HKMA Outlines Regtech Use Cases for Pandemic Environment

In its fifth issue of ‘Regtech Watch’, the HKMA outlines four potential regtech use cases relevant to the pandemic environment.

The HKMA (Hong Kong Monetary Authority) has published its fifth issue of ‘Regtech Watch’, focusing on technology applications that can help maintain business continuity and effectively respond to operational challenges presented by Covid-19 disruptions.

The newsletter highlights the key challenges faced by institutions during times where strict social distancing measures are called for, including the rolling out of extensive work-from-home arrangements in managing the risk of Covid-19 infections.

Technology can play a major role in helping address the operational challenges presented by the pandemic, the HKMA says. The newsletter outlines four potential regtech use cases relevant to the pandemic environment.

Remote access and collaboration platforms

Banks are deploying a range of technology solutions such as video conferencing solutions to support remote working in a scalable, sustainable and secure way.

Some banks are also moving to store certain data on centralised and cloud-based solutions, to ensure internal data can be accessed by employees working remotely. Such solutions also present scalability benefits for adhoc and computational-intensive data analytics, such as risk model adjustments that arise as a result of Covid-19.

“Ultimately, these solutions enable banks’ staff to collaborate and work in a remote and safe manner, but without compromising the banks’ business and operational continuity,” the HKMA says.

Compliant business communications

Some banks are addressing the use of personal messaging applications for communications between bank staff and customers by deploying solutions that provide an all-in-one enterprise messaging platform, which is compatible with common personal messaging applications and popular corporate tools.

Through such platforms, customers can still use their preferred personal messaging applications to communicate with their bank, while banks can retain all business communication histories for audit and compliance purposes.

Automated processing of Covid-19 relief loans

Banks are utilising robotic process automation (RPA) to streamline the process of obtaining borrowers’ applications, determining if borrowers’ loans are valid for payment deferrals through whitelist checking, modifying payment terms in relevant loan documents, and sending letters of confirmation to the borrowers.

Some banks enabled and empowered staff to build robots to automate processes. Reusable development libraries have been developed to enable swift robot design and deployment in accordance with rapidly changing business needs.

“This automation of processes aims to reduce operational risks by limiting the possibilities for human or manual errors, especially when staff are under pressure to process large amounts of documents in a short period of time, and without the usual convenience or support available in an office environment,” the HKMA says.

Social-distancing and contact-tracing solutions

Some banks may consider deploying solutions to monitor compliance with social distancing requirements, including limits on group sizes or minimum physical distance between individuals.

The newsletter highlights the use of AI-powered three-dimensional cameras with spatial and depth perception that can continuously collect visual footage and statistical patterns or spatial data, analyse the collected data to measure the distance between customers, and provide timely alerts to identify cases that breach social-distancing requirements – such as customers are standing too close to each other while queuing.

Other emerging solutions enable banks to alert staff if they may have come into contact with potential or confirmed Covid-19 cases, making use of Bluetooth and Wi-Fi of mobile phones and proximity data, combined with various advanced techniques, to reconstruct the contact histories of employees in offices.

“Since these solutions collect personal data, they can only be successfully implemented with the buy-in of employees and customers. To this end, banks should obtain adequate support from employees before rolling out the solutions in the workplace.”

“If successfully deployed, these solutions can offer senior management the insight required to make more informed and risk-balanced decisions when
responding to confirmed infection cases. This benefits operational resilience and lowers the possibility that unnecessary office closures causing operational disruption to be triggered without due cause.”

Financial institutions are encouraged to study the use cases outlined in the newsletter in their exploration of the use of technology to overcome the difficulties presented by the pandemic and to consider whether any of these arrangements may be adopted as business-as-usual arrangements.

The HKMA encourages the banking industry to closely work with the technology sector to explore relevant regtech solutions.

The full newsletter is available here.

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