Hong Kong's consumer credit market continued to benefit from improving lender and consumer confidence in the second quarter of 2026, as stronger domestic demand supported balance growth across credit cards and personal loans. New activity reflected a disciplined approach from lenders, with originations increasingly concentrated among lower-risk borrowers, while portfolio performance remained broadly stable to improving.

These insights are drawn from the TransUnion (NYSE: TRU) Hong Kong Industry Insights Report for Q2 2026, a quarter in which GDP grew 4.3%¹, driven by robust exports and resilient domestic demand. Meanwhile residential property prices rose 7.9%² in the first half of the year, reaching their highest level in two and a half years. Consumer confidence also improved, with the value of total retail sales increasing 4.6% year-over-year (YoY)³ in June, led by 20.1% growth in jewellery and valuable gifts and an 11.3% increase in electronic and durable consumer goods.

Credit Card Balances Reflect Renewed Consumer Retail Spending Momentum

Against this positive backdrop, credit card origination volumes rose 6.7% YoY during Q1 2026⁴, with prime plus⁵ consumers recording the highest growth across all risk tiers at 21.1% YoY, followed by super prime borrowers at 6.9%. In addition to strong retail spending and improving macroeconomic conditions, competitive lender promotions during the Chinese New Year holiday season in Q1 also contributed to this growth.

Across generations, Gen Z⁶ accounted for nearly one in four (24.9%) new card originations, up 1.8 percentage points from a year earlier. This aligns with findings from TransUnion’s Q1 2026 Consumer Pulse Study, which showed that among Gen Z consumers intending to apply for new credit or refinance, nearly half (44%) were considering a credit card, up seven percentage points from 2025.

Despite origination growth being driven by consumers in the prime plus and super prime risk tiers, average credit limits on new cards issued declined by 6.3% YoY in Q1 2026, reflecting lenders’ continued underwriting discipline.

Outstanding credit card balances grew 4.3% YoY in Q2 2026, amid sustained consumer spending activity in line with the broader retail trends. Consumers continued to leverage their cards to support consumption needs, driving a 3.4% YoY increase in average balance per consumer.

"Credit card trends in Q2 2026 closely mirror the positive momentum we are seeing in Hong Kong's retail sector," said Weihan Sun, senior director of research and consulting for Asia Pacific at TransUnion. "Lenders continue to meet demand selectively, prioritising lower-risk consumers while maintaining prudent underwriting standards. As consumer confidence improves, capturing and defending share of wallet among prime and above cardholders will be a key opportunity for lenders in the months ahead."

Personal Loan Growth Shifted Towards Higher-Quality Borrowers and Larger Loan Sizes

Although personal loan origination volumes declined slightly by 1.4% YoY in Q1 2026, average loan sizes increased by a significant 9.1% in the same period, driven by greater appetite from larger lenders and a growing share of prime plus and super prime borrowers, whose originations rose 11.7% and 15.5% YoY, respectively. While these better risk tiers still accounted for less than 10% of originations, they contributed disproportionately to the outstanding balance growth of approximately 4.3% YoY, given the larger loan amounts they tend to carry.

While Millennials accounted for the largest share of personal loan originations in Q1 2026 at 42.7%, their strong interest in this product was also reflected in the Consumer Pulse Study. Among Millennials intending to apply for credit or refinance, 42% preferred a new personal loan, up six percentage points from 36% a year earlier, signalling a growing diversification of credit usage among the largest borrower segment beyond credit cards.

Personal loan performance continued to improve across all measures. The largest improvement was seen in consumer-level delinquency, which declined by 7 basis points (bps) YoY to 0.91% (measured as the percentage of consumers with 60 or more days past due, or DPD). The account-level rate decreased by 3 bps to 0.81%, while the balance-level rate fell by 1 bp to 0.52%. This positive trend has been sustained over several quarters, providing lenders with greater confidence to extend credit.

"The personal loan market reflects a meaningful shift in borrower profile," said Sun. "We are seeing greater participation from lower-risk borrowers and proactive lender engagement, supported by improving portfolio performance across all delinquency measures. This combination of quality demand and disciplined supply positions the market well for continued, sustainable growth."

Average Revolving Line Balances Increased Despite Fewer Consumers Carrying Balances

Revolving line activity remained subdued in Q2 2026, continuing a trend of measured market contraction.

Origination volumes in Q1 2026 declined by 7.8% YoY, marking a considerably slower rate of decline than in previous quarters. This sustained contraction in new account originations occurred as the market continued to normalise following the withdrawal of low-limit revolving line products amid elevated delinquencies. With originations now increasingly led by money lenders, whose share increased by 8.2 percentage points YoY, average limits on newly originated accounts grew by 18.4% YoY.

The number of consumers carrying revolving line balances fell 5.5% YoY, while average balances among active borrowers rose 5.9%, indicating continued engagement among consumers who maintain these facilities.

Following several quarters of tightened underwriting by lenders, portfolio performance continued to improve. The account-level delinquency rate (60+ DPD) declined by eight bps YoY, to 0.43%, while consumer- and balance-level delinquency rates fell as well.

Q2 2026 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.

“Looking ahead, lenders have a clear opportunity to capture rising organic demand for credit cards from Gen Z consumers, while defending their top-of-wallet position with prime and above borrowers who continue to drive card origination growth. At the same time, growing wallet diversification among Millennials for personal loans is reshaping engagement strategies,” said Sun. “With improving economic conditions and renewed consumer confidence, lenders that can effectively identify and engage these distinct segments through advanced analytics will be best positioned to deliver sustainable growth in the second half of 2026.”

¹ News.gov.hk: Economy grows 4.3% in Q2

² Rating and Valuation Department: Property Market Statistics

³ Census and Statistic Department: Provisional Statistics of Retail Sales for June 2026

⁴ Origination figures are reported three months in arrears due to reporting lag

⁵ TransUnion CreditVision® risk score: Subprime = JJ to II; Near prime = HH to DD; Prime = CC; Prime plus = BB; Super prime = AA

⁶ 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

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.”

Hong Kong’s consumer credit market showed mixed trends in the first quarter of 2026 as credit cards and personal loans remained broadly stable, supported by healthy outstanding balance growth and steady repayment performance. However, revolving lines and loans on card continued to contract, reflecting more selective lender activity and softer demand in those segments.

These insights and others are shared in the TransUnion (NYSE: TRU) Hong Kong Industry Insights Report for Q1 2026, which also showed that credit delinquency trends remained largely stable or improved, suggesting prudent repayment behaviour among consumers, while lenders’ disciplined underwriting and portfolio management continued to support credit quality. This is in the context of a steady inflation rate, at 1.7% for February and March¹, and a 5.9% GDP growth² in the quarter – the strongest in nearly five years.

Credit Card Spend Remained Strong

Hong Kong’s credit card market remained stable, with outstanding balances and average balance per consumer increasing during the first quarter of the year, despite a decline in total card accounts. Outstanding card balances rose 4.9% year-over-year (YoY), and average balance per consumer increased 3.6% YoY, reflecting sustained spending momentum. The total number of card accounts declined by 2.1% YoY, due in part to the closure of dormant accounts, by lenders, which contributed to a 3.4% YoY decline in average total card credit limit per consumer.

Origination trends also improved; although new account volumes were slightly lower YoY, at -1.1% in Q4 2025³, this was a slower rate of decline than was seen in previous quarters. The market saw a growing contribution from younger consumers as Gen Z⁴ accounted for nearly three in ten (29.4%) new card originations, up from 26.3% a year ago, indicating continued participation from this segment as labour market conditions improved.

From a risk perspective, credit card performance remained steady. Delinquency rates were broadly unchanged at the account and consumer level, while balance-level delinquency rose by only one basis point YoY to 0.23%.

“The credit card portfolio reflects a healthy balance of resilient spending and stable risk,” said Weihan Sun, senior director of research and consulting for Asia Pacific at TransUnion. “This was likely due to a surge in domestic demand, with private consumption estimated to have grown by around 5.0%⁵ YoY, supported by a calendar of government-backed ‘mega events’ as well as a steady return of live entertainment and conferences. Card issuers would benefit from ensuring that their account management programs are focused on maintaining or increasing their share of wallet to drive profitable balance sheet growth,” added Sun.

Personal Loans Growth Driven by Larger Loan Sizes Despite Softer Originations

New personal loan amounts increased 12.1% YoY during Q1 2026, supporting a 3.6% YoY growth in total outstanding balances, while total personal loan accounts rose 1.3% YoY. Average balance per consumer climbed 2.7%, and the number of consumers with an open personal loan account edged up 1.6%. These findings show that lenders are focused on enabling greater access in the personal loan market, led by improvements in performance trends.

