HKMA Sets Out Two-Year Roadmap to Promote Adoption of Regtech
HKMA published a two-year roadmap to further promote regtech adoption in the banking sector in Hong Kong. The roadmap has been laid out in a white paper on harnessing the power of regtech. At the Hong Kong FinTech Week 2020, HKMA provided updates on a range of initiatives to further foster the fintech ecosystem and support corporates, including initiatives to promote regtech adoption, use data to facilitate small and medium enterprise financing, and further research on the Central Bank Digital Currency (CBDC).
HKMA had commissioned KPMG to develop a whitepaper to explore the current state of regtech in Hong Kong, examine common practices and barriers to adoption, and outline a roadmap to accelerate adoption in the banking sector. The research for this white paper is based on surveys conducted with local banks and regtech providers as well as in-depth interviews with banks, regtech firms, local and overseas regulators, and other industry stakeholders. The whitepaper sets out a high-level roadmap of planned initiatives from the list of 16 recommendations that have been developed to aid implementation over the next two years. A couple of key recommendations areas involve boosting awareness by issuing practical guidance and enhancing regulatory engagement with the regtech ecosystem through ongoing dialog and collaboration. To implement the recommendations, HKMA will roll out a series of events and initiatives in the coming two years, including:
- Developing a Regtech knowledge hub, in the second to third quarter of 2021, that acts as a central repository of all regtech-related content and knowledge-sharing for the Hong Kong banking industry
- Developing a "Regtech Adoption Practice Guides" series, in the first to second quarter of 2021, that could potentially build on or supersede the "Regtech Watch" newsletter series
- Devoting some of the “Regtech Adoption Practice Guides” series, to focus on how to utilize the key technologies enabling regtech adoption, in the first to second quarter of 2021
- Hosting a large-scale regtech event in the first to second quarter of 2021
- Hosting a regtech challenge in the form of a hackcelerator-style event in the first to second quarter of 2021
- Developing a regtech skills framework, in the second and third quarter of 2021, that identifies the skills required for different roles to accelerate the adoption of regtech
- Developing Regtech Adoption Index (RAI), in the first to second quarter of 2021, that covers actual adoption, intent to adopt, as well as key enablers for adoption
At the Hong Kong FinTech Week, the HKMA Chief Executive Eddie Yue announced that HKMA is exploring a new data strategy and considering building a new financial infrastructure called Commercial Data Interchange (CDI) to enable more efficient financial intermediation in the banking system and to enhance financial inclusion in Hong Kong. To study the technical feasibility of the CDI, the HKMA is conducting a Proof-of-Concept (PoC) study in collaboration with banks. The PoC focuses on using trade-related data to facilitate trade finance application process and is expected to be completed by the end of 2020. The next phase of the study will begin in 2021 to cover other commercial data sources that could facilitate alternative credit scoring conducted by banks.
HKMA also provided an update on Project Inthanon-LionRock, which is the joint study on the application of a central bank digital currency (CBDC) to cross-border payments conducted by HKMA and Bank of Thailand; this project has entered the second phase. The two authorities aim to explore business use cases in cross-border trade settlement and capital market transactions. The Hong Kong Exchanges and Clearing Limited, 19 participating banks, and five other corporates are going to participate in the project. The two authorities also intend to enhance the cross-border corridor network prototype to support CBDCs of other central banks in the region. They will soon bring banks and large corporates into trials using actual trade transactions. The project findings are expected to be delivered in the first quarter of 2021.
Keywords: Asia Pacific, Hong King, Banking, Regtech, Roadmap, Knowledge Hub, Fintech, Hong Kong Fintech Week, HKMA
Previous Article
EBA Seeks Views on Management and Supervision of ESG RisksRelated Articles
EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
EBA Publishes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
EU to Amend Credit Risk Adjustment Rules; ESAs Submit Queries on SFDR
The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.
MAS Amends Notice 635 and Issues Second Proposal on Green Taxonomy
The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.