The Hong Kong Monetary Authority (HKMA) has outlined four actions to promote the use of RegTech in the Hong Kong banking sector.
According to Regulation Asia, HKMA CEO Eddie Yue claimed RegTech constituted an ‘integral and important driver’ of the organisations’ FinTech 2025 strategy – a new development strategy that was announced earlier this year which envisions Hong Kong as a leading hub for FinTech and RegTech solutions.
Yue underlined four key steps to help transform bank attitudes and practices towards RegTech – with the first being that the HKMA itself needed to understand the evolution of Hong Kong’s RegTech landscape and understand what was happening ‘on the ground’.
The authority had previously launched the Regtech Adoption Index (RAI), which had discovered that 56% of banks surveyed are using RegTech in a minimum of two of the six regulatory themes identified in a previous whitepaper published by the group in 2020.
However, banks were found to have little engagement with the wider RegTech market – with only 16% of them taking part in associations and groups and around 33% partnering with RegTech firms. The RAI acknowledged low ecosystem participation, integration issues and budget constraints as key barriers in this respect.
The second step of the plan is for the HKMA to raise awareness among banks in regard to the solutions, benefits and applications associated with RegTech. The organisation claims it intends to roll out a centralised knowledge hub in the coming year to help provide a platform for the industry to discover information and content about RegTech.
Thirdly, the HKMA will encourage the development of new RegTech solutions and innovations through incentives and competitions.
The HKMA is also encouraging greater use of iAM Smart – the Hong Kong governments’ new digital identity platform – that enables remote onboarding and secure authentication.
Yue said the HKMA was ‘exploring’ the potential for a corporate version of the platform to help support increased development.
The fourth step by the HKMA is to expand the RegTech market by fostering talent and enhancing interaction across the ecosystem.
The HKMA deputy chief Arthur Yuen also offered four key areas for overcoming challenges associated with RegTech adoption. These involved ‘buy-in’ from stakeholders across financial institutions, good quality data to use RegTech effectively, robust risk management and collaboration between solutions providers, financial firms and professional services.
It was revealed recently that the HKMA was planning to speed up proposals to require financial organisations to disclose their climate change-related financial risks.
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