Delinquencies declined at both account (down by two basis points to 0.84%) and consumer level (down by five basis points to 0.95%). Balance-level delinquency also improved by two basis points to 0.55%. Taken together, these findings show the personal loan segment experienced stable underlying demand, higher supply amounts and improving portfolio performance.

“The personal loans market was resilient during 2025, although originations slowed down by three percent during the last quarter of the year,” Sun said. “The market was largely resilient in terms of demand and supply throughout 2025 despite that slowdown in Q4, but demand further picked up again in the first quarter of 2026 when enquiries for new loans increased by 2.7% YoY. The growth in the number of consumers carrying a balance shows that there is still good engagement with this product. Lenders would benefit from identifying consumers who have the propensity to open personal loans by leveraging consumer trended attributes.”

Revolving Line Originations Contracted Sharply with Balances Declined

In contrast to the stable origination trends in credit card and personal loans, revolving line originations declined 40% YoY, continuing a trend seen throughout 2025 after some digital banks scaled back low-limit product offerings following elevated delinquencies. Originations increasingly were led by traditional lenders and money lenders, where line assignments tend to be larger. As a result, the average limit on newly originated accounts increased by 24.8% YoY.

The number of consumers carrying a revolving line balance decreased by 9.7% YoY, and outstanding balances decreased by 1.6% YoY. However, younger consumers continued to show interest in revolving credit, with Gen Z representing nearly one in three (32.9%) originations.

Account-level delinquencies improved by eight basis points to 0.44%, while consumer-level delinquencies improved by 13 basis points. These changes reflect both portfolio cleanup and a more cautious lending environment, which are likely to lead to a recovery in these products as volumes and limits become normalised.

“As outstanding balances continued to decline amid encouraging performance trends, the revolving line segment appears to be stabilising as lenders focus on more sustainable growth, including addressing consumer behaviour on high delinquency small facility products,” said Sun.

Loan on Card Originations Contracted and Balances Declined

Loan on card activity continued to moderate, extending a trend seen through much of 2025. Origination volumes declined by 28.3% YoY in Q4 2025 as some lenders reduced campaign activity. This pullback contributed to a 12.3% YoY decline in total loan on card accounts and a 5.6% YoY drop in outstanding balances in Q1 2026. The number of consumers with an active balance also declined 12.6%, reinforcing the view that both supply and demand softened in this segment.

At the same time, the consumers who continued to use the product utilised larger share of open lines. Average opening balances increased 11.7%, and the average balance per consumer rose 8.0%. This indicates that while fewer consumers were using loan on card, those who remained active were borrowing higher amounts and carrying larger balances.

“Hong Kong’s consumer credit market continued to show a measured and differentiated pattern across products during the first quarter of the year,” Sun said. “Resilient spending and balance growth in credit card and personal loans are helping support market stability, while moderated usage in revolving lines and loan on card reflects more selective activity rather than broad-based deterioration.”

Q1 2026 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.

“These trends reflect that the Hong Kong financial services market is becoming more balanced rather than broadly expansionary,” said Sun. “For lenders, the priority in 2026 will be to capture growth in stronger segments while maintaining discipline in underwriting and portfolio management. The mix of improving domestic consumption and changing borrower behaviour is likely to reshape credit demand across both secured and unsecured products. In this environment, staying close to emerging opportunities and risks, while acting swiftly on data-driven insights and analytics, will be critical to navigating an increasingly nuanced landscape.”

1 Info.gov.hk: Consumer Price Indices for February and March 2026

2 News.gov.hk: Economy grows 5.9% in Q1

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

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 Info.gov.hk: Advance estimates on Gross Domestic Product for first quarter of 2026

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today announced the launch of a market-first initiative offering a one-time free credit report per year for eligible individuals who have lost their Hong Kong Identity Cards (HKID)¹. This initiative aims to provide affected individuals with immediate visibility into their credit profile during a high-risk window after HKID loss, helping to minimise potential financial losses resulting from identity theft and safeguarding long-term credit health.

According to TransUnion’s latest H1 2026 Update to the Top Fraud Trends Report, identity theft remains a significant threat in Hong Kong, cited as the leading cause by more than one-third (34%) of consumers who reported losing money to digital fraud last year. This comes as Hong Kong recorded the highest median digital fraud loss globally at HK$48,000. Stolen identities can be used to enable unauthorised account openings, fraudulent loan applications and credit overextension, with reported individual losses exceeding HK$2.5 million in recent cases. Yet, data from TransUnion’s Fraud Report shows an alarming reactive response among victims – only 42% reached out to impacted companies such as credit card providers, while even fewer (39%) contacted credit reference agencies for support. This lack of immediate remedial action further amplifies the high-risk window following HKID loss.

To help the public mitigate identity theft risks during this critical window, TransUnion is providing an immediate safety net by offering a one-time free credit report to all eligible individuals in the city. Affected individuals can now claim their report by scheduling an appointment online within 30 days of the loss and presenting the required documentation in-person at TransUnion’s Hong Kong office. This complimentary report serves as a practical and timely tool that gives individuals a clear, comprehensive view of their credit standing to identify early red flags, such as unauthorised accounts opened in their name or unexpected credit checks from unfamiliar financial institutions. It enables swift action – including promptly notifying financial institutions or freezing suspicious accounts – to minimise potential fraud and long-term damage to credit health.

While this one-time credit report provides immediate support, individuals are also encouraged to take additional steps to secure their identity following an HKID loss, such as filing a police report and promptly notifying relevant financial institutions. As identity risk persists well beyond the initial incident, keeping track of your personal credit profile over the long-term through regular monitoring and setting up credit alerts are essential to maintaining ongoing protection.

“Identity theft can happen in a flash – fraudsters can exploit stolen identities within hours to open accounts and secure loans, causing immediate financial losses and potentially long-term damage to credit health,” said Lawrence Chau, Director of Consumer Interactive, Asia Pacific at TransUnion, “Do not let your credit record be a risk – make it your opportunity. As the first credit reference agency to offer this dedicated service to all citizens, this initiative provides individuals with timely visibility into their credit profile during a critical window. Driven by our data-led identity insights, advanced analytics and decades of local experience, TransUnion has long been a pioneer in fraud prevention in Hong Kong. We remain committed to equipping individuals with a comprehensive suite of tools to help safeguard their identities and financial well-being against evolving fraud threats.”

To learn more about how TransUnion supports individuals affected by HKID loss in monitoring and minimising identity theft risks, please visit: TransUnion Offers Free Credit Report to Individuals Affected by HKID Loss

1 For Terms and Conditions, please refer to: TransUnion Offers Free Credit Report to Individuals Affected by HKID Loss

Avishek has more than 17 years of experience in global banking, combining strong international exposure across Hong Kong, India and the United Kingdom with extensive cross‑regional collaboration spanning Asia Pacific, Europe, the Middle East and Africa (EMEA), and the Americas. Prior to this role, he served as Senior Vice President at HSBC, where he led the unsecured lending business across nine Asian markets. Avishek holds a master’s degree in statistics from the Indian Statistical Institute in Kolkata.

He brings deep expertise in advanced analytics and data science leadership, with a proven track record of applying emerging data technologies to shape product strategy and deliver measurable outcomes. This background in data innovation aligns closely with TransUnion’s evolution from a traditional credit reference agency to a trusted information and insights partner, enabling organisations to view consumer identity holistically through diverse data assets and helping them to make informed decisions with confidence, which forms the foundation of trust in the modern economy.

This appointment marks a significant milestone for TransUnion Asia Pacific, as it brings together regional analytics capabilities – including Data Science and Analytics (DSA), Data Asset Management (DAM) and Data Strategy (DS) – into a more integrated structure under one regional leadership model. Together, these efforts will continue to accelerate TransUnion’s analytics value creation and reinforce its commitment to the responsible and secure use of data.

“As the role of information and data continues to grow in enabling robust and evidence‑based financial decisions in today’s economy – particularly amid persistent global uncertainties, rising fraud risks and increasing regional integration such as the Greater Bay Area – the capabilities to manage, analyse and translate data into trusted and meaningful insights has never been more important,” said Marie Claire Lim Moore, Asia-Pacific Regional President and Hong Kong CEO at TransUnion. “Data and analytics are central to TransUnion’s continued evolution into a trusted information and insights partner powered by identity-based intelligence. We are pleased to welcome Avishek, whose deep expertise in data-driven transformation and strategic analytics will further strengthen our ability to deliver value beyond credit, supporting businesses and consumers in making more confident, informed decisions and advancing our mission of Information for Good.”

