rmb funds. settlement between banks is real - time, and hong kong is one of the few jurisdictions achieving real - time settlement in a retail payment infrastructure. both banks and svfs can participate in fps. this creates a retail payment ecosystem that facilitates money transfers among users of banks and svfs. the full interconnectivity of all payment participants is, again, likely to be one of first in the world. in addition to fps, the hkma is leading a working group to work on a common qr code standard for retail payments. a common qr code standard will facilitate merchants, especially smes, in using one single qr code to accept different payment schemes. this would certainly help promote the wider use of mobile retail payments in hong kong. 3 / 6 bis central bankers'speeches ( b ) supervisory sandbox 2. 0 the hkma will upgrade the existing fintech supervisory sandbox to sandbox 2. 0. there will be three new features in this enhanced version. first, we will set up a fintech supervisory chatroom that would engage the stakeholders at a much earlier stage of project development. the chatroom will be manned by experts from our fintech facilitation office and banking supervision department. the chatroom will provide speedy and timely feedback when new technology or solution is being contemplated, thereby reducing the risk of abortive work by the parties concerned and expediting the rollout of new fintech applications. second, tech firms may have direct access to the sandbox. tech firms may test out their innovation by seeking feedback from the chatroom without necessarily going through a bank. third, we understand that our fellow regulators in hong kong, the securities and futures commission ( sfc ) and the insurance authority ( ia ), will shortly be launching their own sandboxes. following discussion among the hkma, sfc and ia, we have agreed to link up the three sandboxes through a common interface so that there can be a single point of access by the stakeholders for fintech solutions covering more than one sector. ( c ) facilitating virtual banking we believe that the time is ripe for hong kong to try out virtual banks. in some jurisdictions, it has proved to be technically feasible and commercially viable for virtual or branchless banks to operate. a virtual bank operates on a different model of service delivery and may help promote financial inclusion as they normally target small customers, be they individuals or smes. our view is that the emergence

which deals with messages and life style amenities, it is not enough for tech firms just to offer speed and convenience when it comes to banking and finance. tech firms wishing to venture into finance must recognise and accept the need for regulation, which is essential in the provision of appropriate protection to consumers and investors. the element of trust cannot be earned by speed and convenience alone. for the banking industry, it is not realistic or sustainable to rest on the laurels of public trust they presently enjoy and refuse to adopt new technologies that can offer more efficient and personalised services demanded by the customers. in the new era of smart banking, the industry, the fintech community and the hkma must work together to transform the financial ecosystem of hong kong. smart banking is a platform that offers full interconnectivity amongst retail and corporate customers and allows more personalised financial services and transactions to be undertaken with great mobility, speed, ease and safety! at the same time, under our risk - based supervisory regime, the right balance will need to be struck between promoting financial innovations on the one hand and 5 / 6 bis central bankers'speeches according appropriate customer and investor protection on the other. in conclusion, it is not a question of whether the tech firms will disrupt the banks or the banks can resist the intrusion of tech firms. it is a question of whether we make the best out of banking and technology by marrying the two. the answer to this question is crystal clear to me. we must move into the new era of smart banking by embracing technology and safe banking. indeed it is most encouraging to see many banks in hong kong are already taking the initiative to ride on the wave and making impressive progress in this direction. ladies and gentlemen, i feel very excited by the prospects that lie ahead because hong kong, by virtue of its status as an ifc and technology hub in asia, is uniquely well positioned to advance and excel. thank you very much. 6 / 6 bis central bankers'speeches