A New Era of Smart Banking
The Hong Kong Monetary Authority (HKMA) today unveiled a number of initiatives that prepare Hong Kong to move into a New Era of Smart Banking. In a keynote speech delivered during the Annual Banking Conference of the Hong Kong Institute of Bankers, Mr Norman Chan, Chief Executive of the HKMA, outlined how the HKMA will take lead and help the banking sector to rise to a higher level and embrace the enormous opportunities brought about by the convergence of banking and technology.
The initiatives to be launched by the HKMA include:
|1.||Faster Payment System (FPS) – Both banks and Stored Value Facilities (SVF) operators can participate in the FPS, which supports the use of mobile phone numbers or email addresses for payments in Hong Kong dollar and Renminbi anytime and anywhere. FPS is scheduled to be launched in September 2018. In addition, an industry working group has been established to facilitate a common QR code standard, which would promote the wider use of mobile retail payments and greater convenience to customers and merchants.
|2.||Enhanced Fintech Supervisory Sandbox (FSS) 2.0 – FSS 2.0 will have three new features: (i) a Fintech Supervisory Chatroom will be set up to provide speedy feedback to banks and tech firms at an early stage of their Fintech projects; (ii) tech firms may have direct access to the sandbox by seeking feedback from the Chatroom without necessarily going through a bank; (iii) the sandboxes of the HKMA, the Securities and Futures Commission and the Insurance Authority will be linked up so that there will be a single point of entry for pilot trials of cross-sector fintech products. The FSS 2.0 will be launched by the end of 2017.
|3.||Promotion of Virtual Banking – The HKMA welcomes the introduction of virtual banks in Hong Kong and will consult the industry to review and amend the Guide to Authorization of Virtual Banks issued in 2000.
|4.||Banking Made Easy initiative – A new task force will be set up within the HKMA to work with the banking industry to minimise regulatory frictions in customers’ digital experience, including remote onboarding, online finance and online wealth management.
|5.||Open Application Programming Interface (API) – A policy framework on Open API will be formulated to facilitate the development and wider adoption of API by the banking sector, thereby stimulating innovations and improving financial services through collaboration between banks and tech firms. The HKMA aims to finalise the policy on Open API for the banking sector around the end of 2017.
|6.||Closer cross-border collaboration – The HKMA will strengthen its efforts to collaborate with several authorities in other jurisdictions in the development of Fintech. Latest initiatives being pursued include cooperation with the Office of Financial Development Service of the Shenzhen Municipal Government, and the development of a Distributed Ledger Technology (DLT) platform to digitalise banks’ trade finance processes in Hong Kong, with potential connectivity with Singapore’s trade platform.
|7.||Enhanced research and talent development – The HKMA will step up collaboration with the Hong Kong Applied Science and Technology Research Institute, Science Park and Cyberport to promote the introduction of new technology and processes that will bring about higher speed and greater convenience to bank customers, and to nurture fintech talents in Hong Kong.|
“The upgrading of our banking system to a new and higher level of Smart Banking is not just something nice-to-have but a must. To meet the rising aspirations and demands of customers, banking and technology must converge sooner rather than later.
“In the new era of Smart Banking, the industry, the fintech community and the HKMA must work together to transform the financial ecosystem of Hong Kong. Smart Banking will offer full interconnectivity amongst retail and corporate customers and allow financial services and transactions to be undertaken with great mobility, speed, ease and safety. At the same time, we need to strike the right balance between promoting financial innovations and according appropriate customer and investor protection,” said Mr Norman Chan.
Further details of the initiatives will be announced by the HKMA in due course.