Commenting on his appointment, Avishek said: “It is an honour to join TransUnion at a time when trusted data and insights are increasingly vital in helping financial institutions, businesses and consumers navigate a rapidly evolving environment. TransUnion has built a strong platform that harnesses data responsibly to drive transparency and resilience. The integration of our regional data strategy – encompassing effective sourcing, disciplined standardisation, advanced analytics and rigorous quality management – underpins a robust, secure and well-governed data ecosystem. I look forward to building on this foundation to deliver meaningful impact for business, individuals and the broader Hong Kong economy.”

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

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today announced the launch of Money Lender Data Hub. The new platform supports the Hong Kong government’s mid-March initiatives to strengthen consumer protection and financial stability through enhanced regulation of the money lender sector. This one-stop solution – the first initiative launched by a credit referencing agency – is set to promote and facilitate broader participation of licensed money lenders in the Credit Data Smart (CDS), ultimately fostering a more resilient financial ecosystem in Hong Kong.

The Money Lender Data Hub is thoughtfully developed to bring meaningful value to financial institutions, consumers and the wider industry. It aligns with the consultation conclusions issued by the Financial Services and the Treasury Bureau (FSTB), which require all money lenders to submit borrowers' credit information to the CDS regularly and to obtain consumer credit data from the system once they reach specified business scales. By improving the completeness of consumer credit data in CDS, financial institutions can make more informed credit decisions for risk management, while consumers gain a more accurate representation in the marketplace to responsibly access the financial services they need. This marks an important step forward in strengthening Hong Kong’s credit industry and further supports the city’s longstanding position as an international financial centre.

“As Hong Kong’s pioneering credit referencing agency for over 40 years, TransUnion has continually evolved alongside market and regulatory developments to build a resilient and inclusive credit ecosystem. Since the launch of CDS, we have remained committed to ensuring a smooth transition and providing ongoing support for market operations, all aimed at developing a comprehensive and robust consumer credit database,” said Marie Claire Lim Moore, Asia-Pacific Regional President and Hong Kong CEO at TransUnion. “Recognising the needs of money lenders, especially smaller ones, TransUnion is leveraging our deep local experience and knowledge to introduce the first one-stop solution in market with enhanced cost efficiency – Money Lender Data Hub, enabling wider industry participation and contributing to the long-term financial stability of Hong Kong.”

As a long-standing trusted partner for credit providers, TransUnion understands the key considerations for money lenders, including those with smaller-scale operations, to participate in CDS, such as resource readiness, technology expertise, industry know-how and data security. In response, Money Lender Data Hub serves as a comprehensive, 24/7 hassle-free solution that enables money lenders to engage with CDS in a compliant and cost-effective manner. It provides end-to-end support that covers onboarding, independent assessment, data validation, secure uploads and transmissions to CDS, culminating in the receipt of a lite consumer credit report for effective decision-making.

Key features of Money Lender Data Hub include:

• A solution that meets all compliance standards: Money Lender Data Hub is the first solution that enables money lenders to seamlessly onboard and contribute data to CDS through an established, streamlined channel while ensuring full compliance with local laws and regulations

• Automated flow and hassle-free end-to-end support: The user-friendly platform features highly automated processes, supported by ongoing training, operational assistance and professional consultation, reducing the need of money lenders for additional manpower or system development costs

• Assured data security and integrity: Leveraging TransUnion’s global capability as a data expert, the solution applies best-in-class data security controls to maintain accuracy and security through rigorous cleansing, processing and governance, safeguarding data integrity end-to-end

• Empowered credit decisioning: Tailored to money lenders’ specific business needs, the solution offers flexibility to access lite consumer credit reports, delivering reliable and actionable insights for informed credit decisioning

Commenting on the solution, Devon Sin, Interim Managing Director of TransUnion Credit Information Services, said, “We are excited about the transformative impact Money Lender Data Hub will bring to CDS and Hong Kong’s credit ecosystem, helping smaller money lenders overcome common challenges in joining CDS. This data-driven innovation will further strengthen the completeness of the credit database, supporting more responsible credit access, usage and management for both credit providers and consumers. Enhanced data consolidation and transparency will also improve fraud detection among consumers by enabling earlier identification of suspicious activities. Together, these advancements form a solid and trusted foundation for sustainable economic growth and reinforce the city’s position as a leading international financial centre.”

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.”

Consumers adapt as fraud tactics focus on digital devices

Data from TransUnion’s survey, conducted between September and October 2025 among 979 Hong Kong adults, revealed that fraudsters are targeting digital devices in consumers’ hands. Among those who said they were targeted with online, email, phone call or text message fraud attempts in the last three months (37%), vishing (fraudulent phone calls meant to trick consumers into revealing data) and smishing (fraudulent text messages with the same intent of obtaining personal data) were the leading types of fraud reported, each cited by 36% of surveyed respondents. Meanwhile phishing (fraudulent emails, websites, social posts, QR codes, etc. meant to steal data) was also prevalent at 34%.

Despite these threats, the percentage of Hong Kong consumers who said they were targeted by an online, email, phone, or text messaging scam during the same period fell to 37%, down from 44% a year ago. Furthermore, only a small minority (6%) reported falling victim to such scams recently, likely driven by greater public awareness and stronger frontline fraud filters.

In addition, Hong Kong consumers appeared to take more action in response to data breaches. Among those who said they were notified in the past three months that details about their identities or online accounts had been stolen in a data breach (17%), more than one-third (34%) reported checking their account for unauthorised activity while another 34% said they changed the password of the affected account, marking increases of 11 and five percentage points respectively from a year ago. Slightly more than a quarter (26%) went further by reporting closing the affected account or reviewing their credit report for fraudulent activities like a new credit card being opened under their name, both up from 23% last year, highlighting an improvement in self‑management.

Gaps in regular security maintenance leave holiday shopping exposed

However, despite increased awareness about being targeted with fraud and more post-incident actions, proactive digital protection remained inconsistent, leaving consumers exposed to the ever-evolving fraud threats. Close to a third (29%) of respondents reported that they had not taken any action in response to cybersecurity concerns over the past two months. Among those who stayed idle, 43% said they took no action because they did not want to spend the time, staggeringly up from 25% a year ago, while almost a quarter (24%) were unsure what actions to take.

This inconsistency is of particular concern as Hong Kong consumers continue to show a strong appetite for digital convenience, especially in the run‑up to the holiday season. Close to two-thirds (61%) of respondents plan to do half or more of their holiday shopping online, highlighting the popularity of e‑commerce. Additionally, most consumers (82%) also indicated a preference for using a wider range of electronic payment methods (credit card, debit card, mobile payment app and buy now, pay later, which is known as interest-free instalment payment plans in Hong Kong) during the holiday shopping season. As fraudsters increasingly exploit vulnerabilities in digital devices, this growing reliance on cashless transactions underscores the urgent need for more consistent, proactive security measures to stay ahead of emerging threats.

“Hong Kong consumers are increasingly alert to fraud and know better how to react quickly after an incident, which is an encouraging step forward,” said Devon Sin, chief product officer at TransUnion Asia Pacific. “However, awareness alone does not close the protection gap. Consistent, proactive security maintenance to address cybersecurity risks before they arise is essential to keeping fraudsters at bay. As the holiday season typically brings a surge in digital activities, ongoing vigilance and the use of trusted protection tools remain key for consumers to stay secure. Ultimately, security is not a one-time effort, it is an ongoing commitment.”

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.”

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

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 strategic cooperation provides a basis for TransUnion Hong Kong and Baihang Credit to collaborate in promoting financial inclusion in the GBA. This partnership will enable mainland consumers to have efficient and convenient access to credit and other financial services from Hong Kong financial institutions, while also facilitating Hong Kong consumers to access such services from mainland financial institutions. In addition, the collaboration will support credit providers in preventing fraud and making holistic lending decisions powered by TransUnion’s cutting-edge solutions. 

Marie Claire Lim Moore, Asia-Pacific regional president and Hong Kong CEO at TransUnion, said, “The strategic cooperation with Baihang Credit will see us explore how our companies can support consumers in accessing financial services and lending products seamlessly across the GBA, while also facilitating financial institutions in providing tailor-made products for consumers. As Hong Kong’s leading credit reference agency and a global pioneer in FinTech and RegTech, TransUnion is well placed to support the credit economy of the GBA, helping to enable the tremendous potential brought by closer ties across the region and catering to an ever-growing consumer demand.” 

