HKMA announces commercial data project for data owners and banks

The Hong Kong Monetary Authority is introducing the Commercial Data Interchange (CDI), which aims to establish a consent-based common standard for data owners to share their digital footprint with banks through data providers, said Eddie Yue, HKMA’s CEO in a published speech.

Today, there is reliance on multiple one-to-one connections between banks and data providers. Under CDI, each bank and data provider will have a single connection to this interoperable platform. That should make data sharing more efficient and scalable.

Financial institutions and data providers will be able to connect their systems to this infrastructure. That will allow customers to authorize their own service providers — such as utilities companies and payment gateways — to provide banks with relevant and authenticated data through this platform.

With customers’ consent, banks can have direct, efficient access to a substantial body of data. That will enable them to offer the most suitable services to customers, or perform more precise and objective credit assessments. And that, in turn, will help banks address the pain points.

For example: a family-run noodle shop which has problems getting bank credit can now choose to allow its bank to access historical turnover data from its point of sale terminals. With access to this data, and by using AI tools, the bank should be able to make an accurate forecast for the noodle shop’s sales. That means it can make a credit decision without having to first ask the owner for loan collateral. Hopefully, the noodle shop is successful and its sales rise above the projections in the bank’s model. Then its credit limit can automatically be increased by an appropriate amount.

“Of course, we will ensure that the principles of customer consent and data security are upheld at all times. The platform will also be subject to rigorous governance that will include consumer protection measures,” Yue said in the speech.

“This new data strategy is a paradigm shift in the development of Hong Kong’s financial infrastructure. We have always facilitated the secure movement of funds through our robust clearing and settlement systems. Now we will also be facilitating the secure movement of data, at the initiation of the data owner, to enable more efficient financial intermediation in our banking system,” he added.

Read the full speech

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