environment and consumers’ improved confidence in their future incomes seem to have engendered a shift in credit card management behaviours.

The proportion of credit cardholders that revolved their cards – meaning paying a partial amount of their total card balances each month – gradually decreased alongside rising interest rates, down from 56% in Q4 2021 to 54% in Q4 2022. At the same time, credit cardholders that managed their accounts as a transactor – paying the total balance each month to avoid paying interest and/or late fees – increased gradually from 44% in Q4 2021 to 46% in Q4 2022.

“Despite more credit cardholders paying off their balances in full each month, there was still significant growth in credit card balances, indicating a rebound of consumer spending on the back of Hong Kong’s reopening and revival of economic activities, and potentially higher balances maintained by those that did still revolve. At the same time, the growth in loan on card originations and balances may also suggest that consumers were shifting their balances to new loans on card with lower interest rates to cope with rising interest rates and inflation,” added Chen.

Cardholders with loans on card tend to spend more

Loans on card offer additional credit access to consumers who already hold a card with a lender, giving lenders the opportunity to earn additional interest income and increase overall share of wallet.

Simultaneously, consumers with loans on card were observed to hold nearly double the number of cards than those without loans on card. Super prime* consumers with loans on card held an average of 7.7 cards in their wallets, compared to the 4.4 cards held by super prime consumers who did not hold a loan on card. For the prime plus risk band, consumers with loans on card held an average of 7.4 cards in wallet, compared to the 3.9 cards held by consumers without loans on card. The trends were similar for near prime and prime consumers.

The Q4 2022 report also observed the average card spend among prime and above consumers holding loans on card was three times greater than that of consumers of a similar risk profile and without loans on card. These insights indicate that consumers who hold loans on card tend to be more engaged and credit active, offering greater growth potential.

Consumers who took out loans on card are mostly Millennials (born 1980-1994) and Gen Z (born in 1995 onwards). Millennials accounted for 41.5% of originations in loans on card during Q3 2022 (latest available data for originations). Gen Z borrowers made up 36.9% of new loans on card, compared to 34.7% during the same quarter of 2021.

“Gen Z consumers are the most rapidly growing group of borrowers, and they present an opportunity for lenders seeking growth-driven revenue sources,” Chen said. “Consumers with loans on card leverage their credit cards in building higher balances, making this a profitable consumer segment for credit card issuers. Lenders can leverage trended data and algorithms to predict consumers likely to open loans on card and hence fuel smart portfolio growth.”

Top-of-wallet card wins up typically three-fifths or more of outstanding card balances

TransUnion found the average number of cards per cardholder reduced when comparing Q4 2019 to Q4 2022. Previously, 40% of super prime Hong Kong residents had five or more credit cards in wallet, whereas just 35% have this many cards in wallet now. On average, each super prime cardholder held 4.9 cards in Q4 2019 versus a slight drop to 4.4 cards in Q4 2022. The super prime segment represented a significant 70% of overall cardholders in Q4 2022.

Among those super prime cardholders with five cards or more, the top-of-wallet card reflected 58% of the overall consumer-level balance across all cards. The second most used card held only 22% of overall consumer-level card balances, and the remaining three or more cards held just 20% of their balances. Among super prime cardholders with four cards, the top-of-wallet card typically reflected 69% of their card balances. The top-of-wallet card for super prime consumers with three open cards held 75% of their balances, while the top-of-wallet card among those with two cards accounted for 84% of their balances. With top-of-wallet cards holding a significant share of balances, being the top-of-wallet card issuer becomes increasingly critical in an environment where interest rates are rising and consumers are reengaging in the market as the economy recovers.

When it comes to loyalty relating to the top-of-wallet card share, TransUnion’s data shows 61% of consumers turn to the financial institution issuing their top-of-wallet card when applying for a loan on card.

“Lenders need to invest in and diversify their strategies to become or remain the top of wallet card and ensure a meaningful share of consumers’ credit card balances, especially when there are fewer cardholders with five or more cards in wallet,” Chen said. “In this environment where competition for balances is stiff, lenders can grow portfolios by promoting alternative products. The fact that so many loans on card are originated off consumers’ top-of-wallet credit cards suggests that lenders seeking to expand the number of products accessed by their highest-balance consumers should focus on promoting this product, leveraging the credit and relationships that they already have.”

For more information about the TransUnion Hong Kong Industry Insights Report, please visit our dedicated website.

*TransUnion CreditVision® risk score: super prime = AA; prime plus = BB; prime = CC; near prime = DD to HH; subprime = II to JJ. Prime and below = CC to JJ.

[1] “Hong Kong Economic Situation – Latest Developments” by the Office of the Government Economist of Hong Kong

[2] “GDP and its Main Expenditure Components at Current Market Prices” by the Census and Statistics Department of Hong Kong

[3] All originations in this press release are based on Q3 2022 data due to reporting lag.

[4] “Hong Kong Interest Rate” by Trading Economics

The new packages include Credit Report (a detailed account of credit histories and credit scores), Credit Score Calculator (a simulator to help consumers understand the potential impact of financial decisions on their credit scores), Debt Analysis (an overview of debt-to-income ratios), and Credit Alert (an alert service to help prevent identity thefts) services.

Creditworthiness is key to achieving financial goals

Credit scores are an indicator of creditworthiness, or more simply, how trustworthy a consumer is to receive new credit. With regular credit monitoring, consumers can make more informed decisions and take proactive steps to improve their creditworthiness. This, in turn, will help them achieve their life goals, whether that be buying property, starting a new business, or finding a new job.

In fact, a TransUnion study[2] shows that among consumers who continuously monitored their credit reports for at least 12 months, one in three (34%) also saw an improvement to their credit scores, compared to only 15% of those who did not monitor. A good credit score not only helps consumers gain access to the credit they need, it may also allow them to obtain a lower interest rate. Consumers with a Super Prime score (AA) received on average an annual percentage rate (APR) of 4.8% on personal loans, compared to 10.7%-19% for those with a Near Prime score (DD, EE or FF)[3].

“Just as your lifestyle choices impact your physical health, your credit health is a reflection of your credit habits,” said Irene Foo, director of Consumer Interactive at TransUnion Hong Kong. “To keep your credit health in good shape, it is important to monitor your credit reports on a regular basis. Improving credit health is not something that happens overnight. It generally requires a conscious effort in building good habits and consistent monitoring over the medium to long term to see an improvement. Now is a great time to make a New Year’s resolution to establish habits that will improve your credit health and credit worthiness.”

The packages are available at two price options for consumers to choose from based on their needs:

• Credit Monitoring Service Package for 6 months at HK$688, or HK$115 a month on average (Original fee at HK$280 per month)
• Credit Monitoring Service Package for 12 months at HK$888, or HK$74 a month on average (Original fee at HK$280 per month)

They are exclusively available on the TransUnion HK Credit Report mobile app, which can be downloaded from Apple’s App Store or Google Play.

[1] Terms and conditions apply.

[2] The TransUnion study analyzed consumer credit reference data during the period from September 1, 2020 to August 31, 2021.

[3] TransUnion CreditVision® risk score: Super Prime = AA; Prime Plus = BB; Prime = CC; Near Prime = DD to HH; Subprime = II to JJ

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today released its latest quarterly Consumer Pulse Study. It reveals that Hong Kong consumers, for the first time in a year, show increased optimism over their household finances; but they are, at the same time, increasingly wary of recession in 2023.

Consumer confidence held back by worries over recession and inflation

Findings show that 36% of Hong Kong consumers surveyed are optimistic about their household finances in 2023, up four points from the previous quarter. Almost one-third (31%) also expect their income to increase in the year ahead, two points higher than last quarter. These are the first improvements seen in a year, as the city reopens its borders and lifts nearly all pandemic restrictions.

However, fears of recession continue to grow, with 34% expecting the Hong Kong economy to go into a recession in 2023, up by a significant 10 points from the previous quarter.

“This represents a unique moment in time for Hong Kong as it charts its way back to normalcy in the face of a complex economic climate”, said Kevin Chen, principal, Financial Services Research and Consulting at TransUnion Asia Pacific. “The local economy is, on one hand, expected to benefit from reopening and the subsequent influx of visitors and investors. On the other hand, global economic headwinds from rising interest rates, inflation and slowing external demand will continue to weigh on the Hong Kong economy.”

Additional findings show that inflation and the threat of recession are the top concerns among consumers, with around three-fifths (63% and 56%, respectively) ranking them among their top three concerns for their household finances over the coming months. When asked about how they plan to deal with a potential economic slowdown, the majority of consumers plan to cut back on spending (73%) and build up savings (63%). Across generations, the youngest group, Gen Z, appears to have the lowest desire for reducing spending (52%), as compared to Gen X and Baby Boomers who are the most open to reducing spending (both at 81%).

Consumer appetite for credit falls for the fourth quarter

Against the backdrop of macroeconomic uncertainties and rising interest rates, consumer appetite for new credit continues to decrease. Less than one-third (31%) of consumers surveyed plan to seek new credit, down for three consecutive quarters from 48% at the beginning of 2022. In fact, rising interest rates are a key factor affecting consumers’ decisions on seeking new credit. More than half (52%) say that rising interest rates have high to moderate impact on whether they would apply for new credit, up nine points from last quarter.

Among those seeking new credit, there is a shift in product preference as fewer consumers (51%) plan to apply for a credit card, down six points from the previous quarter. At the same time, consumer appetite for refinancing personal loans sees the largest increase, up seven points to 19%; while mortgage loans see the biggest decline, down nine points to 17%.

“The threat of increasing interest rates and high inflation combined with recession fears represent the latest in a series of significant challenges consumers have faced in recent years,” added Chen. “Financial institutions need to better understand consumers’ needs in order to capture credit business amid subdued demand. They can leverage digital technologies to enhance their customers’ onboarding experience, while also employing insight-led strategies to manage their portfolio and risk effectively.”

TransUnion’s Consumer Pulse Study surveyed 1,011 consumers in Hong Kong during November 3-15, 2022. This quarterly study examines shifting consumer attitudes and behaviors based on the dynamics of income, debt, and identity theft, with respondents ranging from Gen Z (born 1995-2004), Millennials (born 1980-1994), Gen X (born 1965-1979), and Baby Boomers (born 1944-1964). For more information, please view the full report of the Consumer Pulse Study Q4 2022.

These findings are based on intelligence from billions of transactions contained in TransUnion’s TruValidate™ fraud analytics solution suite. The analysis determined that the average number of suspected digital fraud attempts on any given day during that holiday period globally was 82% higher than during the rest of the year (January 1 to November 23, 2022). In Hong Kong, it was 62% lower than the same period plus the Singles’ Day than during the rest of 2022.

The study also revealed the share of suspected digital fraud attempts for each individual day in the holiday shopping period for transactions in Hong Kong and globally.