Wang Xiaolei, chairman of Baihang Credit, said, “As the first market-based credit reference agency in China with dual qualifications for personal and business credit reference services, and the only one in the GBA, Baihang Credit has always strived to perfect its data system. It continues to increase the capabilities of credit reference products and services, drive the development of the credit ecosystem, and strengthen data safety and the protection of credit rights. The strategic cooperation marks a significant step forward in the cooperation of credit reference agencies in the GBA. Baihang will continue to pursue development based on market principles, rule-of-law, and technological advancement. Rooted in Shenzhen, Baihang will firmly grasp the historical opportunities offered in the GBA and continue to explore the mutual recognition of credit reference products in compliance with the law. We will provide credit reference services that satisfy market demand and support the integrated development of the GBA.” 

As Hong Kong’s first consumer 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^®. 

To help support the development of the credit economy, TransUnion Hong Kong has been active in expanding its business into the GBA. It sees potential for its market-leading solutions to serve both consumers and financial institutions, thus fostering financial inclusion while also safeguarding personal data privacy and security across the region. 

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.

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.

As the global economy shifts and consumer credit markets evolve, credit decisioning requirements have become even more complex and customized. To better address the rapidly evolving needs and priorities of financial institutions, TransUnion (NYSE: TRU) has announced an expansion of its go-to-market strategy for decisioning solutions by including leading decisioning platforms within its global Strategic Alliance Distribution Partner Program.

The expansion was driven by TransUnion’s extensive research of how to best meet long-term decisioning needs within the financial services industry. The findings uncovered a growing need for more open and flexible platforms with self-service capabilities—both of which empower business users to change custom rules, add new data sources, and update custom risk models to adapt to the market in real-time. To deliver the best service possible, TransUnion’s world-class data and analytics solutions are now also available via Strategic Alliance partners for credit decisioning.

“Today’s announcement will ensure financial institutions—both large and small—gain access to world-class data and analytics solutions in rapid fashion,” said Aaron Smith, TransUnion’s vice president of global platform partnerships. “In selecting partners for the program, we engaged in a rigorous evaluation that included 130 categories and 20 sub-categories. Based on their assessment and our customers’ current and future needs, we partnered with industry-leading decisioning platforms like Provenir.”

The new partners expand on TransUnion’s existing Strategic Alliance Distribution Partner Program, which includes leading providers within Digital Onboarding, Data Analytics, Core platforms, and more. The addition of decisioning providers will meet customers’ rapidly evolving needs for increasingly complex and custom decisioning requirements across the customer lifecycle. Business users can greatly expedite the delivery of much-needed roadmap items and key functionality that can immediately solve for their requirements.

“Organizations must be able to make accurate credit decisions instantly to deliver superior customer experiences, and Provenir’s AI-powered decisioning platform makes it possible by bringing together the essential components of data, AI and decisioning,” said Bharath Vellore, General Manager, APAC for Provenir. “We’re enjoying great success partnering with TU to help clients respond quickly to market changes and make smarter, real-time decisions.”

Customers who require an industry-standard solution to drive their prequal and prescreen strategies can rely on TransUnion for its decisioning solutions and ongoing support, keeping their data, attributes, and scores available in a flexible, scalable manner which fits their needs.

Find out more about TransUnion’s Strategic Alliance Distribution Partner Program network here.

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.

TransUnion is consolidating its data analytics and digital onboarding solution to help Hong Kong’s banks and money lenders grow their businesses by making better, more informed decisions faster. TransUnion’s latest ‘House of Analytics’ solutions suite combines data science and business consulting services to help accelerate decision making on financial products such as loans and mortgages. In addition, to help lenders capitalise on Hong Kong’s recently announced Wealth Management Connect initiative, TransUnion announced a Cross-Border eKYC (electronic know your customer) upgrade to its TruValidate Digital Onboarding solution.

“Having served Hong Kong businesses and consumers for more than 40 years, TransUnion is committed to transforming our solutions to meet the evolving needs of the market,” said Marie Claire Lim Moore, CEO of TransUnion Hong Kong. “As we look to the future of finance, TransUnion is advancing its capabilities to provide new solutions, models and insights to support the thriving FinTech ecosystem in Hong Kong.”

Introducing the ‘House of Analytics’ portfolio

The House of Analytics is a suite of solutions that uses machine learning and predictive modelling to help businesses make better use of their data to solve business challenges. House of Analytics customers have the opportunity to enrich their data with TransUnion’s credit bureau which holds millions of individual credit records and currently over 1,000 CreditVision behaviour algorithms to improve their modelling and help meet their business goals. These information and insights have already helped TransUnion’s bank and money lender customers to achieve 10-30% improvement from their pre-TransUnion-solution benchmark.

TransUnion is also increasing the range of behaviour algorithms in its CreditVision solution by 30% to over 1,300 in 2022 to provide additional dimensions of consumer behaviour and more use cases. These will further strengthen the capability of the House of Analytics to help solve customers’ needs.

This enhanced analytics enablement suite of solutions combines data science technologies with consulting services to run analyses on how rich data can be used to identify and overcome business problems. TransUnion’s panel of experts review all relevant data to develop insights and models that address use-case-specific needs for products such as personal loans, auto loans, credit card applications and mortgages.

The House of Analytics includes a sandbox facility for customers to test their data in a safe, enclosed environment to determine its usefulness. Customers can run sandbox testing independently themselves or invite TransUnion experts to support. Within the House, TransUnion is looking to incorporate federated learning (a machine learning technique) in the near future allowing organizations to collaborate on model training without giving away proprietary data. This will help the financial services sector and adjacent industries to unleash the power of data by connecting data sources and co-create an enormous data ecosystem to accelerate digital innovation in the future.

Cross-border Digital Onboarding for banks joining Wealth Management Connect initiatives

Following the recent announcement of Wealth Management Connect schemes, TransUnion’s TruValidate Digital Onboarding solution will now be expanded to support cross border remote account opening and will add new features such as AML (anti-money laundering) screening and SME account opening. 

TransUnion is supporting banks in both Hong Kong and China that have participated in the Northbound and Southbound schemes respectively to help them better evaluate potential customers from different capital markets. The solution provides flexible, direct deployment and an excellent user experience utilising facial recognition and NFC-based (Near Field Communication is a wireless data transfer technology) data capture matching against biometrics and official state data with 100% accuracy and additional tamper-proof safeguards. Investors simply input either their national ID card, a valid exit-entry permit for travelling to and from Hong Kong and Macau (EEP) or a mainland Chinese passport to open cross-border bank accounts online.

First launched in Hong Kong in 2017, TransUnion’s TruValidate Digital Onboarding solution has transformed traditional, time consuming legacy onboarding processes. The proven, pre-built state-of-the-art solution is integrated with TransUnion data for screening, verification and credit decisioning and has a customizable front-end that plugs into a customer’s existing digital channels giving applicants a single streamlined hassle-free onboarding service.

Jerry Ying, Chief Product Officer of TransUnion APAC, said: “In announcing the House of Analytics and Cross-border Digital Onboarding today, we are aiming to equip banks and money lenders with the latest fintech capabilities to build their businesses faster through informed decision-making. We will continue to build ever more robust solutions for the financial services sector and to help sustain trust between lenders and consumers.”

TransUnion is an active participant in Hong Kong Fintech Week 2021. In addition to joining panel discussions on gauging and understanding credit risk, RegTech adoption and cybersecurity, TransUnion is also hosting two online masterclasses for financial practitioners to learn about customer acquisitions and tackling the SME market.

• Credit market is in recovery amid an economic rebound. Two new credit products, Buy Now Pay Later and Payday Loan, are gaining popularity

TransUnion (NYSE: TRU) today announced the latest results from its quarterly Consumer Pulse Survey, which tracks Hong Kong consumer attitudes to their financial situation and outlook. The data shows a further decrease in the impact of the pandemic on household incomes with 43% of consumers reporting their household income was negatively impacted, down 2 percentage points from the previous round of the study conducted in June. Meanwhile, more consumers are expecting to spend more in-store and online. Just under a third (31%) expect to spend more on retail purchases which is a six percentage points increase over the previous quarter. This increased expectation has occurred at a time when the government was rolling out its first batch of consumption vouchers. The survey also revealed that Buy Now Pay Later (BNPL) and Payday Loans are gaining popularity as the economic situation rebounds.

The latest Q3 Consumer Pulse Survey polled 1,100 Hong Kong consumers between August 16-31, 2021.

Consumer sentiment continues to improve but uncertainty remains

Over the survey period, Hong Kong maintained a near-zero level of locally transmitted COVID-19 cases. This backdrop supported a continued improvement in consumer sentiment. More than half of consumers (57%) said their household income was currently unaffected. The majority were also more confident in their ability to pay their financial obligations – 76% expected to be able to pay their current bills and loans in full, up four percentage points from the previous survey in June.

