The Hong Kong Monetary Authority (HKMA) has unveiled a set of initiatives to further industry convergence between the banking and technology sectors and deliver a “new era of smart banking” for the territory, the regulator’s chief executive announced…

At a recent speech in front of Hong Kong’s banking elite, Norman Chan, chief executive of the HKMA, outlined seven HKMA-led initiatives to assist the local financial services sector in “[embracing] the enormous opportunities brought about by the convergence of banking and technology.”

“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,” Chan said. “To meet the rising aspirations and demands of customers, banking and technology must converge sooner rather than later.”

Among the seven initiatives outlined by Chan include the forthcoming launch of the Faster Payments System (FPS), designed to support the use of mobile phone numbers or emails for payments. The system will provide the necessary infrastructure for full person-to-person and person-to-business connectivity, promoting greater competition between banks and non-bank competitors, Chan said.

Chan also announced the launch of HKMA’s Open API policy framework, tasked with facilitating the development and wider adoption of API by the banking sector.

“We believe that the wide adoption of an Open API framework would promote collaboration between banks and tech firms, a crucial element for stimulating innovations and improved services for customers in Hong Kong,” Chan said.

According to Chan, convergence will be critical to supporting the aspirations of Hong Kong’s established financial services sector, as well as that of its bustling fintech and technology industries.

“I believe that in a couple of years’ time, there will be a high degree of convergence in the way in which banks and tech firms conduct their businesses and compete in the arena of finance,” he said. “This means that the landscape of banking and finance will undergo a profound change during this process.

The seven HKMA ‘smart banking’ initiatives outlined by Chan include:

1. A Faster Payment System (FPS) –supporting the use of mobile phone numbers or email addresses for payments in Hong Kong dollar and Renminbi. The FPS is due to be launched in September 2018. 

2.  Enhanced Fintech Supervisory Sandbox (FSS) 2.0 – to facilitate convergence and communication between tech firms and the banking sector. The FSS 2.0 will be launched by the end of 2017.

3. Promotion of Virtual Banking across Hong Kong

4. ‘Banking Made Easy’ initiative – establishing a new task force within the HKMA to work with the banking industry to minimise regulatory frictions in customers’ digital experience.

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. To be finalised at 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.

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 technology development in banking and nurture fintech talent in Hong Kong.