Breakdown of Risky Transactions During Holiday Period

* For Hong Kong only

“Fraudulent activity tends to be prevalent in online retail that has become an integral part of everyday life,” said Jerry Ying, chief product officer at TransUnion Asia Pacific. “Despite the fact that consumers have begun returning in larger numbers to in-person shopping following the gradual relaxation of social distancing measures, online retail continues to be the preferred means for many. It is important that online retailers ensure consumer security and privacy protections, which is important to consumers, but in a way which ensures a seamless shopping experience that minimizes unnecessary friction.”

TransUnion also revealed in the analysis the top types of potentially fraudulent e-commerce transactions during the holiday shopping season globally. This year, promotion abuse (where a user abuses site promotions, such as refer-a-friend and free giveaways) and account takeover (where someone other than the owner of an account uses it without permission) were the leading types of fraud attempts.

“While it is good to see the digital fraud originating from Hong Kong decrease, possibly amid improved consumer awareness and effective preventive measures taken by more businesses, there is no room for complacency,” said Ying. “As fraudsters become increasingly sophisticated, online retailers must continue to equip themselves with the proper tools to detect fraud at the first warning sign, and without inhibiting the consumer journey. They can leverage some holistic fraud solutions that are able to verify customer identity and authenticity at the very beginning of a transaction, without resulting in false positives that may cost them legitimate transactions.”

Majority of consumers express concern this holiday season

The decrease of suspected digital fraud coming from Hong Kong during the traditional busiest days of the holiday shopping season occurred as consumers express concern about being victimized. TransUnion’s 2022 Q3 Consumer Pulse Study conducted between August 19 and September 1 found that the vast majority of Hong Kong consumers (86%) are concerned with being victimized by online fraud this holiday season.

TransUnion monitors digital fraud attempts reported by businesses in varied industries such as gambling, gaming, financial services, healthcare, insurance, retail, and travel and leisure, among others. The conclusions are based on intelligence from billions of transactions and more than 40,000 websites and apps contained in TransUnion’s flagship identity proofing, risk-based authentication and fraud analytics solution suite – TruValidate™.

To find out how this data varies by select countries and regions, download TransUnion’s holiday fraud trends infographic.

[1] The percent of suspected digital fraud attempts are those that TruValidate customers either denied or reviewed due to fraudulent indicators compared to all transactions it assessed for fraud.

Credit activity in Hong Kong has continued to increase in key product categories following the easing of COVID-19 restrictions and Phase II of the Consumption Voucher Scheme, according to TransUnion’s (NYSE: TRU) Q3 Industry Insights Report. The global information and insights company’s findings highlight a marked increase in the originations of loans on card and unsecured revolving lines, as well as growth in account balances.

“Overall, credit demand and supply in Q3 reflected a long-awaited increase in consumer credit activities,” said Kevin Chen, Principal, Financial Services Research and Consulting at TransUnion Asia Pacific. “This occurred despite private consumption not having yet recovered to pre-COVID-19 levels. Consumer sentiment has likely been bolstered by an improved unemployment rate and the stimulus provided by the government’s consumption voucher scheme.

“After being stagnant for several consecutive quarters, credit cards, which are the most widely-held consumer credit product in Hong Kong, finally saw a resurgence in originations and balances, while other forms of unsecured lending also continued their growth trajectory,” Chen said. “Although the latest quarterly data could indicate optimism among consumers that is leading to increased use of credit, it remains to be seen how the recently announced 4.5% contraction in Hong Kong’s GDP will affect credit market activity going forward.”

Credit card origination approaches 2021 rate

Credit card origination volumes fell slightly in Q2 2022 (the latest period for originations due to reporting lag), by -0.8% year-over-year (YoY) compared to Q2 2021. The YoY decline was all seen among consumers in the lowest-risk super prime score tier. Among borrowers in higher-risk tiers, an increase in origination volume was seen, with prime and below segments increasing the most on a YoY basis: originations among subprime consumers jumped by 45%, near prime by 15%, and prime by 7%¹.

Total outstanding credit card balances also increased YoY in Q3 2022. These higher card balances were also likely a result of increased economic activity following the gradual relaxation of COVID-19 restrictions in Q3, with overall retail sales value in Hong Kong having increased by 1.3% YoY².                                                                   

Loans on card continue strong growth

Originations for loans on card (a product that offers additional access to credit to a consumer that already has a credit card with a lender) grew by 21.7% in Q2 2022, compared to Q2 2021, as lenders took advantage of opportunities to earn additional interest income and increase their overall share of consumers’ wallets through this lower cost of acquisition channel.

“Loans on card can be a profitable lever to help build loyalty and balances among those who need credit. With demand being the highest among younger, well performing consumers, lenders would do well to assess growth opportunities among existing cardholder portfolios,” Chen said.

Unsecured personal loan growth subdued

Growth in the unsecured personal loan market started to slow during 2022, with originations for this loan type only growing marginally, by 0.4% YoY, in Q2 2022, compared to the same quarter in 2021 when the number of unsecured personal loans increased by 5.2% YoY. The level of the originations, however, was still above the level seen in 2021 and earlier in the pandemic, suggesting sustained demand and supply.

Personal loan borrowers tend to be in higher-risk score tiers, with a larger share in prime and below segments compared to credit cards and other lending products. Over the past year, banks have expanded originations to higher risk borrowers. The share of bank personal loan originations going to the non-prime consumer segment increased from 44% in Q2 2020 to 57% in Q2 2022. For comparison, money lenders’ share of personal loan originations to non-prime consumers remained stable at around 95%. Money lenders constitute a slight majority of the unsecured personal loans market, with close to 52% of newly unsecured personal loans issued.

Demand for mortgages falls

Mortgages – the second most commonly held product in the Hong Kong consumer credit market – continued to be under pressure from an ongoing correction in the housing sector, in which property prices have fallen against the backdrop of weak demand and rising interest rates which has constrained affordability. While the number of accounts saw a moderate 3.5% increase YoY in Q3 2022, origination volumes seen in Q2 2022 decreased by -30.2%, in sharp contrast to the same quarter in 2021 where mortgage originations grew by 14.3%.

“Historically, a slow-down in mortgage originations can indicate caution among consumers, who are likely reluctant to take out long-term debt under economic conditions such as high inflation, high interest rates, and uncertainties in the property market. At the same time, as property values fall further, we may experience an improvement in affordability that could lead to a potential re-engagement from consumers looking to purchase a home.” Chen added.

Table 1: Q3 Metrics for Major Consumer Credit Products in Hong Kong

Source: TransUnion Hong Kong (except for mortgage data which is from the Residential Mortgage Survey (September 2022) published by the Hong Kong Monetary Authority)

i. Originations are viewed one quarter in arrears to account for reporting lag.

ii. Serious-delinquency rates are 90 or more days past due for credit cards and 60 or more days past due for all other credit products.

iii. Delinquency data are reported at a balance level except for mortgages and loan on card, which are reported at an account level.

Consumers engaging more with credit

According to the TransUnion Consumer Pulse Survey for Q3 of 2022, of consumers who said they intend to apply for new credit in the next year, 41% were planning to open a new personal loan, indicating a preference for this product. This preference may be driven by an increased need for credit in the current inflationary environment, either to pay down more expensive credit card balances or to finance new purchases.

The Consumer Pulse Survey also highlighted that consumer sentiment is increasingly upbeat, supported by an improved employment market and 66% of consumers saying that their household finances were either better than expected or as planned during this quarter – an increase from the 60% of consumers who said the same thing in Q2.

These stable or improved finances enhanced consumers’ confidence in meeting their debt obligations, with 80% of respondents saying that they expected to be able to pay their bills and loans in full, up from 78% in the previous quarter. This was despite a consistent 95% of consumers expressing concern about inflation. 

“Considering the current relatively stable status of the pandemic, along with improved labor conditions, consumption and the resulting demand for credit are likely to continue to support credit market recovery. The current and expected economic conditions indicate a tremendous opportunity for lenders to pursue growth. Hong Kong consumers have shown resiliency, a regained interest in credit, and a potential need to leverage credit to cope with the rising cost of living and debt. Lenders should leverage enhanced credit attributes to identify consumers who are likely to be resilient to these pressures and pursue prudent growth with these consumers, and hence gain loyalty.” Chen concluded.

For more information about the TransUnion Hong Kong Industry Insights Report and to register for TransUnion's Q3 2022 Industry Insights Report webinar scheduled for December 7, 2022 at 3:00pm HKT, please visit our dedicated website.

¹ TransUnion CreditVision^® risk score: super prime = AA; prime plus = BB; prime = CC; near prime = DD to HH; subprime = II to JJ. Prime and below = CC to JJ.

² The Census and Statistics Department (C&SD) of Hong Kong, “Provisional Statistics of Retail Sales for September 2022”, November 1, 2022

“At TransUnion, we are honored to be entrusted as a credit reference agency to support the future of the credit economy in Hong Kong,” said Marie Claire Lim Moore, regional president of Asia Pacific and CEO of Hong Kong at TransUnion. “We have a long history of helping banks and money lenders in Hong Kong manage credit risk and enabling consumers from all walks of life to access credit and achieve their aspirations. As we embark on this new chapter, we are confident that our strong local experience and global expertise, combined with our continuous pursuit of innovation and investment in talent, will position us well for the opportunities ahead.”

TransUnion supports the introduction of the MCRA and is confident that it will bring long-term benefits to the Hong Kong economy. TransUnion has been contributing significant expertise and resources to help make the transition process to this new model a success and will continue to work closely with regulators, Industry Associations, banks and money lenders to promote financial inclusion and further Hong Kong’s credit economy in the future.

Lim Moore concluded, “Hong Kong has a proud heritage as a global financial center with an advanced credit economy. TransUnion’s vision of making trust possible between consumers and businesses in global commerce is at the heart of everything we do, and today’s announcement is an important step in the evolution of the Hong Kong market.”

TransUnion (NYSE: TRU), a global information and insights company, and EY-Parthenon, one of the largest global strategy consultancy firms, have released the Future of SME Financing report, which reveals new research highlighting the challenges faced by Hong Kong’s small and medium sized enterprises (SMEs) in financing and access to credit. The report shows that SMEs needed to access external financing to endure the pandemic, but they were hampered in this by laborious loan application processes.

In Hong Kong, 98% of all businesses are SMEs, which employ 45% of the workforce[1], making them a key contributor to the city’s economic recovery. The need to support and finance these small businesses has never been more vital.

“As Hong Kong’s economy continues to emerge from the pandemic disruptions, the SME sector will play a pivotal role in driving the recovery,” said Eric Cheung, senior director and head of solution consulting of TransUnion Asia Pacific. “The sector’s growth potential cannot be understated as the demand for financing to support their operations and ambitions is greater than ever. That makes it critical for the financial services sector to understand their evolving needs so we can better support those small businesses that underpin Hong Kong’s economy.”

Journey to Financial Support is Encumbered by Obstacles

Among surveyed SMEs, almost two-thirds (61%) required financial support over the past year. In particular, SMEs sought financing to cover day-to-day operations, including working capital (25%) and paying staff salaries (23%), while some were to tackle changing market conditions under the prolonged pandemic through business expansion (18%) and changing business model (17%).