The Consumer Pulse Survey also found that across all categories of bills and loans there was a decrease in those unable to meet their obligations compared to the last quarter. Among these, 26% felt they would be unable to pay their personal loans (down 10 percentage points). This was followed by payment concerns on private student loans (down nine percentage points to 25%) and mortgages and auto leases (down eight and 15 percentage points to 15% respectively).

More consumers increased their discretionary spending over the quarter (up two percentage points to 22%) and expanded digital services (up three percentage points to 18%). Fewer consumers canceled subscription/memberships (down two percentage points to 19%) and reduced digital services (down two percentage points to 16%). Perhaps in anticipation of receiving government spending vouchers, 80% of consumers expected at least to maintain or increase their online transactions over the next three months.

While the survey results demonstrate improving consumer sentiment, concern remains regarding the future impact of the pandemic. Looking ahead, nearly half (48%) of respondents expect their income to decrease. In light of the uncertainty, over the last three months, 52% of consumers have cut back on discretionary spending, while the number saving to build their emergency funds is up five percentage points to 44%. The number saving for retirement also increased (up five percentage points to 23%).

Credit market is recovering with credit demand and supply increasing

The Consumer Pulse Survey also showed an improvement in financial inclusion in Hong Kong. In this round of the survey, 38% of consumers believed they had sufficient access to credit and lending products, an eight percentage points increase over the previous quarter. Half (50%) of all respondents said they find access to credit important in achieving their financial goals, three percentage points more than the previous quarter.

Just over two in five (41%) of respondents planned to apply for new credit or refinance existing credit. When calculating credit need by risk segments, near prime consumers said they had the most need for credit (67%), followed by prime plus (66%) and prime (59%). Almost three-quarters (73%) of consumers found it either very or extremely important to monitor credit, up six percentage points from Q2 and 14 percentage points from Q1.

“The latest survey indicates a narrower gap between consumer needs and market supply. We also see that more consumers understand the importance of maintaining credit health in order to access needed credit to achieve their financial goals,” said Marie Claire Lim Moore, CEO of TransUnion Hong Kong. “This finding is in line with our latest Industry Insight Report, which also showed increasing credit demand and supply. This brings opportunities to both credit suppliers to capture growth, and for Hong Kong consumers as the economy continues to recover from the pandemic.”

In the context of the overall improved market environment, the survey also found two new credit products – Buy Now Pay Later (BNPL) and Payday Loans – were gaining popularity. Almost two-thirds (62%) of respondents were aware of BNPL services, up 14 percentage points from the last survey. But more consumer education is required as 27% of consumers who had not used BNPL said they did not understand the service.

The Payday Loan is a new credit product brought to market by virtual banks which helps bridge gaps between spending need and actual payday. 80% of respondents had heard about it and just over half (52%) believed the product would be at least somewhat valuable. With the product still being new to the market, only 10% of consumers had used the service in the past 12 months.

“These products showcase how virtual banks are trying to gain more market penetration, introducing alternative credit lines for different types of consumers,” said Lim Moore. “This is also a reflection of a more competitive market, requiring banks and lenders to better understand their customers and be more prepared for their evolving needs.”

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.

• Consumer sentiment remains positive despite rising global trade tensions and expected pull back in GDP in H2 2018

• YoY card balance growth in Q2 2018 exceeded inflation driven by increased new card originations (grew 20% YoY in the first quarter) and increased utilization of existing cards:

• Younger consumers continue to be the engine for strong consumer credit growth

  • Millennials hold 26% of total card balances

  • Three out of 10 credit cards added in the last 12 months were opened by Gen Z and their balances have almost doubled on the back of this, ending the quarter with around 85% YoY growth

• Unsecured personal loan market shows weaker growth with number of accounts falling 2.1% and number of consumers with personal loans dropping 2.2% YoY

• Mortgage inquiry volumes reached their highest levels in three years despite rising house prices and interest rates

Hong Kong, Sep 5, 2018 – The Hong Kong consumer credit market continues to benefit from favourable economic conditions, including low unemployment, high labour force participation and rising wages. TransUnion’s (NYSE: TRU) newly released Q2 2018 Industry Insights Report showed positive originations and balance growth across most major consumer lending products, with generally low and stable delinquency rates, as consumers are continuing to access credit and are able to successfully manage current debt levels.

“Hong Kong’s consumer lending environment continues to reflect the strong economy with widespread balance growth,” said Brendan le Grange, director of research and consulting for TransUnion Hong Kong. “Escalating global trade tensions might pull back GDP growth in the second half of the year, which remains an area of potential concern for lenders and consumer businesses. But through the first half of the year, there are no indications of significant risk within the consumer lending sector.”

Credit cards – the most widely held credit product in Hong Kong – are leading the rise in overall consumer balance growth. Q2 2018 is now the third consecutive quarter in which year-over-year card balance growth has exceeded inflation. This balance growth has been driven by both new card originations and increased utilization of existing cards. Credit card account originations in the first quarter of 2018 (latest data available) were up nearly 20% year-over-year, to 587.1K, compared to Q1 2017 (latest data available). Average consumer balances at the end of Q2 2018 increased 2.9% over the prior year, to 39.0K. At the same time, card delinquencies remained well controlled. Consumer-level delinquency rates–the percentage of consumers 90 or more days past due on one or more cards–dropped one basis point over the past year to 0.07% at the end of Q2 2018.

Younger -consumers were once again the engine for that growth. While Baby Boomers (born 1946 to 1964) reduced their balances by 3.9% year-over-year, Millennials (born 1980 to 1994) accounted for two out of every three HK dollars added by the credit card industry in the last year (Q2 2017 to Q2 2018). They now hold 25.8% of total card balances.

The youngest borrowers grew their balances even faster, as three out of 10 credit cards added in the last 12 months were added by Generation Z (born 1995 onwards). Gen Z balances have almost doubled on the back of this, ending this quarter up 84.7% year-over-year.

“As we’ve seen in recent quarters, the youngest generations are driving growth in the consumer credit market. Many of these consumers are still early in their careers and still entering household formation life stages, and their credit needs are continuing to evolve and grow. This bodes well for the overall Hong Kong market today and in the future,” said le Grange.

Potential Weakness Seen in Unsecured Personal Loan Market?

While the consumer credit market is performing well overall, TransUnion noted weaker growth in the unsecured personal loan market. TransUnion found that the number of open accounts fell 2.1% over the past year, to 618.9K in Q2 2018, while the number of consumers with a personal loan dropped 2.2% over the same period to 422.1K.

“Unsecured personal loans are an important segment of the consumer credit market because younger consumers often utilize such loans,” said le Grange. “It is not yet clear whether consumers are shifting their borrowing preferences to other account types, such as credit cards, or if lenders are pulling back from marketing this product. This trend bears watching in the coming quarters to understand if there is a longer-term shift occurring, and how lenders may be able to respond.”

 Mortgage Market on the Rise

TransUnion’s Industry Insights Report also found that the mortgage market is performing exceptionally well. Mortgage inquiry volumes reached their highest levels in three years, despite both higher house prices and rising interest rates.

“Hong Kong property prices continue to rise, with the Centa-City Leading Index, an indicator of Hong Kong property price changes, adding approximately 17% year-over-year. This is compounded by mortgage lending rates that have started to climb, which may put pressure on demand for new home purchases. Despite these headwinds, the number of mortgage inquiries in Q2 2018 reached the highest levels in over three years,” said le Grange. “This strong demand contributed to the healthy growth in mortgage accounts we saw over the past year.”

As of Q2 2018, there were 532K mortgage accounts, up 7.6% from Q2 2017. As well, mortgage account originations increased year-over-year by 0.7%, to 26.5K in Q1 2018, the latest quarter available. At the same time, account-level delinquency rates (60 or more DPD) dropped 1 basis point to a low 0.04%.

“The mortgage market’s strong performance is indicative of the overall consumer performance in Hong Kong. More credit is being extended, balances are rising and delinquencies are, for the most part, dropping. This is good news for both lenders and consumers,” concluded le Grange.

About TransUnion (NYSE: TRU)

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

We call this Information for Good ^SM. http://www.transunion.hk

Overall, total installment loan balances grew 1.9% in the first quarter, continuing a trend of year-over-year balance growth that was seen in every quarter in 2017. Younger borrowers are playing an important role in driving this growth.

Personal loan balances held by Baby Boomers (born 1946 to 1964) fell by 4.1% year-over-year in the first quarter, while balances held by Generation X (1965 to 1979) rose by 1.9% and balances held by Millennials (1980 to 1994) rose by 10.7%. These three major generations account for 98% of loan balances, but the youngest generation, Gen Z, experienced 78.5% year-over-year balance growth, albeit from a much smaller base level.

