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Hong Kong FinTech Week 2020: HKMA’s Initiatives for the Next Era

Hong Kong FinTech Week 2020: HKMA’s Initiatives for the Next Era

(09 November 2020 – Hong Kong) Chief Executive of the Hong Kong Monetary Authority (HKMA) Eddie Yue announced a range of initiatives the city is implementing in order to prepare its financial sector for the future during the keynote speech of Hong Kong FinTech Week, which is jointly organised by HKMA and InvestHK.

“Hong Kong has embraced a new era for smart banking, but to prepare for the next era, there is a need to continuously enhance the ecosystem and empower the people in it. The fintech initiatives announced today are examples of the HKMA’s focus on applying technology to achieve better banking and drive financial inclusion,” said Yue.

1. Using data to facilitate SME financing

HKMA is considering building a new consent-based financial infrastructure called Commercial Data Interchange (CDI) that will allow small and medium-sized enterprises (SMEs) to use their own data to enhance access to financial services. A Proof-of-Concept (PoC) study is currently underway in collaboration with banks, focusing on using trade-related data to facilitate trade finance application process and is expected to be completed by the end of 2020. 

Separately to develop the relevant technology for alternative credit scoring, HKMA has commissioned the Hong Kong Applied Science and Technology Research Institute (ASTRI) to study the use of artificial intelligence in SME loan applications.

2. Digitalisation of trade finance

HKMA plans to connect the trade finance platforms between Hong Kong and China, specifically the eTradeConnect and the People’s Bank of China Trade Finance Platform, to support importers and exporters.

Phase 1 of the PoC was completed, which includes a pilot run that involves seven banks. The second phase is tentatively scheduled for early 2021 and is expected to cover more types of trade activities and financing solutions.

HKMA and the Bank for International Settlements Innovation Hub have also co-organised a ‘TechChallenge’ in August 2020, where it received 103 solutions. Prototype development for selected solutions will begin next year. 

3. Central Bank Digital Currency (CBDC)

HKMA and the Bank of Thailand are jointly exploring business application of CBDC in cross-border trade settlement and capital market transactions. Hong Kong Exchanges and Clearing Limited, 19 banks and five corporates are also involved in this study.

The two central banks are also looking to enhance the cross-border corridor network prototype to support CBDCs of other central banks in the region. 

4. Regtech adoption

HKMA has published a two-year roadmap – “Transforming Risk Management and Compliance: Harnessing the Power of Regtech” – to promote Regtech adoption in the Hong Kong banking industry.

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