General Information & Client Services
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
September 27, 2018

During the regulatory keynote speech at the Tenth Annual Banking conference of the Hong Kong Institute of Bankers, Arthur Yuen of HKMA discussed the smart banking initiatives of HKMA that are reshaping the banking sector landscape. He examined industry response to the smart banking initiatives, the growing significance and drivers of regtech in the smart banking era, and the exploration of suptech by HKMA.

Mr. Yuen discussed numerous digital banking and fintech initiatives from various banks. Key among them include the projects on mobile payments; biometric authentication initiatives using different biometric attributes, such as fingerprint, finger-vein, voiceprint and facial features; software security tokens; chatbots powered by artificial intelligence; and enhanced financial services leveraging distributed ledger technologies and social media platform integration. Also, over 70 firms, including local and overseas technology and financial firms, have expressed interest in establishing virtual banks in Hong Kong and about 10 banks plan to launch online personal lending services that leverage machine learning technologies and data analytics. To help develop the regtech ecosystem, HKMA will open the Fintech Supervisory Sandbox to Regtech projects or ideas raised by banks or tech firms. HKMA will soon launch a series of regtech-specific projects, through its Banking Made Easy initiative, focusing on four areas: AML/CFT surveillance technologies; regtech for prudential risk management and compliance; study on machine-readable regulations; and its exploration of suptech.

HKMA plans to embark on a study to enhance the timely retrieval and transmission of anti-money laundering and countering the financing of terrorism (AML/CFT) related information and data from banks and Stored Value Facility operators in a digitalized and efficient way, as opposed to the old-fashioned way of regulatory returns and surveys. It will also explore data analytics tools for processing the data collected to generate useful analyses for furthering the capability to understand and assess the money laundering and terrorist financing risks at the sectoral level. These will hopefully lead to an evolution and reshaping of regulatory interface between HKMA and market practitioners to enhance AML/CFT surveillance capability of all. Additionally, HKMA will engage the banking industry and fintech community to identify possible ideas where regtech may be explored in prudential risk management and compliance in Hong Kong. HKMA would also provide supervisory guidance or clarifications to facilitate the applications of these technologies, as part of its Banking Made Easy initiative.

The third area that HKMA would explore is related to machine-readable regulations. Although the idea of machine-readable regulations is still at the conceptual stage, HKMA will conduct a deep-dive study on the needs for, and possibilities of, machine-readable regulations in respect of selected regulatory requirements. The study is expected to offer better insights on whether machine-readable regulations are desirable and feasible in Hong Kong and to encourage the industry to explore the use of new technology in enhancing the regulatory processes. The fourth area will involve the exploration of suptech or supervisory technology by HKMA. HKMA will use the new technology to support and enhance the effectiveness and forward-looking capability of supervisory processes and activities. It can also seek to further automate its interactions with banks, such as streamlining banks’ regulatory data collection mechanism, enhancing digitalization and analytics of supervisory information, and automation of supervisory processes.

 

As HKMA engages the tech community in its exploration of suptech, tech firms will also gain a better understanding of its regulatory requirements and supervisory processes. This in turn will help enhance the HKMA interface with the tech community, which will be beneficial for the further development of the regtech ecosystem in Hong Kong. All the above initiatives share a common objective, which is to identify challenges facing the industry throughout the regulatory compliance journey and build a more diversified regtech ecosystem. To sum up, HKMA believes that the “time is right for closer collaboration among the banking industry, technology community, and the HKMA to give a push to the adoption of regtech in Hong Kong.”

 

Keywords: Asia Pacific, Hong Kong, Banking Suptech, Regtech, Artificial Intelligence, Automation, AML/CFT, HKMA

Related Insights
News

EBA Single Rulebook Q&A: First Update for November 2018

EBA published answers to seven questions under the Single Rulebook question and answer (Q&A) updates for this week.

November 09, 2018 WebPage Regulatory News
News

FED Finalizes the Large Financial Institution Rating System

FED finalized the new supervisory rating system for Large Financial Institutions (LFIs), to better align with the current supervisory programs and practices for these firms.

November 09, 2018 WebPage Regulatory News
News

ECB Publishes Guides for Capital and Liquidity Management by Banks

ECB published the guides for capital and liquidity management by banks in EU.

November 09, 2018 WebPage Regulatory News
News

EC Amends Regulation on Prudent Valuation for Supervisory Reporting

EC published the amended Implementing Regulation (EU) 2018/1627 on prudent valuation for supervisory reporting. Regulation 2018/1627 amends the Implementing Regulation 680/2014.

November 09, 2018 WebPage Regulatory News
News

FED Intends to Publish the Financial Stability Report in November 2018

FED intends to begin publishing a semiannual report presenting its view of the outlook for U.S. financial stability, on November 28. The financial stability report will include a summary of the FED framework for assessing the resilience of the financial system in the United States.

November 09, 2018 WebPage Regulatory News
News

ESMA Asks Clients of CRAs and TRs to Prepare for No-Deal Brexit

ESMA issued a public statement to raise awareness, among the market participants, on the readiness of credit rating agencies (CRAs) and trade repositories (TRs) for the possibility of no agreement being reached in the context of the United Kingdom withdrawing from the European Union (Brexit).

November 09, 2018 WebPage Regulatory News
News

EIOPA Publishes Result of the Work of EU-US Insurance Dialog Project

EIOPA published four papers resulting from the work of the EU–U.S. Insurance Dialog Project (EU-U.S. Project) in 2018.

November 08, 2018 WebPage Regulatory News
News

EIOPA Publishes Q&A on Regulations in November 2018

EIOPA published new sets of questions and answers (Q&A) on implementing and delegated regulations applicable to insurers in Europe.

November 07, 2018 WebPage Regulatory News
News

APRA Finalizes CPS 234 to Help Combat Threat of Cyber Attacks

APRA has released the final version of its prudential standard focused on information security management.

November 07, 2018 WebPage Regulatory News
News

US Agencies Propose Reduced Reporting for Qualifying Institutions

US agencies (FDIC, FED, and OCC) proposed to reduce regulatory reporting burden on small institutions by expanding the number of regulated institutions eligible for streamlined reporting.

November 07, 2018 WebPage Regulatory News
RESULTS 1 - 10 OF 2192