Arthur Yuen: The fintech catalyst - a new era of fintech growth in the
Greater Bay Area
Remarks by Mr Arthur Yuen, Deputy Chief Executive of the Hong Kong Monetary
Authority, at the Hong Kong FinTech Week 2024, Hong Kong, 28 October 2024.
* * *
Good afternoon ladies and gentlemen. Welcome to the FinTech Week 2024.
As banking supervisors, we have long been encouraging banks to "go Fintech" - on the
one hand, to meet customers' increasing expectations of financial services, in terms of
timeliness, convenience and cost; and on the other, to catch up with the pace of
digitalisation and better manage strategic risks.
Also because of our role as banking supervisors, while we keep an eye on today's
adoption rates, we must also have a telescopic view of the future Fintech developments.
Looking ahead, as with the Hong Kong Monetary Authority (HKMA)'s "Fintech 2025"
strategy, we should envision the shape of a thriving Fintech ecosystem in the next five
to 10 years.
In the Fintech world, one key indicator of success is a Fintech firm's ability to expand
beyond its home market. Historically, successful Fintech companies established their
global presence in about 10 years down their start-up journeys. With that said, we may
wish to set our sights on compressing such time to expansion - can we shorten the
cycle to, say, five years?
Indeed, in the Greater Bay Area (GBA), this may be possible, given its unique
characteristics that encapsulate a complete and ideal ecosystem, such as a large pool
of talented professionals, vast experience in technological research and development,
supportive regulatory environment, and a natural position to facilitate cross-border
collaboration.
The question for us is: what role should Hong Kong play in the GBA Fintech ecosystem?
The role of Hong Kong in the future of Fintech
As an international financial centre, Hong Kong is poised to leverage its unique
advantages to become a regional Fintech hub, accelerating cross-border flows of data,
resources, and capital; enabling Fintech firms to refine their solutions to suit the needs
of Hong Kong, Asia, and even the global markets; providing access to international
resources; and opening up the abundant demand across borders to support Fintech
exportation.
These strengths allow Hong Kong to catalyse Fintech growth in the GBA. Specifically,
on the southbound, Hong Kong's high aspiration and readiness to embrace frontier
technologies will allow the Fintech firms from Mainland China to adapt and expand to
international markets quicker and safer; whereas on the northbound, Hong Kong can
facilitate Fintech firms abroad to enter into the Mainland China, the world's top
consumer market for Fintech.
As an example, WeBank, an established Mainland digital bank, set up its technology
company headquarters in Hong Kong in July this year, further paving the way to
commercialise its technology solutions for the global markets. We are pleased to have
Mr Henry Ma from WeBank, who will share his experience in the upcoming panel
discussion.
Given such a pivotal role as a Fintech catalyst, the value of Hong Kong is substantial.
The next and more important question we have is: how do we better achieve this role?
How do Hong Kong better achieve its role?
In nature, catalysts accelerate growth and lower "activation barriers", i.e. the energy
required to initiate growth. In the Fintech ecosystem, this is the role of Hong Kong -
fostering Fintech growth while addressing key adoption barriers.
So, what exactly are the key barriers facing the industry?
According to a recent cross-sectoral adoption study conducted under the HKMA's "All
banks go Fintech" initiative, the top three Fintech adoption barriers are:
Uncertainty about regulatory compliance when adopting novel technologies;
Unavailability of data accessible in a secure manner; and
Unawareness of the plethora of Fintech solutions.
To cross these barriers, the HKMA has indeed endeavoured to roll out a wide range of
facilitative measures.
Barrier 1: Uncertainty about regulatory compliance when adopting novel
technologies
GBA Fintech Pilot Trial Facility
With the aim of addressing the regulatory uncertainties about cross-border technology
adoption, the GBA Fintech Pilot Trial Facility was jointly launched in 2022 by the
People's Bank of China (PBOC) and the HKMA (and further linked up with the
respective pilot trial facility of the Monetary Authority of Macao in November 2023) to
facilitate pilot trials of cross-border Fintech initiatives, allowing testing to be conducted
concurrently in Hong Kong and Mainland GBA cities.
