(Yicai) Nov. 19 -- More and more Chinese Hong Kong residents are choosing to live long-term in the Chinese mainland’s Greater Bay Area, driving demand for cross-border loans among other services. As a result, mainland banks are evaluating risks in an effort to seize the most opportunities from this situation.

There is a growing demand for mainland loans from Hong Kong residents, Xian Diyun, chief product officer for Asia-Pacific at TransUnion Credit Report Hong Kong, said at the 2025 Hong Kong Fintech Week. A large number of Hong Kong residents travel North weekly for consumption, and many of them are even starting businesses and buying homes in the Greater Bay Area, creating a need for loans, he added.

The issue is that these individuals have comprehensive credit histories in Hong Kong but no credit records in the Chinese mainland, which is prompting banks to address such a shortage in services, according to Xian.

The credit data required to issue mainland loans to Hong Kong residents has not yet been integrated due to obstacles in data management, storage permissions, and regulatory requirement differences between Hong Kong and the mainland, Chen Yingyi, deputy director of the Institute of Regional Development and Planning at the China Development Institute Shenzhen, told Yicai.

If a Hong Kong resident defaults on a mainland loan, debt recovery and legal enforcement procedures become complex and costly because of the involvement of different jurisdictions, Lin Jiang, professor of economics at Lingnan College, Sun Yat-sen University, told Yicai. Moreover, as an international financial center, Hong Kong is also on high alert for potential money laundering risks related to multi-channel capital flows, he added.

Lin suggested accelerating the establishment of a cross-border credit cooperation mechanism under the Greater Bay Area framework, promoting collaboration between the People’s Bank of China’s Credit Reference Center and Hong Kong’s regulatory authorities, and building a model for mutual recognition and conversion assessment of credit records.

“Even though the demand is limited, mainland banks still have a strong willingness to advance this matter, hoping to build a mature cross-border credit verification platform,” Xian pointed out. “When people from Singapore and Malaysia come to work or study in China in the future, this platform could be applied.”

Another issue lies in the difference in loan interest rates. At the end of October, the upper limit for mortgage interest rates at Bank of China and HSBC was 3.25 percent to 3.5 percent in Hong Kong, versus around 3 percent for high-quality mainland clients.

Most credit demand from Hong Kong residents in the Chinese mainland is actually concentrated on consumption, Xian said. If they can obtain a mainland credit card loan, their convenience in daily consumption and payments will be greatly enhanced.

Buying social security in the mainland has also become a new trend among Hong Kong residents. Mr. Li, a Hong Kong resident in his 50s, calculated that by paying a monthly pension insurance premium of CNY898 (USD126), he can retire in Shenzhen in 20 years, receiving a monthly pension of over CNY3,000 (USD422). “I can break even in four years,” he said.

Hong Kong and Macao residents had participated in pension, work-related injuries, and unemployment insurance in Guangdong province 332,800 times as of August last year, up 119 percent from the end of 2021, according to data from the Guangdong Provincial Social Security Fund Administration.

Editor: Futura Costaglione