The majority of SMEs (73%) said a prolonged and complex application process is the major pain point in their financing journey. Specifically, 21% found it difficult to meet the collateral requirements attached to the loan. Other challenges include a perceived lack of transparency in the approval process (18%), the large amount of required documents (17%), and the slow application process (17%).

The research found that these challenges are tied to financial institutions’ highly manual processes and legacy technology. Financing professionals interviewed said some of the greatest barriers to processing SME loan applications are the lack of SME-specific data to evaluate risk (30%), the lack of SME-specific risk tools to evaluate credit worthiness (29%), along with operating inefficiency in collecting documents from SMEs (29%).

These challenges have made it more difficult for SMEs to access credit at a time when they need it the most, especially new-to-credit businesses. For lenders, the challenges mean missed opportunities and slower business growth in the SME segment.

Traditional Banks Remain First Port of Call

Traditional banks remain the key source of financing, with almost all SMEs (95%) obtaining their financing from them. Bank loans are the most sought-after financial product (37%), with private debt (20%) and credit cards (18%) also used regularly.

Despite their strong financing needs, many SMEs struggled to obtain the same amount of financing as they did before the pandemic due to challenges in meeting credit requirements. In fact, 40% saw a decrease in their financing amount compared to pre-pandemic times, with a significant shift from larger to smaller loans. During the past year, 31% took out a small loan of below HK$500,000, versus 21% before the pandemic.

“The pandemic has been both a disruptor and a digital catalyst, and there is no better time for banks and money lenders alike to build their digital capacity so they can create more SME-friendly processes,” said Cheung. “Lenders now have an opportunity to rethink and redesign their current processes and assessment frameworks with SMEs’ evolving needs in mind. By optimizing processes, data analytics and digital capabilities, lenders can set themselves up to better serve the rapidly growing SME financing market.”

TransUnion offers a range of digital solutions to help banks and money lenders improve their financing processes, from onboarding and credit assessment to credit monitoring, and to better manage credit and promote financial inclusion. In particular, the TransUnion SME KYB solution is designed to enable faster onboarding processes, while also improving accuracy with access to official data sources. Credit risk management is supported by the TransUnion SME Score which leverages both companies’ and individuals’ credit data to facilitate better credit analysis and decisioning.

About the Future of SME Financing Report

The Future of SME Financing study was prepared jointly by EY-Parthenon and TransUnion. The research comprised of two surveys covering 100 SMEs and 200 banks and money lenders in Hong Kong conducted in July 2022 to examine how SMEs’ financing needs could be better served. Additional interviews with subject matter experts were used to validate the findings and gain further insights into the specific challenges faced by banks and money lenders along with their current adoption of digital solutions. The Future of SME Financing report is available for download here.

[1] Hong Kong Trade and Industry Department, August 2022

Federated learning is a machine learning technology that allows organizations to collaborate in building and training artificial intelligence (AI) models while keeping their respective proprietary data at source to safeguard data privacy.

Data collaboration will be conducted over the Openhive Federated Learning Platform using world-leading and proven privacy-preserving AI technology. This TransUnion-Openhive FLDN is the first federated learning network deployed in Hong Kong to enable data collaboration between different data requesters and data providers, enabling new business insights using machine learning.

The FLDN future-proofs data-driven analytics by enabling privacy-preserved data collaboration, machine learning and scoring in an end-to-end platform. This opens up tremendous opportunities for data partners as the FLDN helps them to create business value from their data, and leverage TransUnion’s credit data and analytics expertise to serve different industries and wider economies, including the Greater Bay Area (GBA).

“Our partnership with Openhive is a great example of how we pursue innovation to constantly enhance our customer solutions and strengthen our technological leadership,” said Jerry Ying, Chief Product Officer, TransUnion Asia Pacific. “The launch of this federated learning platform is a significant milestone for Hong Kong. Collaboration by different parties on the platform opens the door to creating many more as yet unrealized data-driven solutions across more industry sectors.”

The partnership expands TransUnion’s established strengths in data analytics and insights, with its data being part of the FLDN for collaboration with data partners from diverse industry sectors. The TransUnion-Openhive FLDN is data agnostic, where data from any industry sector can be included in the network with data privacy being preserved to create insights that allow more informed decisions to be made. 

Federated learning applications such as this fall under the Hong Kong Monetary Authority’s Regtech promotion roadmap to build new data infrastructure and encourage Regtech adoption, particularly in providing alternative credit risk assessment solutions for small and medium sized enterprises (SMEs). Using the TransUnion-Openhive FLDN, TransUnion will be able to take data analytics to a new level using a broader range of conventional and alternative data, such as rent and utility payments to offer lenders more accurate credit assessments for consumers and businesses. This will particularly help individuals and small and medium-sized businesses that have limited credit histories to get better access to the credit they need to achieve their financial goals in Hong Kong and across the Greater Bay Area. Ultimately, as well as helping businesses better manage risk and be more competitive, it will also help increase financial inclusion.

“The TransUnion-Openhive FLDN enables financial institutions to benefit from the synergy of data collaboration with TransUnion as well as other representative data providers. In compliance with data privacy and security, financial institutions can now model with alternative data on the FLDN to get more accurate predictive insights and risk assessments, which are crucial for managing businesses in the dynamic economic environment nowadays,” said Juni Yan, MD, Openhive.

Continued changes in Hong Kong consumers’ wallet profiles are being driven by macroeconomic pressures, including increasing inflation¹ and four interest rate hikes since the start of the year², according to TransUnion’s (NYSE: TRU) Q2 Industry Insights Report. The global information and insights company’s findings highlight a marked increase in the number of new unsecured personal loans and unsecured revolving credit lines, along with cautious spending on credit cards.

Unsecured personal loan originations increased by 6.7% year-over-year (YoY) in Q1 2022 (the latest period for originations due to reporting lag). Originations are a measure of new accounts opened and are a reflection of both consumer demand and lender appetite to advance credit. The total number of open unsecured personal loans increased by 5.2% YoY in Q2 2022, and over the same period the average balance for new personal loans also increased by 2.7%.

Originations of unsecured revolving lines increased by 81.3% YoY in Q1 2022 – this was in comparison to a relatively weaker quarter the year before for this category, and likely stimulated by the more favourable interest rates offered on this product type. The total number of revolving line accounts increased by 8.7% YoY in Q2 2022, although the average balance in this category fell by 9.1% YoY in the same period. This was primarily driven by increases in lending to consumers with prime and above credit scores³, with the share of originations to non-prime borrowers remaining steady. Low risk consumers tend to carry lower balances on revolving products, which may explain some of the decrease in overall average balances despite the increase in originations. At the same time, lenders are granting smaller credit limit amounts on new unsecured revolving line accounts to prime and above consumers—approximately half the average new credit limit compared to new limits assigned 12 months ago.

Countering the growth in new account openings for unsecured credit loan and line products, the number of credit card accounts in the Hong Kong market fell by 3.4% YoY. This was primarily caused by a 38.2% YoY decline in origination volumes in Q1 2022. Additionally, the average new credit card account credit line fell by 8.0% YoY in Q2 2022. Outstanding balances remained broadly static for credit cards as consumers took a cautious approach to spending. Consumers continued to perform well on their card payment obligations, with balance-level delinquencies for credit cards falling by two basis points (bps) YoY in Q2 2022.

The fall in the number of credit card accounts and in originations is likely due to a saturation of accounts in market, with most Hong Kong residents, on average, already holding more than two cards in pocket⁴. Government issuance of consumer vouchers via digital channels, and a lack of attractive promotions or favorable interest rates has made Hong Kong residents reluctant to apply for new credit cards.

The trends identified by the Q2 Industry Insights Report are also supported by the findings of the Q2 TransUnion Hong Kong Consumer Pulse Study, published in August. It reflected consumers’ cautious approach to spending, with 95% of consumers saying they were concerned about the current rate of inflation in Hong Kong. The study also found that 22% of consumers expect to be unable to pay at least one of their current bills or loans in full in the coming months, with 81% of respondents having said that their household income stayed the same or decreased in the preceding three months. This is despite the recent drop in the Hong Kong unemployment rate, which has improved each month since April 2022 but still remains above pre-pandemic levels.⁵

The same study highlighted that 45% of Hong Kong residents were cutting back on discretionary spending, including dining out, travel, and entertainment, with 16% cancelling subscriptions and memberships and 12% cancelling or reducing digital services.

Table 1: Q2 Metrics for Major Consumer Credit Products in Hong Kong

Source: TransUnion Hong Kong (except for mortgage data which is from the Residential Mortgage Survey (June 2022) published by the Hong Kong Monetary Authority)

i. Originations are viewed one quarter in arrears to account for reporting lag.

ii. Serious-delinquency rates are 90 or more days past due for credit cards and 60 or more days past due for all other credit products.

iii. Delinquency data are reported at a balance level except for mortgages and loan on card, which are reported at an account level.

Shift in saving and investment strategies

“The significant growth in unsecured loans and revolving lines indicates a clear shift in consumer preferences and needs in light of the rising cost of living. This shift has likely led to the unusually cautious spending behaviour that has mostly impacted the credit card market,” says Marie Claire Lim Moore, Regional President, Asia Pacific and Hong Kong CEO of TransUnion. “With strong macroeconomic headwinds impacting the market, consumers are understandably cautious about credit usage.

The Q2 TransUnion Hong Kong Consumer Pulse Study findings support this with consumers starting to focus more on savings rather than on spending and investments – the number of Hong Kong residents saving more in their emergency fund increased by four percentage points, to 45% from Q1 to Q2 2022.

“Consumer sentiment during the second quarter may also have been impacted by the fifth wave of COVID-19 and associated inbound travel restrictions,” Lim Moore says. “It will be important to see how the market responds to the relaxation of travel restrictions and quarantine rules with the introduction of the ‘3+4’ approach to COVID-19 during August 2022,” adds Lim Moore⁶.

Secured lending reflects cautious sentiment

Secured lending trends often reflect consumers’ long-term sentiment, given the length and amount of commitment implied by a mortgage or auto loan agreement. Overall growth among secured products like mortgages and auto loans has slowed down compared to growth rate peaks earlier in the pandemic.

YoY originations growth for mortgages, although still positive, was 1.1% in Q1 2022 and was well below YoY growth levels recorded at the end of last year (Q4 2021 YoY change: 19.2% and Q3 2021: 25.1%). The total number of auto loan accounts decreased by 10.2% YoY in Q2 2022, with a 25.8% YoY fall in origination volumes in Q1 2022. The slowdown in secured credit products is an indication of a caution in consumer sentiment towards taking on major financial commitments during times of uncertainty.

“As we navigate challenging economic conditions, it is important for lenders to look for resilient consumer segments by assessing the credit needs and preferences of their existing customers,” says Lim Moore. “In light of the rising cost of living, there are segments of consumers who may need to leverage credit to cope with economic pressures. By leveraging enhanced insights that help predict consumer credit needs and behaviours, lenders can serve these consumers effectively to drive portfolio growth in the near future,” concludes Lim Moore.

