The Hong Kong Monetary Authority (HKMA) has announced plans for a “FinTech Innovation Hub” to support the development of the Hong Kong FinTech sector.
HKMA announces new FinTech Hub in collaboration with the Applied Science and Technology Research Institute
Norman T.L. Chan, Chief Executive of the HKMA, revealed the plans for the new hub in his speech at the Treasury Markets Summit 2016 on Tuesday.
The hub, set up by the HKMA in collaboration with the Applied Science and Technology Research Institute, will allow both small and big businesses to carry out proof of concept trials for their products and services in a safe, contained environment separate from their internal systems.
Further, Chan announced, that the HKMA will launch a second initiative called the “FinTech Supervisory Sandbox”, to allow banks to test and trial newly developed technologies and applications within a pilot program.
“Within the Sandbox, banks can try out their new Fintech products without the need to achieve full compliance with the HKMA’s usual supervisory requirements. This will enable banks to gather real-life data and user feedback on their Fintech products or services more easily and in a controlled environment, so that they can make suitable refinements to their products before the full launch.”
Building a “Brand” for financial services
Chan began his speech by stating the ambition of building Hong Kong as a “Brand” for financial services.
So far, the Chinese territory, which is well known as a global financial hub, has lagged behind other Asian competitors in the development of a technology start-up sector. However, the regulatory authority has in recent months hoped to boost FinTech in Hong Kong through a range of new support initiatives, including setting up the “Fintech Facilitation Office” (FFO) earlier this year and launching the “Cybersecurity Fortification Initiative” in May.
With the new initiatives, launched today, Hong Kong is hoping to catch up to other FinTech innovators in the region. The new hub and Sandbox also hope to address important issues of safety to businesses and customers, which Chan also commented on at large in his speech.
“While very few people would dispute the convenience and speed in which new technology can offer in financial services, there is an important catch that no regulators should and could overlook. The issue is whether the new technology is safe enough for the consumers and investors.”
“The more correct narrative is that, without compromising consumer and investor protection, the HKMA embraces the use of Fintech and innovation.”
Regulations and support matter for start-up development
The HKMA’s commitment to help the development of FinTech along is likely to have a significant impact on the sector. Singapore, currently the leader in the Tech start-up sector in Asia, can attribute much of the positive development to favourable and supportive government-initiatives as well as local investor support.
In many cases, the development of a vibrant start-up community hinges on the successful government campaigns to support their development and provide a favourable environment.
In the UK, many tech start-ups quote favourable regulations and supportive authorities as a main reason why they chose to set up their business at this location. While Brexit has sparked some worries that start-ups may abandon the UK due to the exit from the European Union, a serious case can be made for the country to hold on to its position as FinTech capital of Europe, if the FCA and other government bodies manage to provide a more favourable regulatory and supportive environment for start-ups, than other European locations.
Katharina Fleiner 07/09/2016