“Gen Z represents a very small part of the Hong Kong economy, but the immense growth we’ve observed by the youngest generation in such a short period is likely just the beginning of a transformative shift in the Hong Kong consumer credit market,” said Brendan le Grange, director of research and consulting for TransUnion Hong Kong. “As younger consumers with purchasing power enter the market, lenders will need to understand that their borrowing needs may differ from older generations – even from Millennials, who have long been viewed as the catalyst for credit growth in the market. It’s highly likely that digital channels will continue to be a key in reaching Gen Z consumers as we’ve already observed.

Number of Unsecured Credit Products (in thousands) as of Q1 2018

Beyond experiencing strong credit growth rates, TransUnion found that Gen Z consumers may disrupt the current lending competitive landscape. An example of this can be seen in the near prime risk tier (consumers with TransUnion CreditVision risk scores between DD to HH), which has the largest share of personal loan accounts and balances among all risk tiers. In this tier, where money lenders have a 28% share of total balances and a 24% share of Millennial balances, they have a 40% share of Gen Z balances. Money lenders include FinTechs, companies that provide unsecured personal loans via digital means. This higher penetration by money lenders may indicate a preference among Gen Z consumers to do business with this lender type.

According to the TransUnion report, the borrower profile for personal loans is younger than for credit cards, the largest unsecured account type. Millennial and Gen Z consumers held 36% of all personal loan balances in Q1 2018, compared to 27% of credit card balances. This younger profile of personal loan customers should support continued steady growth through 2018; for all unsecured credit products, Millennials and Gen Z are seeing year-over-year balance growth while older consumers, particularly Baby Boomers, are shrinking balances.

“Younger consumers–Millennials and Gen Z–are the major growth driver for unsecured credit balances. Lenders need to understand the preferences and value drivers of these segments in order to effectively serve them and build long-term loyalty,” added le Grange. “In particular, the Gen Z segment, who are newer to credit and have limited behavior and performance history, are still creating their credit story. It will be interesting to observe their journey forward and understand where there are unique differences from earlier generations.”

Year of the Dog Begins with Impressive Credit Card Balance Growth

The first quarter of 2018 showed strong year-over-year balance growth across all major retail lending products. Credit card balances, in particular, experienced a healthy growth rate of 5.2% between Q1 2017 and Q1 2018. This was a major change from the previous year, when balances rose less than 1% between Q1 2016 and Q1 2017.

“Government-published retail spending figures show total retail spending up by 13.9% year-over-year at the headline level, and up by even more among discretionaries such as luxury goods and electronic gadgets. This is likely driving some of the card balance growth. At the same time, the seasonal nature of credit card usage suggests balances will settle lower in the two quarters to come,” added le Grange.

Demand Rises for Tax Loans

Tax loans experienced a revival in demand, with a 42% year-over-year increase in loan inquiries in the first quarter. Tax loans by their nature have an older profile and Gen Z made less than 1% of those inquiries, but even here the volume of their inquiries is up 87.2% since the last season and year-over-year balances more than doubled. But Millennials, who now open 1 in 3 new tax loans, saw the largest year-over-year total balance increase of any age segment.

“Millennials are transitioning from up-and-coming consumers to mature borrowers with significant incomes; many of the older members of this segment are in their late 30’s and have become high earners. As they have already done with credit products like credit cards and mortgages, we expect Millennials to become an increasingly important segment of the tax loan market. At the same time, while Gen Z remains a very small portion of the tax loan portfolio today, the experience of the Millennial segment in recent years can serve as a guide for expected future growth of the Gen Z segment”, concluded le Grange.

Tax Loan Balances (in millions) as of Q1 2018

About TransUnion (NYSE: TRU)Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

We call this Information for Good. http://www.transunion.hk

TransUnion’s report found that after a year of sub-inflation growth, credit card balances rose nearly 5% in the last quarter, helping spur year-over-year growth of 2.3%— back above inflation¹. The rise was likely due to increased retail spending in the fourth quarter, which grew 5.7% between Q4 2017 and Q4 2016 according to figures from the Census and Statistics Department.

“The Hong Kong consumer credit market continues to be solid and is buoyed by a strong macro economy,” said Brendan le Grange, director of research and consulting for TransUnion Hong Kong. “Unemployment is at 10 year lows, wages are up for the 10^th consecutive quarter, GDP growth remains strong, and now retail spending is up as well. The growth of credit card balances in the fourth quarter is significant because Hong Kong had previously experienced eight consecutive quarters in which year-over-year balance growth came in below inflation.”

Credit Card Data Point to Strong Performance

Much of the growth in the credit card industry is being driven by the Millennial generation (born between 1980 and 1994). As of Q4 2017, Millennials held a 25% share of the 18.8 million credit card accounts, up from 24% in Q4 2016. Outstanding balances for Millennials grew by 14.0% during 2017, significantly higher than the 2.3% mark for the overall population.

Instalment Loan Balance Increases Led by Millennial Interest in the Product

As the second most popular credit product in Hong Kong, with 625,200 such accounts, unsecured instalment loans continue to be favored by younger generations. The Millennial share of all instalment loan originations increased to 35% in the third quarter of 2017 (the most recent quarter for which data are available), up from 32% two years earlier. Over that same time, the share of originations by both Generation X (born between 1965 and 1979) and Baby Boomers (born between 1946 and 1964) declined. At the end of 2017, Millennials held 26.3% of total instalment loan balances, ahead of Baby Boomers whose balances have declined over the past several years.

TransUnion found that unsecured instalment loan balances per consumer climbed to $258,100 at the conclusion of 2017. With the help of spill-over tax loan demand, instalment loan balances ended Q4 2017 3.0% higher year-over-year and 1.2% higher quarter-over-quarter. “Despite the strong fourth quarter growth for credit card balances, instalment loan balances saw much stronger percentage growth for the full year. Demand for this loan type remains fairly strong, driven largely by strong interest from Millennial borrowers,” said le Grange.

Origination volumes rose for instalment loans, up 1.7% year-over-year between Q3 2016 and Q3 2017 and 8.3% from Q2 to Q3 2017. The total value of new loan balances booked was down, though, as average new loan values dropped, most significantly in the super prime risk tier but across risk tiers as well. This is a reversal of the trend observed earlier in 2017, where origination volumes were falling alongside rising loan values.

Delinquencies and Account Volume Muted, Though Millennials Driving Growth

Consumers continued to perform well on their credit, as delinquency rates during 2017 remained very low for all credit products. Serious account-level delinquency rates for credit cards and mortgages dropped 2 basis points each, to 0.12% and 0.05% respectively. The serious delinquency rate for unsecured personal loans declined 7 basis points, to 0.85%, while auto loans only increased 1 basis point to 0.12%.

As delinquencies remained low, account growth rates have been somewhat muted, with certain sectors experiencing more growth than others. Much of the growth that is occurring is happening due to Millennials.

Millennial Impact on Hong Kong Consumer Credit Accounts

“There are primarily positive signs in the Hong Kong consumer credit market. Nevertheless, with many products showing signs of saturation, lenders will need to focus on building innovative products to win over existing balances from their competitors,” said le Grange. “As well, they must find ways to continue to appeal to Millennial borrowers, who will be the source of balance growth for the next few years.”

Note: Transunion does not calculate our own inflation rate estimate, but relies on data from the Census and Statistics Department by Dec 2017

1. https://www.censtatd.gov.hk/hkstat/sub/so60.jsp

About TransUnion (NYSE: TRU)Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

We call this Information for Good. http://www.transunion.hk

Headquartered in Chicago, TransUnion provides premier global risk and information solutions to businesses and consumers. Set up in 1982, TransUnion’s Hong Kong office provides analytics and consulting; credit reporting; customer acquisition; and fraud and ID identification management.

Wang joined TransUnion in May of 2013 as Senior Director, Head of Product for Asia Pacific, and went on to be promoted to Vice President, Innovative Solutions Group, in March 2016, taking over regional responsibility for TransUnion’s product and solutions roadmap for Asia Pacific.

Wang brings over 20 years of experience in banking, consulting and international business to the CEO role. She possesses a wide spectrum of expertise in consumer banking, covering planning and business development, consumer credit risk and credit operations. Over her distinguished career, she has established an excellent track record of leadership in building up teams and managing projects that drive positive business results.

Prior to TransUnion, Wang held leadership roles at JPMorgan Chase & Co., TPG Capital and HSBC.

“We are excited about the numerous opportunities that lie ahead as Hong Kong embraces fintech and strives to become the preeminent Asia hub for cutting-edge digital financial solutions. TransUnion is proud to help the city and industry navigate the changing regulatory environment and rapid digital transformation,” said Lawrence Tsong, TransUnion’s APAC president. “Given Neona is a remarkable leader, and is highly respected and regarded in our industry and across the company, I am confident she will continue to bring insightful thought leadership and comprehensive solutions to our customers in Hong Kong.”