For more information about the Q2 2022 Hong Kong Industry Insights Report and to register for the webinar scheduled for 28 September at 3:00pm HKT, please click here.

1 Hong Kong Inflation Rate - July 2022 Data - 1981-2021 Historical - August Forecast (tradingeconomics.com)

2 Hong Kong Interest Rate - 2022 Data - 1998-2021 Historical - 2023 Forecast - Calendar (tradingeconomics.com)

3 TransUnion CreditVision® risk score: super prime = AA; prime plus = BB; prime = CC; near prime = DD to HH; subprime = II to JJ. Prime and above = AA to CC; below prime DD to JJ

4 Total number of credit card in market divided by total population comes to 2.6 credit cards per person

5 Hong Kong Unemployment Rate - July 2022 Data - 1981-2021 Historical - August Forecast (tradingeconomics.com)

6 Arrivals in Hong Kong now only have to isolate in a hotel room for three days, instead of seven. This is followed by four days of medical surveillance, including rapid antigen and polymerase chain reaction testing, and limited public activity. Arrivals must also comply with restrictions under the amber code system.  Explainer: Hong Kong's '3+4' Covid-19 hotel quarantine arrangements for international arrivals - Hong Kong Free Press HKFP (hongkongfp.com)

Global information and insights company TransUnion (NYSE:TRU) has appointed Marie Claire Lim Moore as Regional President, Asia Pacific (APAC). Lim Moore joined TransUnion in April 2020 as Hong Kong CEO and has helped to elevate and improve the business while navigating the challenges of COVID-19 and wider evolving market dynamics.

TransUnion’s APAC business is well positioned for growth as its markets continue to evolve, delivering Information for Good® to help make trust possible between consumers and businesses in global commerce. In Hong Kong, the number of money lenders has grown significantly, and the wider Greater Bay Area presents new opportunities and possibilities. In the Philippines market, TransUnion has made significant strides in increasing financial inclusion across its rural lending ecosystem.

Lim Moore has significant experience in financial services, emerging technology and data having held senior regional roles at Visa and Citibank earlier in her career. She is a true global citizen having worked across multiple markets, including New York, Singapore and Greater China. A passionate advocate of women’s leadership and empowerment as well as a number of charitable initiatives, she is a mentor for The Women’s Foundation and also serves on the Board of Directors of Habitat for Humanity and the Splash Foundation in Hong Kong.

“Claire has led our Hong Kong business through a significant period of change. The wider APAC market is also growing, and we recognise the opportunities presented by the Greater Bay Area initiative and increased financial inclusion in the Philippines. Under Claire’s leadership, our Hong Kong team already helps and supports key elements of our wider APAC business and this appointment strengthens that work,” said Todd Skinner, President, TransUnion International.

Pia Arellano, CEO and president of TransUnion Philippines, will continue in her role and will join the APAC leadership team reporting to Marie Claire Lim Moore. Lim Moore’s current role as CEO of TransUnion Hong Kong will remain unchanged.

“Our Hong Kong and Philippines businesses already collaborate very closely, and this new role and evolved structure will allow the region to access even greater resources and expertise for the benefit of our clients and consumers. I look forward to seeing our APAC business continue to grow and thrive as we build new and innovative solutions that best serve the evolving needs of the market. We have a wealth of talent in our business that is ideally positioned to make the next step in our journey a success,” said Lim Moore.

Dr. Charm has over 30 years of experience in the innovation and technology industry, specializing in FinTech, artificial intelligence, big data, digital transformation, as well as the technology markets in Mainland China and ASEAN countries. Dr. Charm has held various senior management positions at Hong Kong Cyberport Management Company Limited, IBM, Oracle and HSBC, and has provided strategy, training and consultancy services to companies and organizations such as HSBC, Hang Seng Bank, Bank of East Asia, ICBC (Asia), AIA, Sun Life, Chow Tai Fook, Airport Authority Hong Kong and MTR. During his tenure as Chief Public Mission Officer at Cyberport, Dr. Charm led his team to build a world-leading digital technology ecosystem with over 1,200 start-ups from over 30 countries where over 300 were FinTech start-ups.  

Marie Claire Lim Moore, CEO of TransUnion Hong Kong, said: “Dr. Charm’s appointment comes at an opportune time of rapid advancement in FinTech and RegTech in Hong Kong and the Greater Bay Area, and as we move towards the Multiple Credit Reference Agencies (MCRA) model in Hong Kong. We have proven track record of supporting businesses and consumers and continue to drive market innovation and new solutions. As an expert and innovator in the technology sector, Dr. Charm will provide insight and strategic advice that will further strengthen our service for the benefit of the market as a whole.”

Dr. Charm said: “As the first local consumer credit reference agency, TransUnion has laid solid foundations for the credit economy in Hong Kong over the past 40 years, supporting easy and quick access to credit and other essential financial services to millions of consumers. At the same time, it has been a true pioneer in the areas of FinTech and RegTech. I am privileged to advise the company in its exciting next chapter of growth.”

In addition to the aforementioned roles, Dr. Charm is Chairman of several elite start-ups in Asia and Associate Professor of Practice at Chinese University of Hong Kong Business School. He actively engages with the innovation and technology ecosystem in Asia and has served since 2019 as Chief Judge of the FinTech Award of Hong Kong ICT Awards and as a member of Cyberport’s Entrepreneurship Committee Advisory Group, HKSTP’s Leading Enterprises Acceleration Mentorship Programme, Executive Committee of FHKI’s Hong Kong Startup Council, GS1 Hong Kong’s IoT Industry Advisory Council and Consumer Council’s Advisory Group on Digital Economy and Information Technology.

A pioneer in the Hong Kong market, TransUnion is committed to developing cutting-edge technologies and services, pursuing innovation to bring advanced solutions to the industry. With a strong belief in Information for Good®, TransUnion Hong Kong will continue to leverage state-of-the-art technology to provide a smooth and secure experience for both financial institutions and consumers, towards the goal of helping more people access credit and other essential financial services and boosting financial inclusion in Hong Kong.

The rate of suspected digital fraud attempts from Hong Kong in Q2 2022 has decreased 26% compared to the same period last year, which is a significant drop compared to the 14% decline shown globally. TransUnion’s (NYSE:TRU) quarterly fraud analysis showed that the rate of suspected digital fraud attempts originating from Hong Kong declined across almost all of the industries tracked except for the gambling (2%) and financial services sectors (2%), with the largest declines in gaming (-59%), communities (-48%), and retail (-46%).  

TransUnion’s data on fraud against businesses is drawn from billions of transactions and more than 40,000 websites and apps contained in its flagship identity proofing, risk-based authentication and fraud analytics solution suite – TransUnion TruValidate™. The percent or rate of suspected digital fraud attempts are those that TruValidate customers either reviewed and/or denied due to fraudulent indicators compared to all transactions that were assessed for fraud.

“Over the past two years we’ve generally seen rates of digital fraud increase as consumers increased their use of digital channels. However, it’s good to see the digital fraud rate for transactions originating from Hong Kong decrease the last couple quarters which could show that businesses are taking effective preventive measures against digital fraud,” said Jerry Ying, chief product officer of TransUnion APAC. “We’ve known for a long time that fraudsters follow the money and target where it is being spent. With people staying at home more during the pandemic, illegal online gambling helped fill the entertainment void for many consumers, which is particularly prone to fraudsters’ attention and has been a consistent tendency. At the same time, another pandemic trend has been consumers being more conscious about savings, investments and household finances. The data shows that these sectors remain a target for fraudsters.”

Year-over-Year Growth Rates of Digital Fraud Attempts (from Q2 2021 to Q2 2022)

TransUnion’s most recent quarterly Consumer Pulse Survey findings mirror the downtrend in digital fraud attempts coming from Hong Kong. Among 1,006 Hong Kong adults surveyed from May 25 – June 15, 2022, almost one-third (32%) said they had been targeted by digital fraud in the last three months, down six percentage points from Q1 2022. Among those targeted, phishing scams (41%) remain the most common type of digital fraud, followed by money/gift card scams (21%) and stolen credit card/fraudulent charges (21%).

Fraud Rates Fall Faster in Hong Kong Compared to Global Trends

TransUnion’s latest quarterly fraud analysis shows that the largest declines year-on-year (YoY) in the rate of suspected digital fraud of transactions originating from Hong Kong occurred in gaming (-59%) and communities (-48%) followed by retail (-46%), and travel and leisure (-35%). Rates of decline in communities, retail, and travel and leisure are ahead of the global figures (-8%, -28% and -28%, respectively) whereas declines in gaming were slightly less severe than the global trend (-63.5%).

Looking at the longer-term trend, the rate of digital fraud for transactions originating in Hong Kong against online communities is up 124% in Q2 2022 compared to the same quarter two years ago. Although fraud in financial services showed a slight YoY increase in Q2 2022, rates are actually down 4% compared to two years ago.

“The focus across industry has been identifying more of the good transactions and allowing them to pass with less friction,” said Jerry Ying. “Strong fraud and authentication practices decrease false positives and focus fraud-fighting resources on the minority of interactions that warrant scrutiny. By reducing the pool of manual reviews and customer interrogations, organisations can dramatically reduce costs, increase revenue and improve the overall customer experience.”

For worldwide and regional breakdowns around how much the suspected digital fraud attempt rate recently changed, what types of fraud are most prevalent in certain industries and more, please download the infographic.

Global information and insights company and Hong Kong’s leading consumer credit reference agency TransUnion (NYSE: TRU) today announced the latest results from its quarterly Consumer Pulse Survey. It shows that the financial impact of the ongoing COVID-19 pandemic is being sustained, with 81% of Hong Kong consumers reporting their household income stayed the same or decreased over the past three months. The majority of consumers (95%) also said they are concerned about the current rate of inflation, which has resulted in more than half (57%) of all respondents saying they are going to make changes in their purchasing behavior.

The 2022 Q2 Consumer Pulse Study surveyed 1,006 Hong Kong consumers between May 26 – June 15, 2022.

Worries Over Inflation Influencing Consumers’ Decision-Making amid the Sustained Financial Impact of the Pandemic

Consumers are feeling less confident than at any time during the fifth wave of the pandemic in Hong Kong and lower than during recovery periods of previous waves since Q2 2021. Less than a quarter (22%) of respondents felt their household finances were better than planned at the point when the survey was taken – this was significantly less than previous quarters. The percentage of consumers who felt optimistic about their household finances in the coming 12 months also dropped to just under a third (32%) in Q2 2022. Concerns over inflation are also at an all-time high since first asking the question in Q3 2021 (95% in Q2 2022)¹.

More than half of respondents (55%) said they cut back or cancelled household spending in the past three months, while most respondents (77%) said they are not planning to increase discretionary personal spending in the coming quarter, an increase from the end of 2021. Examples of discretionary spending provided to respondents included dining out and travel.

