Hong Kong Squares Up to Singapore, Australia With Fintech Hubby
City’s monetary authority to start hub to develop fintech
Regulatory sandbox allows trials with looser supervision
The Hong Kong Monetary Authority is establishing a financial-technology hub and adopting a regulatory “sandbox” to allow faster trials of products and applications as it tries to turn around a perception that it’s lagging behind other cities in stoking innovation.
The authority’s Fintech Innovation Hub will provide resources to banks and payment firms to conduct “proof of concept” trials of products and services based on new technologies, Chief Executive Norman Chan said in a speech at a summit in Hong Kong on Tuesday. The “supervisory sandbox” will allow firms to try out fintech products without having to comply fully with the HKMA’s usual requirements, Chan said.
Countries such as Singapore and Australia are pushing forward developments in financial technology with similar initiatives. The urgency to prepare regulatory environments for fintech is growing as banks from HSBC Holdings Plc to Standard Chartered Plc begin offering digital services such as biometric authentication and as mobile-payment systems such as Apple Pay and AliPay are introduced around the region.
There is “a quite commonly held perception that the development of fintech in the financial-services sector in Hong Kong has been slow,” Chan said. “I do not subscribe to this view, at least insofar as the banking sector is concerned.”
Chan cited biometric authentication, such as voice and facial recognition, as an example of the technology the fintech hub could be involved in. The hub’s controlled testing environment would allow regulators to provide early input on trials before the technologies are actually implemented, he said.