- Hong Kong. Credit: Mike Behnken.
Following in the path of London and Singapore, Norman T.L. Chan, chief executive at the Hong Kong Monetary Authority (HKMA) announced the launch of a fintech innovation hub and a supervisory sandbox at the Treasury Markets Summit 2016.
Chan said that there was a widespread perception that: “The development of fintech in the financial services sector in Hong Kong has been slow,” a view he did not subscribe to. However, in order to further the uptake of new financial technologies, Hong Kong would be opening a ‘fintech supervisory sandbox.’ Like the similar UK scheme, the sandbox would function as a ‘safe space’ where pilot projects would not be required to gain full compliance at launch.
In a circular released shortly after the speech, the regulator specified that participating financial firms had to ensure that they had safeguards in place to protect customers participating in the pilot projects. These include compensation for any loss incurred to customers, controls in place to mitigate risk, and close monitoring to ensure that any problems are quickly identified.
The HKMA listed mobile payment services, biometric authentication, blockchain, robotics and augmented reality as technologies and practices that could benefit from the sandbox scheme.
Along with the regulatory sandbox, the HKMA also announced the creation, with the participation of the Applied Science and Technology Research Institute, of a fintech innovation lab. The lab will provide resources and facilities for financial firms that want to test new technologies. The regulator will also provide advice and guidance relating to regulatory aspects of new technologies.
Cheng said that the lab will be particularly useful for smaller players: “While some of the largest banks have built their own laboratories, this new Fintech Innovation Hub will cater for the big and small institutions alike such that the industry as a whole would be able to adopt new technologies more speedily and in a more collaborative manner.”