“The financial impact of the fifth wave of the pandemic on household incomes is certainly not going away. However, over and above this, there is an interplay with growing concerns over inflation rates. This is likely being triggered by the broader macro-environment and happenings in global financial markets such as the Fed rate hike alongside local increases in things like petrol prices which are already being felt,” said Eric Cheung, Senior Director and Head of Solution Consulting of TransUnion Asia Pacific. “There are financial boosters coming such as the disbursement of another phase of consumption vouchers in the city, it’s crucial to keep abreast of the macro economy which is also shaping consumers’ evolving needs as well as their risk and credit profiles.”

Consumers Value Credit and Lending Products but Don’t Believe They Have Sufficient Access

Associated with concerns around their financial stability, despite 95% saying it’s important to have access to credit and lending products to achieve financial goals, only 44% agreed they currently have sufficient. Meanwhile, only 58% of consumers said they believe they would be approved for a credit or lending product if they needed one.

Cheung added, “The latest survey presents the financial inclusion situation in Hong Kong, as a significant portion of consumers feel they do not have sufficient access to credit or loan products, and think they would not be approved for credit and loan applications. The best antidote for this is for consumers to manage credit proactively to help improve their credit ratings. This is the key that unlocks access to the financial products they need.”

TransUnion’s research is being updated regularly on its Consumer Pulse Study web page as the company continues to support consumers and businesses around the globe. 
 

1. Q1 2022: 92%; Q4 2021: 90%; Q3 2021: 94%

The newly released TransUnion (NYSE: TRU) Q1 2022 Industry Insights Report reflects the impact of wave five of the COVID-19 pandemic in Hong Kong, with muted consumer sentiment reflected in subdued levels of overall activity across a number of major categories in the consumer credit market.

In Q1 2022, enquiries—a measure of consumer demand—were roughly three quarters (77%) the overall level they were in the corresponding pre-pandemic quarter of Q1 2019, and 91% of what they were the same time twelve months ago (Q1 2021). The decline in enquires was across a number of major consumer lending categories, falling most for mortgages (down -36.9% YoY in Q1 2022) but also down (-12.4%) for credit card which is the most widely held credit product in Hong Kong. Enquires often reflect wider consumer sentiment, and this appears to be true in Q1 2022, with the TransUnion Consumer Pulse Study* conducted during the same period showing just over a quarter (26%) of people experienced a drop in household income during the last three months.

Originations, which measure new accounts opened and is a function of both consumer demand and lender willingness to advance credit, was impacted by this downward trend in consumer demand for new credit (or credit products with new reward features as is often the case for credit cards). In the fourth quarter of 2021 (latest available data for originations) originations fell drastically for credit cards (-25.8% YoY). However, other categories showed YoY growth, with unsecured revolving lines recording the biggest increase – up 130.1%. Unsecured revolving lines recorded significant origination declines at the beginning of the pandemic but have since seen a YoY improvement in recent quarters.

Much of the recent origination growth in unsecured personal loan (up 21.0% YoY) and revolving accounts is due to favourable comparisons against 2020 levels, which were depressed for these credit products. If we compare to the corresponding pre-pandemic quarter (Q4 2019) the trend for unsecured personal loans was a more moderate increase over a longer period, up 16.7% over two years. For unsecured revolving lines it was still a strong increase, up 93.6% compared to two years ago. In contrast, the YoY fall in credit card originations is consistent with a larger decrease over the two-year period which showed a -36.1% drop when compared to Q4 2019.

“Prior to wave five of the pandemic, the Hong Kong consumer credit market was trending back towards pre-pandemic levels. Although we will eventually return to these higher levels of activity, the latest spike in cases has definitely elongated the recovery timeline,” said Marie Claire Lim Moore, CEO, Hong Kong, TransUnion. “However, it is important consumers and lenders remain resolute – Hong Kong has already shown its ability to bounce back from earlier waves, and there isn’t anything in the data to suggest this won’t be the case again.”

Table 1: Q1 2022 Metrics for Major Consumer Credit Products in Hong Kong

Source: TransUnion Hong Kong (except for mortgage data which is from the Residential Mortgage Survey (March 2022) published by the Hong Kong Monetary Authority)

i.  Originations are viewed one quarter in arrears to account for reporting lag.

ii.  Serious-delinquency rates are 90 or more days past due for credit cards and 60 or more days past due for all other credit products.

iii.  Delinquency data are reported at a balance level except for mortgages, which are reported at an account level.

Unsecured loan categories gaining popularity

Although credit cards remain the most widely held consumer credit product by a significant margin, a feature of the pandemic has been the emergence of changing wallet profiles in the Hong Kong market. The latest quarter’s data has continued to reinforce this trend, showing that consumers are changing both the mix of credit products they demand and how they leverage credit.

In the unsecured lending space, despite the continued YoY fall in credit card originations (down -25.8% YoY in Q4 2021), unsecured personal loans and unsecured revolving lines both recorded an increase – up 21.0% and 130.1%, respectively.

However, total outstanding balances—a function of both the number of active open accounts and their average balance and utilisation—remained relatively unchanged, with only unsecured personal loans recording a material increase (up 4.7% YoY in Q1 2022).

Lim Moore observed: “New accounts opened, measured by originations, can be influenced by a multitude of factors. In the most recent quarter, the fall in credit card volumes is most likely due to a fall in both promotional activity by lenders as well as consumers taking a cautious approach to some forms of credit. The general robustness of outstanding balances, and thus utilisation across categories, clearly demonstrates the ongoing utility of credit cards for consumers, and we anticipate the latest fall in enquiries will start to rebound as cases and social restrictions related to the pandemic subside.”

As in other recent TransUnion IIR reports, the emergence of younger generations—Gen Z (born 1995–2004) and Millennials (born 1980–1994)—continues at pace. Between them, these groups accounted for almost three in five (57.1%) of all new accounts opened in Q4 2021, and a similar percentage (60.8%) of enquiries in Q1 2022.

Money lenders continued to drive growth

Over the last year, the number of originations coming from non-bank lenders (often known as money lenders) has increased significantly. In Q4 2020, non-bank lenders accounted for just over one in ten (11.6%) new products opened as they had reduced their risk appetite alongside a general deleveraging by consumers at the time. In Q4 2021 (latest available data) this had more than doubled and had increased to almost a quarter (22.6%). In order to gain a better picture of the longer-term trend, comparison to a pre-pandemic quarter (Q4 2019) shows a 125.1% increase in the volume of new products opened with non-bank lenders.

In the latest quarter (Q4 2021 for originations), for certain products, non-bank lenders issued more new products than bank lenders – for unsecured personal loans 56.3% of originations were from non-bank lenders. For revolving lines, although the share of new lines originated by non-bank lenders fell from 72.7% in Q4 2020 to 45.6% in Q4 2021, this was not because they issued fewer new accounts, it was because bank lenders had aggressively increased their lending in this category. In Q4 2021 YoY non-bank revolving line originations increased by 77.3%, compared to 463.9% for bank lenders.

Lim Moore commented: “The continued emergence of money lenders in the Hong Kong consumer credit market means unsecured credit products have experienced exponential growth as competition has increased. Money lenders often cater for smaller average balance amounts and are likely to be increasingly important participants in the market as it continues to recover.”

Credit performance remained robust

During the first quarter of 2022, the latest wave of the pandemic contributed to an increase in the Hong Kong unemployment rate** to 5.0% (Q1 2022), up from 4.5% in the period before, and a corresponding increase in households reporting a fall in income*. Despite these headwinds, delinquencies in the market continued to be relatively unchanged, showing consumers are still able to meet their credit obligations.

“Hong Kong consumer delinquency rates continue to be at low levels and are significantly less than in other developed credit economies around the world. Depending on the shape of any wider economic recovery and the delayed nature of some of the financial impact from the latest wave of the pandemic, lenders will be paying close attention to these numbers. Only by diligent monitoring of their portfolio and by leveraging advanced data techniques can they maintain this impressive track record,” concluded Lim Moore.

For more information about the TransUnion Hong Kong Industry Insights Report and to register for TransUnion's Q1 2022 Industry Insights Report webinar scheduled for 22 June at 3:00pm HKT, please visit our dedicated website page.

*TransUnion Consumer Pulse Study of 1,088 adults conducted Feb 14-Feb 23, 2022.
**Census and Statistics Department of the Hong Kong Special Administrative Region (HKSAR) Government shows Q1 2022 adjusted unemployment rate at 5.0% (Jan-Mar 2022), up from 4.5% in the period before (Dec 2021-Feb 2022). Additional figures have been released more recently showing the continuation of this trend with unemployment at 5.4% Feb-Apr 2022.

TransUnion came to its conclusions about fraud against businesses based on intelligence from billions of transactions and more than 40,000 websites and apps contained in its flagship identity proofing, risk-based authentication and fraud analytics solution suite – TransUnion TruValidate™. The percent or rate of suspected digital fraud attempts are those that TruValidate customers either denied or reviewed due to fraudulent indicators compared to all transactions that were assessed for fraud.

“Sophisticated fraudsters pressure test which industries have ramped up fraud prevention measures and as a result, turn to new industries if efforts are being thwarted. That’s exactly what we have observed recently as fraudsters look for new opportunities or points of vulnerability,” said Jerry Ying, chief product officer of TransUnion APAC. “It is paramount that during this dip companies focus on optimizing the customer experience for good customers.”

Suspected Digital Fraud Attempt Rate from Hong Kong Shifts Industries

Source: TransUnion’s quarterly analysis of global online fraud trends
 

Counter to the data coming out of TransUnion’s network, consumers said they were targeted more with digital fraud from Nov. 2021 to Feb. 2022, according to the recent TransUnion Consumer Pulse Survey. Among 1,088 Hong Kong adults surveyed from Feb. 14-23, 2022, 39% said they had been targeted by digital fraud in the last three months, up six percentage points from the previous quarter. Of those consumers who said they had been targeted, they reported phishing scams most (35%) followed by identity theft and money/gift card scams (27% respectively).

“Despite consumers indicating being increasingly targeted albeit over a different time period, suspected fraud rates appear to be stabilizing more recently with our customers. During this period when fraudsters are searching for new vulnerabilities, many organizations have shifted their focus to identifying more of the good customers and transactions to increase revenue and customer lifetime value. By reducing false positives, false declines, and manual review rates, organizations can dramatically improve the customer experience through trusted connections while still keeping the fraudsters at bay,” said Jerry Ying.

For worldwide and regional breakdowns around how much the suspected digital fraud attempt rate recently changed, what types of fraud are most prevalent in certain industries and more, download this infographic.

Global information and insights company and Hong Kong’s leading consumer credit reference agency TransUnion (NYSE: TRU) today announced the 2022 Q1 results from its quarterly Consumer Pulse Survey, which shows the clear impact the fifth wave of the pandemic has had on Hong Kong. The tightened social distancing regulations have affected companies and small businesses leading some to close. This resulted in two-thirds (66%) of respondents reporting their household income stayed the same or decreased in the last three months, and 58% expected the trend to continue in the next 12 months.

