Hong Kong - Legal And Market Insights - New Regulation And headlines Around FinTech and Innovation.
Legal News & Analysis - Asia Pacific - Hong Kong - Regulatory & Compliance - Banking & Finance
26 September, 2019
Hong Kong Monetary Authority announces implementation progress of Open Application Programming Interface Framework for the Hong Kong Banking Sector
On 31 July 2019, HKMA announced the implementation progress of the Hong Kong Banking Sector Framework, one year after its deployment. The Framework, introduced to encourage innovation within the banking sector and the provision of innovative products and services to upgrade customer experience, outlines a four-phase implementation approach to regulate deployment standards and ensure security. The launch of Phase I (Product Information) in January 2019 witnessed the offering of over 500 Open APIs by 20 retail banks – giving access to information of banking products and services, enabling new market entrants to provide services such as foreign exchange rate information, deposit rate and loan product comparison. Following the success of Phase I, HKMA will launch Phase II (Customer Acquisition) by the end of October 2019 to make available banks' customer acquisition process information relating to applications of credit cards, loans or other bank products. Looking ahead to the launch of Phase III (Account Information) and Phase IV (Transactions), as these involve sensitive customer and transaction data, HKMA will work with the industry on API standardisation and release technical standards in 2020.
Fintech collaboration between Hong Kong and France
On 5 July 2019, Hong Kong Monetary Authority and the French Autorité de Contrôle Prudentiel et de Résolution entered into a Memorandum of Understanding to strengthen collaboration between the two authorities in Fintech innovation through information exchange, experience sharing, joint projects and expertise sharing. The Memorandum of
Understanding signifies HKMA's mission to forge cross-border Fintech collaboration with France, a fast-growing Fintech hub in Europe, and its commitment to develop Hong Kong as Asia's most vibrant Fintech hub.
HKMA amends guidelines to encourage greater use of innovative technology tools for credit risk management/loans, encouraging FinTech development in Hong Kong
On 29 August 2019, HKMA amended its guidelines issued to authorised institutions, such as banks, on Credit Risk Management for Personal Lending Business (which was first issued in May 2018), to facilitate adoption of innovative technology, such as data analytics, in assessing and approving credit applications. The amended guidelines removes a 10% limit of an authorised institution’s capital base for such institution’s online finance portfolio, but instead allows authorised institutions to develop their own limit commensurate with their risk appetite and risk management capability. As part of the HKMA’s “Banking Made Easy Initiative’, this is generally seen as encouraging adoption of innovative online technology in credit risk management and to minimize frictions in greater adoption of digital banking and encouragement of the FinTech sector.
Publication of "GFiN - One Year On" Report by Global Financial Innovation Network
On 25 June 2019, the Global Financial Innovation Network reported on its achievements since its inception in August 2019, and laid out its future commitments. GFiN has now grown to comprise 35 member regulators and 7 observers from 21 jurisdictions, and has established itself as a global dialogue and collaboration platform. Currently, representatives in Hong Kong include Hong Kong Monetary Authority, Hong Kong Securities and Futures Commission and Hong Kong Insurance Authority. In the past year, GFiN has launched a cross-border pilot project to help firms simultaneously trial new technologies in multiple jurisdictions. GFiN has also created a RegTech joint work group to share resources and knowledge in this emerging area. Going forward, GFiN will hold meetings with members and stakeholders to formulate work plans and identify new initiatives and projects.
For further information, please contact:
John Koh, Director, Osborne Clarke