About TransUnion (NYSE:TRU)Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

We call this Information for Good. http://www.transunion.hk

“The Hong Kong consumer lending environment remains strong, with low levels of credit risk existing alongside positive, albeit slow, levels of growth,” said Brendan le Grange, director of research and consulting for TransUnion Hong Kong. “This is reflective of an economy that shows some solid numbers, with positive GDP growth expected through 2018 and a continued favorable employment situation.”

TransUnion noted that the Hong Kong government estimates 2017 GDP growth of 3.7%, with 2018 growth forecasted to remain positive but at a lower 2% to 2.5%. Meanwhile, interest rates, which have seen increases in 2017, are likely to continue to rise in 2018. The Hong Kong Monetary Authority policy rate is tied to the US fed funds rate, and the US Federal Reserve has recently reconfirmed its forecast for a cumulative 0.75% to 0.85% increase by the end of 2018.

“2018 is expected to deliver more of the same positive trends. Our consumer credit outlook is stable, but impacted by two key factors—the threat of rising interest rates on the negative side, and the increasing prominence of Millennials with their inherent growth momentum on the positive side,” le Grange added.

The Hong Kong consumer credit market may feel some pressure as a result of rising interest rates. In a brief published last year, the Research Office of the Legislative Council found that 40% of a family’s monthly, spend, for family living in private housing, was going to pay for accommodation – the cost of an average mortgage has already risen 10% since that survey was done, is set to rise a further 9% in 2018, and may rise another 7% again in 2019.

According to TransUnion research, if interest rates rise by 75 basis points before the end of 2018 (as some economists forecast), the cost of the average mortgage booked in 2017 will increase by $1,500 per month, 9%. Approximately 4 out of 5 mortgage holders in Hong Kong should be able to absorb that increased monthly mortgage payment in the short-term simply by moving to lower or minimum monthly payments on their credit cards. However, about 1 in 15 mortgage holders would need to find more than $1,000 per month from other sources to keep meeting their current obligations. Further, nearly 33% of those consumers currently have credit scores that are below prime.

“While this is a small number of consumers overall, this development should be monitored. Many of these consumers may have other resources they can reallocate to cover monthly their debt service – investment or savings contributions, for example – while others may need to reduce spending on discretionary items to cover the higher monthly payments,” said le Grange.

On the positive side, the second major trend shaping the 2018 outlook is the growing prominence of Millennials, those consumers born between 1980 and 1994.

Bankcards remain the most widely held consumer credit product in Hong Kong by a significant margin, In Q3 2017, Millennial cardholder balances were up 12% year-over-year compared to Generation X (up 1%) and Baby Boomers (down 6%). This growth in Millennial card usage is in contrast to the market overall, one in which Q3 2017 was the eighth consecutive quarter with year-over-year balance growth below inflation levels—in other words, a decrease in real dollar buying power exercised through card credit.

“Millennials are positioned to help swing the equilibrium in the credit card market, with headline growth expected to approach 2% in 2018 and 3% in 2019. The next two quarters present Hong Kong lenders with an opportunity to capture festive season credit demand. But in the longer term, lenders will need to find ways to appeal to the high-growth Millennial segment and ensure that credit cards remain a primary vehicle for purchasing and borrowing against the growing number of options available,” le Grange said.

Inside The Hong Kong Consumer Credit Market – Q3 2017

The Industry Insights Report found that credit cards and mortgage loans were the only major credit products experiencing year-over-year account growth. Credit card account volumes grew 1.2% to close Q3 2017 at 18.58 million accounts. The average credit lines available to a consumer also increased 4.1% in the last year to $282,969, while serious credit card delinquency rates (90 days or more past due) remained unchanged at 0.07%.The number of mortgage accounts increased nearly 9% to finish Q3 2017 at 506,100 accounts. Serious delinquency levels (60 or more DPD) for mortgage loans dropped two basis points to 0.05%.

Most Popular Hong Kong Credit Products

Unsecured personal loans remain the second most popular credit product with 623.5 thousand accounts, though this was a 5.3% decline from the previous year. Interestingly, even as the number of consumers with an open personal loan declined in the last year, the average balance per consumer rose about 8% between Q3 2016 and Q3 2017 to $254,700. A possible reason for this balance increase is consumers borrowing to support new home purchases, as mortgage originations have risen sharply over the same period and at least 1 in 5 of the larger value personal loan borrowers have also opened a new mortgage over the past year. The 60 or more DPD delinquency rate on personal loans experienced a year-over-year decline of 5 bps to 0.92% in Q3 2017.

The number of unsecured revolving lines did not change materially in the last year, closing Q3 2017 at 561.8 thousand. Delinquency rates (60 or more DPD) for these lines dropped three basis point in the last year to 0.36% in Q3 2017. While the number of consumers carrying a revolving account balance declined about 2% in the last year, average balances per consumer rose minimally by 0.2% to $129,600.

“We continue to see minor divergences in the popularity of credit products in Hong Kong. Much of this is likely due to the increased presence of Millennials in the overall consumer credit picture and differences in their credit usage and preferences compared to earlier generations. Overall, we see the Hong Kong consumer credit market as strong and stable, with consumer-level delinquency flat or declining and expected to remain at very low levels. Overall, this picture is one of improving prospects for consumer credit demand in future years,” concluded le Grange.

For more information about the Q3 2017 TransUnion Hong Kong Industry Insights Report, please visit here.

Note: Transunion does not make its own interest rate forecasts, but rather relies on the government forecasts of the HKMA¹ and the US Federal reserve²

1. http://www.hkma.gov.hk/eng/key-information/press-releases/2017/20170615-3.shtml

2. https://www.federalreserve.gov/newsevents/pressreleases/monetary20170920b.htm

About TransUnion (NYSE: TRU)Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

We call this Information for Good. http://www.transunion.hk

Making claims is much easier and more intuitive with an artificial intelligence (AI)-powered personal assistant, Amy, who will walk customers through the process. Consumers can say goodbye to all the traditional claim forms. Customer experience will be greatly enhanced with the simplified claim procedures. User verification is also quick and simple with electronic Know Your Customer technology (eKYC) and facial recognition technology.

Eddie Chang, Chief Executive Officer of Wesurance, said, “At Wesurance, it is our goal to use technology to develop the best digital insurance solutions which will allow customers to purchase insurance policies in a more enjoyable way, hence helping to increase the insurance penetration rate among the younger generation. AI and cutting-edge identity verification solutions are major enablers of this goal, allowing us to create a service delivery channel at the consumer’s fingertips that is cost-effective and hassle free. With the expertise and support of our partners Allied World Assurance Company, Ltd and TransUnion we have been able to launch a comprehensive mobile travel insurance solution that ticks all the boxes for Hong Kong’s busy consumers.”

Amy, the customer-centric personal assistant, will help customers 24/7 anywhere they go. A Frequently Asked Question (FAQ) database provides a vast bank of knowledge that enables Amy to deliver instant in-app responses to over 80% of customers’ queries. Unresolved questions are immediately directed to internal representatives to provide real-time support. Amy also sends reminders and notifications to create a seamless consumer journey from start to finish.

Wesurance uses eKYC technology, powered by TransUnion’s IDVision solution suite that utilises advanced technologies such as document forensic algorithms, device intelligence, facial recognition and data analytics to verify a user’s identity. Users simply need to take a photo of their HKID card and then a selfie. In just a few moments, IDVision eKYC can accurately verify the user’s identity.

Lawrence Tsong, President, Asia Pacific of TransUnion said, “The collaboration with Wesurance marks a significant milestone for TransUnion as it is the first time our eKYC solutions will be used in the Hong Kong insurance industry. IDVision eKYC solutions help transform the way financial institutions onboard new customers, providing a smooth customer experience, in a secure manner while fulfilling KYC compliance processes. As a result, our partner companies can protect their businesses and bottom lines from fraud.”

When users make their claim, they just need to answer Amy’s questions and take photos of their supporting documents. Claims are processed quickly and users typically notified of the result within a few days. Thanks to the auto-fill function and optical character recognition (OCR) technology, users can fill in a lot less information when they purchase insurance policies on the platform. All they need is to insert their phone number and address.

In addition, all charges are transparent, with no hidden fees or small print in the contract. eKYC will make it easier for users to purchase not only travel insurance but also other insurance products such as life insurance on the platform in the future.