The latest Consumer Pulse Survey polled 1,088 Hong Kong consumers between February 14-23, 2022. During the period, Hong Kong was heavily hit by the Omicron variant with record-high numbers of confirmed cases. The comparison periods are Q4 (survey conducted between November 1-18, 2021) and Q3 (survey conducted between August 16-31, 2021)

Consumers’ household finances impacted by worsening market environment

According to the Hong Kong Census & Statistics Department, the adjusted unemployment rate between December 2021 and February 2022 climbed to 4.5%, from 3.9% in the previous three-month period¹. The Consumer Pulse Survey results help further explain what this has meant for consumers. Twenty-one percent of consumers responded their salary had been reduced, where 12% of consumers reported that someone in their household had lost their job. A further 18% reported work hours had been reduced. There was a five percentage points increment increase in consumers reporting someone in their households who was furloughed (15%).

In this challenging market environment, 27% of consumers said they were not expecting to be able to pay their bills and loans in full, which was a five percentage points increase, and a reversal of the trend shown in the last few rounds of surveys, where it had fallen from Q2 (28%) to Q4 (22%). Among those who were expecting not to be able to meet their obligations, there was also a continuing trend of more people using their credit accounts to handle bills, with less planning on dipping into their savings (37%, down five percentage points from Q4, and eight percentage points from Q3) or borrowing money from friends or family (24%, down five percentage from Q4 and 15 percentage points from Q3). Instead, over a quarter (25%) planned to pay a partial amount (up two percentage points from Q4), 19% planned to utilize a payment holiday or other accommodation (up one percentage point from Q4 and three percentage points from Q3).

In another trend reversal from the previous Q4 results, more consumers had cut back on discretionary spending, including dining out and other entertainments (an increase of four percentage points to 46%) while fewer people planned to increase their discretionary spending (down four percentage points to 21%). Retirement saving was also impacted. Only a quarter (25%) of respondents said they planned to save more for their retirement, down eight percentage points over the previous quarter.

“The fifth wave of the pandemic has severely impacted society in Hong Kong and disrupted gradually improving consumer sentiment that started in mid-2021,” said Eric Cheung, Senior Director and Head of Solution Consulting of TransUnion Asia Pacific. “While the financial impacts on household income show a similar pattern to previous waves, consumers are making more use of credit to better manage their outgoings. Previous rounds of our survey have shown that the market is quick to recover once the pandemic stresses began to ease, and we are confident that Hong Kong will recover from this wave of the pandemic once it subsides as it has done before.”

More consumers plan to apply for new credit to meet their financial needs

Nearly half (48%) of respondents planned to apply for new credit or refinance existing credit, up eight percentage points from Q4. Of those who planned to apply for new credit, 46% of them planned to apply for personal loans, followed by credit card (39%) and auto loans (33%). Credit cards are the most widely-held consumer credit product in the Hong Kong market, but from our latest survey, fewer consumers (down five percentage points) planned to apply for a new one.

While consumers are using credit tools to meet their financial needs, they are also looking to the government for relief: 57% of respondents were at least somewhat reliant on financial support from the government to get through the pandemic.

“Helping consumers who are experiencing another period of financial hardship requires the combined efforts of different stakeholders in our society,” said Eric. “Financial institutions should be proactive in communicating with consumers to understand the challenges they are experiencing while employing insight-led strategies to manage their portfolio and risk effectively.”

Lenders’ sustainability practices influence consumer decision-making

The Q1 Consumer Pulse Survey also explored consumers’ attitudes to sustainability. Two in five (40%) of respondents consider a lender’s sustainability practices as very important to them when deciding to purchase or refinance with the lender. More than four in five (81%) of consumers believed if a prospective lender offers financial incentives related to their carbon and sustainability footprint, it would influence them to behave greener. These results revealed the increasing importance of sustainability to consumers when they are making decisions on credit and loan products, and showed a clear direction to the industry on product design and development in the future in order to address consumers’ concerns.

Eric added: “Sustainability is becoming an increasingly important issue for the financial industry with increasing public awareness and the government’s plan to develop Hong Kong as the green finance hub within the Greater Bay Area and internationally. As a key pillar of the Hong Kong financial industry, the credit market is advised to adopt sustainability practices more actively to meet customer needs and to support to a greater purpose.”

TransUnion’s research and credit education tools are being updated regularly on its COVID-19 website as the company continues to support consumers and businesses around the globe.

1. Latest seasonally adjusted unemployment rate increased from 3.9% in November 2021 - January 2022 to 4.5% in December 2021 - February 2022. (source: Census and Statistics Department)

The continuous growth of e-commerce could be behind a surge in shipping fraud, which is now the fastest growing type of digital fraud worldwide, according to the 2022 Global Digital Fraud Trends Report by TransUnion (NYSE: TRU), a global information and insights company and Hong Kong’s leading consumer credit reference agency. TransUnion observed an influx in shipping fraud in 2021, resulting in a 780.5% year-over-year (YoY) global increase. When compared to a two-year timeframe from 2019 to 2021, TransUnion data shows shipping fraud grew more than 1,500+%.

Shipping fraud – defined as when a buyer spoofs a shipping address or when a seller receives payment for goods or services, but never ships to the buyer – has quickly emerged as one of the top fraud types across a variety of industries. This issue, however, was most prominent in the logistics industry where consumers purchase goods online and are then reliant on third-party carriers for transportation and delivery of items.

“As consumers shifted from brick-and-mortar retailers to e-commerce platforms over the course of the pandemic, fraudsters gravitated toward where consumers were increasingly spending both time and money,” said Jerry Ying, chief product officer of TransUnion APAC. “Online shopping has become the ‘new normal’ on a global scale and as a result, the propensity for shipping fraud has also increased.”

As consumer adoption of digital channels has continued to accelerate, the global rate for all types of suspected digital fraud attempts increased 9.4% YoY from 2020 to 2021 and 52.2% from 2019 to 2021. In addition to shipping fraud, other types of fraud that experienced large increases when comparing 2020 to 2021 include business identity theft (+113.8%) and identity mining / phishing attempts (+104.8%) which both showed high rates of annual growth. According to TransUnion’s recent survey of 12,500 adults worldwide, 62% of consumers reported identity theft as their greatest concern when it comes to digital fraud.

Common Fraud Types Increased Across Industries from 2020 to 2021

“Nearly half of all consumers worldwide surveyed by TransUnion said they are conducting the majority of their transactions online, covering everything from managing personal finances and shopping to conducting business matters, which has led to an elevated consumer expectation in terms of both experience and security. To effectively mitigate digital fraud risks, businesses should ensure there are strong authentication processes in place as well as streamlined technology and multi-layered identity solutions. These solutions will help build trust with customers and thwart these fraud tactics,” said Ying.

Communities, travel & leisure, and financial services were top three industries in Hong Kong with the highest YoY increase in rate of digital fraud attempts

For transactions originating from Hong Kong, communities saw the largest percentage of annual fraud growth in 2021 with an increase of 72.6% YoY. Travel & leisure (51.8%) and financial services (40.9%) were the second and third industries with the largest growth in the rate of suspected digital fraud attempts. Gaming was another significantly affected industry and increased 21.0% YoY while gambling (20.8%) rounded out the top five.

The growth of digital fraud coming from Hong Kong in communities began since before the start of the pandemic. When comparing the rate of digital fraud coming from Hong Kong in communities from 2019 to 2021, it grew 125.6% potentially due to more people interacting socially online during the pandemic on places like online dating sites/apps. In 2021, global traveling had also been recovering in many other parts of the world, and fraudsters in Hong Kong appeared to try to take advantage of this.

Year-over-Year Growth Rates of Digital Fraud Attempts (2020 – 2021)

Digital fraud in financial services remains one of the prime targets for fraudulent activity both coming from Hong Kong and worldwide, and the rate of suspected digital fraud targeting that industry grew 40.9% and 33.5% YoY, respectively, making it an increasing area of concern for businesses and consumers alike. The number one fraud type worldwide in financial services is true identity fraud – where the victim is a real person and a fraudster uses a stolen identity to commit fraudulent transactions. As such, many financial institutions have taken steps to put greater security measures and authentication solutions in place, especially since digital banking is regarded as the industry standard.

“Fraud continues to impact a variety of different business sectors and fraudsters are always looking for the next opportunity. However, there are some industries that continue to have a target on their backs – such as financial services or social platforms – that should preemptively employ fraud detection solutions and strategies to better serve customers and protect their bottom line,” said Ying.

TransUnion came to its conclusions about fraud against businesses based on intelligence from billions of transactions and more than 40,000 websites and apps contained in its flagship identity proofing, risk-based authentication and fraud analytics solution suite – TransUnion TruValidate™. The percent or rate of suspected digital fraud attempts are those that TruValidate customers either denied or reviewed due to fraudulent indicators compared to all transactions it assessed for fraud.

For more information and insights on global fraud trends with Hong Kong figures, please download the report.

The newly released TransUnion (NYSE: TRU) Q4 2021 Industry Insights Report shows the continued recovery of the Hong Kong consumer credit market at the end of last year, mirroring wider improvements in macro-economic indicators over the same period. In Q4 2021, unemployment was almost half the rate it was at the same time the year before and private consumption, although still behind pre-pandemic levels of Q4 2019, rose by 7.3% year-on-year (YoY)¹. All data in the latest TransUnion report pre-dates the latest increase (wave five) of COVID-19 cases in Hong Kong. While there may be macro and micro impacts that are anticipated ahead as a result of a recent rise in infection rates, 2021 ended with a strong and recovering credit market trajectory.

Originations—a measure of new accounts opened that is a function of both credit demand and supply—increased across all major lending categories YoY in Q3 2021 (most recent quarter for originations due to reporting lag), with the exception of credit cards, which fell 10.6% over the same period. Originations growth was most pronounced for unsecured revolving lines, which increased 92.9% YoY. Unsecured personal loans also recorded strong originations growth over the period (41.4%), as did mortgages (25.1%) and loan on card (24.6%).

Since the onset of the pandemic, unsecured revolving lines had experienced significantly lower levels of activity, with consumers and lenders taking a cautious approach to the category. However, from Q2 2021 onward this trend has reversed. Unsecured revolving line origination growth has been supported by both banks and money lenders. The portion of total outstanding balance share for money lenders has increased from 18% in Q4 2019 to 27% in Q4 2021. Overall, total balances remained relatively unchanged YoY in Q4 2021 (-1.1%). While origination growth has been strong, average balances for this product declined because money lenders typically grant more modest lines of credit. Despite the recent growth in new accounts opened, the volume of open unsecured revolving line accounts is still below pre-pandemic levels.

The overall growth in originations across the market also propelled the overall credit active population. In the final full quarter of data (Q4 2019) before COVID-19 impacted Hong Kong, the volume of credit-active consumers was growing by 2.5% YoY. A year later annual growth fell to just 0.1%. In Q4 2021, YoY growth in credit active consumers rebounded to 0.9%. The overall increase in the credit active population indicates a re-engaged consumer credit market, but one that is evolving with shifts in consumer preferences toward specific products.