The Facility has enabled banks and Fintech solution providers to obtain early
supervisory feedback and user opinions, expedite the launch of Fintech products, and
ultimately reduce development costs. We are encouraged to see successful production
roll-out of cross border Fintech solutions following these trials.
Generative Artificial Intelligence (GenA.I.) Sandbox
In August 2024, a new GenA.I. Sandbox was launched by the HKMA and Cyberport to
promote responsible innovation in GenA.I. across the banking industry as well as to
support banks in piloting novel use cases that focus on enhancing risk management,
anti-fraud efforts and customer experience, providing banks with essential technical
assistance and targeted supervisory feedback.
Barrier 2: Unavailability of data accessible in a secure manner
Shenzhen-Hong Kong Cross-boundary Data Validation Platform
Moving on to the second barrier, in order to facilitate the use of data across borders, the
HKMA and the Shenzhen authorities launched the Shenzhen-Hong Kong
Crossboundary Data Validation Platform in May 2024, providing a credible means for
validating the authenticity of documents presented by data owners.
On this new platform, the first phase of pilot trials has been conducted, covering
crossboundary validation of credit reference reports and account opening documents for
corporate customers. We encourage banks to utilise the platform to discover innovative
use cases and conduct pilot trials involving cross-border data validation through the
HKMA's Fintech Supervisory Sandbox.
Barrier 3: Unawareness of the plethora of Fintech solutions
FiNETech series and Fintech Knowledge Hub
As for the third barrier, removing it requires greater awareness of Fintech solutions
throughout the ecosystem. The HKMA and the other financial regulators have launched
the FiNETech series to bring together financial institutions and Fintech service
providers.
Furthermore, we have upgraded our existing Regtech Knowledge Hub to a new Fintech
Knowledge Hub, which serves as a central portal of the latest Fintech news, events,
HKMA publications to name a few. Though our efforts to boost awareness did not stop
here.
Fintech Connect
Today, we are also pleased to announce the launch of the Fintech Connect, a new
cross-sectoral matching platform, that enables financial institutions to discover
innovative solutions and partner with solution providers via more direct networking and
precise matching.
In collaboration with the Qianhai Authority, the HKMA has also onboarded Fintech firms
in the Qianhai region to the Fintech Connect platform to further promote Fintech
development. Through the Fintech Connect, financial institutions from Hong Kong are
better equipped with access to the innovation from the Qianhai region, and Qianhai
Fintech firms are afforded greater opportunities to access and enter international
markets.
Reaping the harvest
The collaboration with the Qianhai Authority is just the first step in our blueprint for
collaborating with wider GBA stakeholders. A special thanks to the Qianhai Authority
and Ms Helen Wen for jointly exploring this collaboration opportunity.
We are committed to closer collaboration to further promote Fintech development in the
GBA for sustainable development. More Fintech-related initiatives will be undertaken in
the future, such as training sessions and new editions of the FiNETech series, further
exploring the cross-border Fintech and financial cooperation between not only Hong
Kong and Qianhai, but also other cities in the GBA.
With Hong Kong as a catalyst for the GBA Fintech ecosystem, we are reaping the
harvest by converting "uncertainty", "unavailability" and "unawareness" into "certainty",
"availability" and "awareness", fostering mutual growth in both "Fin" and "Tech".
All in all, the role of Hong Kong as a catalyst is indispensable - not only to drive
innovation and development in the GBA Fintech ecosystem, but also to serve as a
launchpad for Fintech solutions that have the potential to reshape the global financial
landscape.
The HKMA will continue to play its part in lowering any "activation barriers" that may
impede innovation or adoption. Let us work together to build a more vibrant and
connected financial ecosystem.