Mr. Chang concluded, “At Wesurance, we deliver InsurTech services that allow insurance providers to offer the same simplicity and customer centricity that Hong Kong residents expect in other areas of their lives. Travel insurance policies are our first range of product. We plan to launch other insurance products on this platform at a later stage. We are confident that this mobile platform will transform the way consumers use insurance in Hong Kong.”

The Wesurance app can be downloaded from the iTunes App Store or Google Play.

All new customers will enjoy a cash rebate equivalent to 40% of the premium which they can use for their next purchase. Both referrers and referees will receive cash discounts. For further information about the promotional offer, please visit www.wesurance.com.hk or https://www.facebook.com/wesurance/.

- End -

About Wesurance

Established in April 2017, Wesurance Limited is a Hong Kong-based financial technology company providing advanced InsurTech solutions to local consumers. Through its subsidiary, Wesurance Digital, the company offers the Wesurance mobile platform which is the local insurance industry’s first mobile solution to integrate an AI-driven digital personal assistant and facial recognition (eKYC) for user identity verification. The platform greatly simplifies the way consumers purchase insurance policies and make claims, achieving enhanced customer experience and satisfaction, and helping insurers save cost and improve efficiency and profitability. For further information, please visit www.wesurance.com.hk.

About Transunion (NYSE: TRU)

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

We call this Information for Good. http://www.transunion.hk

TransUnion’s research, which analyzed consumers in Hong Kong, Canada and the United States, determined that the more consumers pay over their minimum payment due for credit cards or other revolving lines of credit, the less likely they are to go delinquent. Such findings derived from trended data could help lenders better mitigate account risks and maximize consumer opportunities.

“Our research shows that consumers across the globe – be it in Asia or North American – can benefit from paying more than the minimum due,” said Ezra Becker, senior vice president and head of TransUnion’s global research operations. “This may sound intuitive—consumers who are able to pay more usually have more liquidity and therefore are less likely to miss payments. But it is the quantification of this intuition that is important. This is an insight one can only derive from trended data that includes actual payment data, and it can be an important variable for lenders to use when assessing the risk of their credit portfolios.”

According to a new TransUnion survey of 1,000 consumers in Hong Kong, 88% of respondents indicated that they more often pay a greater amount than their minimum due on their revolving debts each month. Yet a significant number (more than 40%) are uncertain about the importance or benefits of paying off above the minimum balance.

Around the World: How Do Consumers Pay Off Their Credit Cards?

“Leveraging trended data and the insights derived from it could really help Hong Kong lenders better identify borrower risk trends and ultimately create greater credit access for consumers. This can only happen when financial institutions utilize trended data and report payment data to credit bureaus,” said Samuel Ho, CEO, TransUnion Hong Kong. “When lenders provide this information and can access it broadly across the consumer wallet, it allows them to better tailor their products to consumer performance, which builds better loan relationships and helps everyone in the long run.”

Payment Data Good Predictor of Delinquency

TransUnion utilized its Total Payment Ratio (TPR) metric to identify the correlation between payment amount and delinquency across multiple products and regions. TPR is calculated by dividing a consumer's total monthly credit payments by the total minimum due on all of the consumer's credit products. The higher the TPR, the less likely the consumer will fall behind on payments.

For instance, a person making $400 in payments on three credit cards when the aggregate minimum due on those cards was $200 would have a TPR of 2.0. A person making $1,200 in payments with an aggregate minimum due of $200 would have a TPR of 6.0. TransUnion used this metric to analyze how credit users performed on various loan types.

The correlation with delinquency was consistent for markets as far ranging as Canada and Hong Kong. For instance, serious credit card delinquency rates (90 days or more past due, or “90+ DPD”) in Hong Kong dropped substantially for all consumer risk types as TPR increased—even when controlling for traditional risk scores.

Credit Card Serious Delinquency Rates (90+ DPD) – Hong Kong

The study further confirmed that payment behavior on revolving debt does impact performance on other credit products, such as auto loans.

Auto Loan Serious Delinquency Rates (90+ DPD) – Canada

"Our study confirmed that as TPR increased, delinquency rates declined for credit cards and auto loans in these varying markets,” added Becker. “This is a powerful new metric that adds value beyond the traditional credit score for evaluating risk.”

Trended Data Leads to More Consumer Benefits

New insights derived from TPR are only achievable when trended data are added to a consumer credit report. TransUnion launched CreditVision in Hong Kong to enhance lending and marketing decisions by leveraging dynamic data to see an expanded view of each consumer’s credit profile.

Whereas a traditional credit report offers a glimpse of a consumer at a snapshot in time, trended data assets leverage up to 24 months of historical information. For example, while a traditional credit report may tell you a consumer has HKD$25,000 in credit card debt, one using trended data would show you whether they have built up or paid down that balance over time.

Previous TransUnion research in the United States found that it is likely such data will benefit more consumers. Compared to the use of a traditional risk score, the use of a CreditVision score could increase the percentage of consumers in the Super Prime risk category from 12% to 21%. Consumers in this risk group are typically eligible for better rates and terms on credit products.

"Our findings, combined with the increased use of trended data, are good news for Hong Kong consumers, particularly those who make larger than required payments on their debts each month,” said Samuel Ho. “Even if they can't pay the full balance, they may now find that lenders view them in a more positive light depending on the amount they do pay. We encourage the use of trended data from CreditVision and the reporting of payment behavior to ensure both lenders and consumers can benefit from these newly available insights.”

For more information about the study and TransUnion’s CreditVision data, please visit (https://www.transunion.hk/PaymentStudy).

About the Consumer Survey in Hong Kong

In partnership with Weber Shandwick and Lieberman Research Worldwide, TransUnion launched a consumer survey in Hong Kong. The online omnibus study is conducted once a week among an Internet representative sample of adults 18-64 years old in Hong Kong. This survey was live on December 9-14, 2016. This report presents the findings of a survey conducted among a sample of 1,000 adults comprising 541 men and 459 women 18-64 years of age. Responses from four per cent of respondents who do not currently own a credit card were disqualified from the survey. Completed interviews are weighted by two variables: age and sex to ensure reliable and accurate representation of the total Hong Kong population, 18-64 years of age. Respondents for this survey were selected from among those who have volunteered to participate in online surveys and polls. Because the sample is based on those who initially self-selected for participation, no estimates of sampling error can be calculated.

In March, TransUnion commissioned Zogby Analytics to conduct an online survey of 500 18-and-up Hong Kong natives, studying credit and personal loan debt (ex-mortgage) and credit health patterns in the city.

The survey shows that 52% of respondents are repaying personal loans at the time of survey, while 18% have to re-pay between HK$10,000-60,000 and 14% owe over HK$100,000.

Although many Hongkongers own several credit cards, the survey found that 36% of respondents actively use only two credit cards and 23% actively use three to four credit cards. Survey findings also showed that 23% have incurred credit card debt between HK$5,000-10,000 per month, while 17% have re-paid over HK$10,000 in outstanding credit card payments per month over the past six months.

The survey asked respondents how much of their monthly income is used to pay personal loans and credit card debt. 12% of respondents said this accounted for over 40% of their monthly income, while 15% said 20-40% of their monthly salaries pays off personal loans and credit card debt.

Commenting on the results of the survey, Angus Choi, Managing Director of TransUnion Hong Kong, said, “One-third (33%) of respondents said they don’t always keep track of what they owe on a regular basis, and fail to pay their personal loans and credit card debt on time. This indicates that many Hongkongers remain unaware of the importance of staying in good ‘credit health’. Any late payments of their credit card debt and personal loans will not only incur extra interest expenses but will impact their credit score. Nearly all banks and credit providers make reference to credit scores when assessing loan applications. A low credit score can significantly affect future credit card, personal loan or mortgage loan applications.”

Choi added: “Given that many Hong Kong consumers are actively using more than two credit cards every month, it’s easy for people to lose track of which outstanding payments they have settled, and by how much. This could prove detrimental because ongoing late credit card payments will also influence a consumer’s credit score and consequently, their chances of securing lower-interest credit.”

TransUnion has provided the following tips to help consumers improve their credit health:

• Create a monthly spending plan and stick to it: Determine your current spending habits, and set a monthly budget to determine just how much disposable income you have so you can manage it wisely. 


• Pay your bills on time and use credit responsibly:This will help you reduce interest payment and avoid over-stretching yourselves. Responsible debt management plays a key role in your financial well-being.


• Check your credit reports frequently: The first step to robust credit health is to recognize which bad financial habits, such as late payments, you may have and how they are represented on your credit report. Regular check-ups may also help you guard against identity theft. 


• Know your credit score: Understand what affects your credit score and take the necessary steps to reaching healthier credit. The higher your score, the better interest rate you are likely to receive.  You can find the credit score in your credit report.