TransUnion insights show that the number of consumers with more than one type of credit product in their wallet is growing at a faster rate than those who only carry credit card(s) (the most widely held consumer credit product category in Hong Kong). In Q4 2021, the YoY growth in the number of consumers who only carry credit card(s) in their wallets was just 0.2%. For consumers who hold credit card(s) and personal loan(s) (second most popular wallet profile in Hong Kong) the number declined in the same period by 0.6%. In contrast, the number of consumers who carry credit card(s) and any other credit product (excluding personal loans) grew by 2.2%. This clearly shows that consumers are re-engaging and opening diverse products that best fit their needs, preferences, and appetite.

Although credit card originations fell in the latest quarter as other categories became the focus of growth, there were still other encouraging metrics for this most widely held credit product. In Q4 2021, outstanding credit card balances increased 3.0% YoY – the strongest growth rate of any of the major consumer credit categories. Additionally, loan on card (a linked product) also showed strong originations growth, up 24.6% YoY in Q3 2021. For both credit cards and loan on card, average account balances increased YoY in Q4 2021, up 3.2% and 1.8%, respectively – a clear indication of the value and utility consumers place on these products. Although credit card lenders have continued to focus on lending to existing customers, there are segments of the market that experienced originations growth. New credit cards to prime and below² consumers increased 2% YoY in Q3 2021.

“It’s now just over two years since COVID-19 hit Hong Kong and the consumer credit market is still clawing its way back to pre-pandemic levels of activity. With wave five of COVID-19 infections hitting Hong Kong in Q1 2022, market participants will be paying close attention to see if lenders continue to accept more risk into their portfolios in order to maintain the momentum that existed at the end of 2021,” said Marie Claire Lim Moore, CEO, Hong Kong, TransUnion.

Table 1: Q4 2021 Metrics for Major Consumer Credit Products in Hong Kong

Source: TransUnion Hong Kong (except for mortgage balance data which is from the Residential Mortgage Survey (December 2021) published by the Hong Kong Monetary Authority)

i. Originations are viewed one quarter in arrears to account for reporting lag.

ii. Serious-delinquency rates are 90 or more days past due for credit cards and 60 or more days past due for all other credit products.

iii. Delinquency data are reported at a balance level except for mortgages, which are reported at an account level.

Younger generations gained increased access to credit

The latest TransUnion Hong Kong IIR showed an increased appetite for risk and lending to new consumer groups – especially when looking at lending to younger generations. In Q3 2021, for credit cards, the distribution of Gen Z (those born during or after 1995) consumer originations increased by nine percentage points, up from 12% in Q3 2020 to 21% in Q4 2021. For mortgages, younger generations also dominated – 56% of demand (as measured by enquiries) came from Gen Z and Millennials (born 1980–1994).

Lim Moore continued: “Younger generations are increasingly fuelling growth in the Hong Kong consumer credit market. For many lenders, risk expansion opportunities for new-to-credit consumers or those with very limited credit history is a new frontier, and it’s important to leverage enhanced data when developing strategies to support this growing market. By empowering more young consumers to access credit, lenders are also acting as an increasingly important catalyst for economic growth – giving people access to the financial opportunities they need to achieve great things.”

Personal loans showed risk shift as lenders continued to seek growth

Personal loans were the only unsecured consumer credit category to record an increase in both originations and outstanding balances in the most recent quarter. The growth in outstanding balances (up 1.0% YoY in Q4 2021) in this category was the first since Q4 2019.

Although banks continued to dominate the unsecured personal loans market, with 73% of new loans granted, there were a number of emerging trends. The risk distribution—a reflection of lenders’ appetite, measured by the percentage of new account originations to below prime consumers— broadened across lender types. Banks, who have traditionally focused on originating prime and above consumers, increased their risk distribution within below prime consumers from 40% in Q3 2020 to 47% in Q3 2021. For money lenders, the below prime risk distribution increased from 83% to 96% over the same period. Here, lenders have been emboldened by the continued improvement of delinquency rates, which were down five basis points YoY in Q4 2021.

Resiliency persisted at end of 2021

The latest data also charts the change in credit scores for the credit-active population over the last year. For the majority of borrowers, they have maintained or improved their score YoY in Q4 2021, mirroring wider economic growth over the period.

Although the TransUnion IIR looks back at historic data, its sister report—the Q4 Consumer Pulse³ which was conducted immediately before wave five of the COVID-19 pandemic hit Hong Kong—showed that there was every reason to believe wider consumer credit market growth would be sustained. Two in five (40%) of consumers indicated their desire to apply for new credit in 2022, with 44% saying they would be applying for a new credit card, 42% wanting to open a new personal loan, and 30% applying for a new home loan.

“Coming into wave five of the pandemic in Hong Kong, there were encouraging signs that lenders were actively seeking growth amongst different consumer groups. COVID-19 and wider global geopolitical events will all have a bearing on lender and consumer confidence in the coming quarters. Lenders will need to constantly review their risk management techniques as they continue to adjust to volatile global economic and local market conditions,” concluded Lim Moore. “In Q4 2021, increased consumer choice and lender willingness to explore new markets meant retaining customer loyalty and ensuring the provision of relevant credit offers were the area of focus for many. Lenders who utilise the latest data and insights techniques to continue to do this will be the ones best able to navigate any uncertainty ahead.”

For more information about the TransUnion Hong Kong Industry Insights Report and to register for TransUnion's Q4 2021 Industry Insights Report webinar scheduled for 16, March at 3:00pm HKT, please visit our dedicated website page.

1. Census and Statistics Department of the Hong Kong Special Administrative Region (HKSAR) Government shows Q4 2021 adjusted unemployment rate at 3.9%, down from 6.6% in Q4 2020. Oxford Economics data show a quarterly private consumption annualised growth rate of 7.3% in Q4 2021.

2. TransUnion CreditVision® risk score: super prime = AA; prime plus = BB; prime = CC; near prime = DD to HH; subprime = II to JJ. Prime and below = CC to JJ.

3. Results of TransUnion Consumer Pulse Study of 1,100 Hong Kong adults conducted 1-18 November, 2021.
 

The leading global information and insights company TransUnion (NYSE: TRU) today announced the Q4 results from its quarterly Consumer Pulse Survey, revealing a continuation in improving consumer sentiment. In Q4 2021, Hong Kong consumers reported a reduced impact of the COVID-19 pandemic on household incomes compared to the previous quarter. Almost a third (30% – 13 percentage points lower than Q3) of consumers reported their household incomes continued to be impacted, while 68% were optimistic about their finances in the next 12 months, up 26 percentage points from Q3.

The latest Q4 Consumer Pulse Survey polled 1,100 Hong Kong consumers between November 1-18, 2021. During the period, there was no record of locally transmitted Omicron case. The comparison periods are Q3 (survey conducted between August 16-31, 2021) and Q1 (survey conducted between March 5-22, 2021).

Consumer sentiment continued to be driven by economic growth

Over the survey period government figures show Hong Kong’s real GDP growth stood at 5.4% year-on-year and the second installment of the consumption voucher scheme was issued in October¹. Both appear to have had a positive impact on results. Seven in 10 (70%) of those taking part in the survey reported their household income was largely unaffected by the pandemic, a 26 percentage points increase compared to the start of the year. The outlook was also increasingly positive with only 43% of respondents expecting household income to be negatively impacted in the future – five percentage points lower than Q3 and 17 percentage points lower than Q1.

Nearly half of consumers (49%) increased their household spending budget – 13 percentage points higher than Q3. In addition, 70% planned to spend the same or more over the festive holiday season compared to the previous year, and 82% expected to maintain or increase their online transactions over the next three months. One-third (33%) of respondents saved more for retirement, which was a 10 percentage points quarter-on-quarter increase. 

Confidence in meeting financial obligations has also improved, particularly in comparison to Q1. More than three quarters (78%) said they would be able to pay their bills or loans in full – up 12 percentage points from Q1. Of those who would not be able to meet their obligations, fewer planned to dip into their savings (down three percentage points) or borrow money from friends or family (down 10 percentage points) and instead seek out more flexible options from lenders. Almost a quarter (24%) planned to pay a partial amount (up two percentage points), 18% planned to utilize payment holiday or other accommodation (also up two percentage points), and 17% plan to refinance payments (up four percentage points).

“It is now almost two years since TransUnion began conducting the Consumer Pulse Survey at the start of the pandemic and it has proved to be a valuable barometer of consumer sentiment towards their finances,” said Marie Claire Lim Moore, CEO of TransUnion Hong Kong. “The latest rounds of the survey in 2021 were conducted against a backdrop of a continuously improving economy, a falling unemployment rate and low numbers of locally transmitted COVID-19 cases – all of which resulted in more positive consumer sentiment.”

More consumers believe in the importance of access to credit

The survey also showed an improvement in financial inclusion in Hong Kong over the past year. In Q4, 61% of consumers believed they had sufficient access to credit and lending products, 23 percentage points higher than Q1. Nearly two-thirds of all respondents (65%) said they considered access to credit important in achieving their financial goals (Q1:52%, Q3:50%). Almost two-thirds (65%) of respondents felt it’s extremely or very important to monitor their credit. A large proportion of consumers (72%) monitored their credit situation at least once a month. 

Two in five (40%) respondents planned to apply for new credit or refinance existing credit. When calculating credit need by risk segments, prime plus consumers said they had the most need for credit (70%), followed by near prime (68%) and subprime (57%)². By generation, GenZ had the most need for credit (53%), followed by millennials (44%).

The top three loan products are personal loans, tax loans and revolving loans at 35%, 19% and 18%, respectively. New products, such as buy-now-pay-later (BNPL), have provided customers with different ways to manage their finances. Of those consumers who said they had used a BNPL product one or more times in the last 12 months (63%), most respondents (78%) stated the terms and conditions are easy to understand, and 82% found the service at least somewhat valuable (up 12 percentage points quarter-on-quarter).

“A changing macroeconomic environment and a noticeable shift in consumer attitudes are redefining the lending market,” said Lim Moore. “Although the marketplace is increasingly competitive, there is still uncertainty ahead in the short term due to the spread of Omicron locally. Employing insight-led strategies to understand the evolving needs of customers is going to be key to business growth for banks and lenders.”

TransUnion’s research and credit education tools are being updated regularly on its COVID-19 website as the company continues to support consumers and businesses around the globe.

1. Latest GDP figures show growth of 5.4% in Q3 2021, following growth of 7.6% in Q2 2021 (source: Census and Statistics Department)

2. TransUnion CreditVision® risk score: super prime = AA; prime plus = BB; prime = CC; near prime = DD to HH; subprime = II to JJ. Prime and above = AA to CC; below prime DD to JJ.

Mr Cheung is a veteran of retail banking and payments industry with over 40 years of experience in the field. He currently serves as Independent Non-Executive Director of Shanghai Commercial Bank and is the Chairman of its Digital Transformation Committee. He was Chief Executive Officer of Octopus Holdings Limited from January 2011 to March 2014 and from January 2015 to September 2020. Under his leadership, Octopus became an integral part of Hong Kong’s development in digital payments and the transition to a cashless society. Mr Cheung has also held senior positions at Visa International Hong Kong and Macau, DBS Bank and Citibank Hong Kong previously.

Marie Claire Lim Moore, CEO of TransUnion Hong Kong, said, “Sunny’s appointment is welcomed at a turning point in the development of the FinTech industry and credit markets in Hong Kong. With his extensive experience in the financial industry and as a pioneer of digital payments in Hong Kong, Sunny’s presence will help TransUnion to drive further innovation and continue to advance easy and seamless access to credit for millions of people in Hong Kong.”

Mr Cheung said, “It is a pleasure and honor to join the Board of TUCIS. For the past four decades, TransUnion Hong Kong has enabled trust between financial institutions and consumers and played a key role in the development of the credit and lending market in Hong Kong. I am privileged to have the opportunity to advise the company on how best to leverage its expertise, deep roots in Hong Kong, and its unique technological capabilities to contribute to the development and advancement of the financial industry in Hong Kong and the wider Greater Bay Area.”

As Hong Kong’s first credit bureau and a pioneer in the local FinTech industry, TransUnion has been at the forefront of new solutions and market developments in Hong Kong for more than 40 years. TransUnion’s mission is to help people around the world access the opportunities that lead to a higher quality of life. It helps businesses and consumers transact with confidence so they can achieve great things – this is Information for Good.

TransUnion (NYSE: TRU) released new findings today around global e-commerce fraud trends that occurred during the busiest period of the 2021 holiday shopping season. The analysis found 17.46% of all global e-commerce transactions between Thurs., Nov. 25, and Cyber Monday, Nov. 29, were potentially fraudulent[1]. In Hong Kong, 20.47% were suspected fraudulent during that same period and including Double Eleven Shopping Festival, Nov. 11.

The global percentage of suspected fraudulent e-commerce transactions is 3.74% higher than the same five-day period leading up to Cyber Monday last year. For transactions originating from Hong Kong, the percentage decreased 29.20% in the same timeframe plus Nov.11. These findings are based on intelligence from billions of transactions, and more than 40,000 websites and apps contained in TransUnion’s fraud analytics solution suite — TruValidate™,.

The analysis also observed the top two reasons globally for potentially fraudulent e-commerce transactions in the five days leading up to Cyber Monday. The top reason was the number of accounts per device – which triggers when a device has accessed the minimum number of accounts during the set time period. The second was evidence exists – which occurs when an account or device has previously had a fraudulent transaction.

Percentage of Suspected Fraudulent E-Commerce Transactions during Holiday Shopping Weekend

Source: TransUnion’s quarterly analysis of global online fraud trends

“The holiday shopping season is a popular time globally for bad actors to engage in fraudulent activity, particularly in the e-commerce and retail industry,” said Jerry Ying, Chief Product Officer of TransUnion APAC. “Despite the decline of suspected digital fraud originating from Hong Kong during the traditional busiest days of the holiday shopping season, levels are still above the global average and occurred as consumers express concern about being victimized. According to TransUnion’s Q4 Consumer Pulse Study, 84% of Hong Kong consumers are concerned with being victimized by online fraud this holiday season. It is imperative that those businesses equip themselves with the proper tools to detect fraud at the first warning sign without inhabiting the consumer journey.”

In addition to the above findings, TransUnion released the following fraud analysis for Hong Kong regarding the percentage of suspected fraudulent e-commerce transactions during the start of the holiday shopping season and entire year from 2019 to 2021.

• 20.47% from Nov. 25 – 29 plus Nov. 11, 2021; 26.30% so far in 2021
• 28.91% from Nov. 26 – 30 plus Nov. 11, 2020; 41.34% in 2020
• 20.81% from Nov. 28 – Dec. 2 plus Nov. 11, 2019; 8.02% in 2019

Percentage of Suspected E-Commerce Fraud – Holiday Season vs. Overall

 Source: TransUnion’s quarterly analysis of global online fraud trends

To find out how this data varies by select countries and regions, how mobile is playing a large part in digital holiday fraud, what days during the holiday shopping season are most popular for fraud and more, TransUnion’s holiday fraud trends can be found here.

The newly released TransUnion (NYSE: TRU) Q3 2021 Industry Insights Report shows increased momentum in the Hong Kong consumer credit market. Against a backdrop of continued economic growth¹, increased consumer spending² and falling unemployment³, consumer and lender confidence appear to be improving and led to a significant increase in new accounts opened (originations).

During a period when COVID-19 infection rates remained low and international travel continued to be restricted, originations—a measure of new accounts opened that is a function of both credit demand and supply—increased across all the major unsecured lending categories. Year-on-year (YoY) growth was most pronounced for unsecured revolving lines at 46.7%. Although this was from a low base, having recorded a significant decline during pandemic times, it was the second consecutive quarter in which growth was observed in this category. This category had previously recorded five consecutive quarters of YoY declines (Q4 2019 to Q4 2020, inclusive).

Credit cards—the most widely held consumer credit product in Hong Kong—maintained the strong YoY growth seen earlier in the year, as originations increased by 24.5% YoY in Q2 2021 (most recent quarter for originations because of reporting lag). The other major unsecured lending categories of personal loans (up 32.2%) and loan on card (up 30.4%) also showed significant increases.

This momentum is expected to continue in the coming quarter, with Q3 enquiries—a measure of consumer demand—showing a similar growth trend. As with originations, unsecured revolving lines recorded the largest increase in enquiries – up 97.8% YoY in Q3 2021, reaching a two-year high. Credit card enquiry volumes increased 14.8% YoY in Q3 2021, compared to a YoY decline of -28.8% in Q3 2020. Personal loan enquiries increased 11.3% YoY in the latest quarter.

The resurgence in originations is congruent with wider TransUnion research, with its recent Q3 Consumer Pulse research⁴ showing a general improvement in household finances. The research showed the number of consumers reporting their household income was negatively impacted by the pandemic was down 12 percentage points from Q1 (Q1: 55%, Q3: 43%). It also showed that the number of households intending to increase spending had increased – nearly a third (Q3: 31%) said they expect to spend more on retail purchases, up six percentage points compared to the prior quarter (Q2: 25%).

Outstanding balance growth across credit cards, loan on card and unsecured revolving lines generally follows originations growth as consumers start to draw down on the credit facilities newly available to them over time. It is anticipated the recent growth in originations will have a corresponding increase in balances in coming quarters. Credit cards was the only unsecured lending category to record an increase in balances YoY in Q3 2021 (up 4.3%), having already seen positive originations growth earlier in the year.

“With unemployment in Hong Kong now at its lowest level since the pandemic begun, and a resurgence in retail spending supported by the consumption vouchers issued in recent months, the growth in new accounts opened has been significant and continues to reverse the impacts of the pandemic,” said Marie Claire Lim Moore, CEO, Hong Kong, TransUnion. “Sustaining this recovery will be front of mind for policymakers and lenders alike, and ensuring the insights needed are available to support Hong Kong will remain our focus. At the moment, we are very much at the centre of a consumer, and increasingly borrowing-led, recovery, and we are working closely with lenders to help maintain this momentum.”

Table 1: Q3 2021 Metrics for Major Consumer Credit Products in Hong Kong

Source: TransUnion Hong Kong (except for mortgage balance data which is from the Residential Mortgage Survey (September 2021) published by the Hong Kong Monetary Authority)

i. When considering enquiries, loan on card is a subset of credit card (i.e. you must have a credit card to have a loan on card) – as such, this product does not require enquiries for originations.

ii. Originations are viewed one quarter in arrears to account for reporting lag.

iii. Serious-delinquency rates are 90 or more days past due for credit cards and 60 or more days past due for all other credit products.

iv. Delinquency data are reported at a balance level except for mortgages, which are reported at an account level.

Lenders show an increased risk appetite, with money lenders leading the charge

The growth in new accounts opened has been observed across all risk tiers, but was most concentrated in the prime and below risk tiers⁵.

For credit cards, originations from prime and below risk tiers (which constitutes about a fifth of total origination volumes) increased by 31.1% YoY in Q2 2021. At an industry level, average new account credit lines for credit cards increased 20.4% YoY in Q3 2021.

A similar trend was also seen for personal loans, with originations for below prime consumers increasing by 36.2% in Q2 2021, compared to 21.7% for the prime and above risk category.

Mortgages—Hong Kong’s primary secured lending category—continued to be more focused on low-risk consumers (93.3% of originations are for prime and above consumers), which is consistent with historical trends.

The increased participation by higher risk (below prime) tiers in the unsecured lending categories, was reflected in both money lender and traditional banks’ origination risk dynamics. When measuring originations growth for unsecured personal loans, for banks the share of originations for below prime consumers increased to 55% in Q2 2021, up from 23% in Q2 2020. For money lenders—who have a business model traditionally more focused on higher risk lending—this increase was to 94% from 75% over the same periods.

For revolving line balances, money lenders have also gained market share. Although overall outstanding balances declined -3.6% YoY in Q3 2021, money lenders’ total share of balances increased to 28% in Q3 2021, up from 18% in Q3 2019.

The increased presence of online lenders in the Hong Kong market, especially within the below prime lending tiers, corresponds with a general increase in the awareness of FinTech lenders amongst consumers. TransUnion’s latest Consumer Pulse research showed that almost two-thirds (62%) of consumers were aware of emerging ‘buy now, pay later’ online services, and just over a third (35%) said they had used these services one or more times in the last 12-months.

“Competition for acquisition growth is increasing. Emboldened by consistently low levels of delinquencies which have continued to improve in recent quarters, lenders of all types have increased their risk appetite and have been able to service the needs of resilient Hong Kong consumers. Careful portfolio monitoring and continued adjustments to underwriting parameters are key to remaining competitive in an improving consumer credit market,” Lim Moore concluded. “With the pandemic recovery under way, competition for share of wallet and retaining new customer loyalty are key elements to lender success. By employing insight-led strategies, lenders can continue to meet the needs of consumers that are entering or re-engaging in the consumer credit market in significant numbers.”

For more information about the TransUnion Hong Kong Industry Insights Report and to register for TransUnion's Q3 2021 Industry Insights Report webinar scheduled for 15, December at 3:00pm HKT, please visit our dedicated website page.

1. Latest GDP figures show growth of 5.4% in Q3 2021, following growth of 7.6% in Q2 2021 (source: Census and Statistics Department)

2. Retail spending increased by 7.3% year-on-year in September 2021 (source: Census and Statistics Department)

3. Unemployment rate dropped to 4.5% in the three months to end of September 2021 (source: Census and Statistics Department)

4. Results of TransUnion Consumer Pulse Study of 1,100 Hong Kong adults conducted August 16-31, 2021

5. TransUnion CreditVision® risk score: super prime = AA; prime plus = BB; prime = CC; near prime = DD to HH; subprime = II to JJ. Prime and above = AA to CC; below prime DD to JJ.