HKMA to Conduct Industry Stock-take on Fintech Adoption

All licensed banks with significant operations in Hong Kong must prepare and submit a questionnaire on fintech adoption by 31 December. 

The HKMA (Hong Kong Monetary Authority) has directed banks to conduct a “Tech Baseline Assessment” to help it identify fintech business areas and specific technology types that could benefit from additional support.

The initiative forms part of the HKMA’s “Fintech 2025” strategy announced earlier this month to drive fintech development in Hong Kong and encourage the financial sector to adopt technology comprehensively by 2025.

A key focus area of “Fintech 2025” is the “All banks go fintech” initiative, which aims to promote the all-round adoption of fintech by Hong Kong banks and encourage them to fully digitalise their operations from front-end to back-end.

In a circular, the HKMA says the Tech Baseline Assessment is being introduced to take forward this work, initially by taking stock of banks’ current and planned adoption of fintech in the coming years.

The exercise will help the HKMA identify fintech business areas (e.g. Investech, Insurtech, Greentech) and specific technology types (e.g. artificial intelligence, blockchain) which may potentially be underdeveloped and would benefit from the HKMA’s support.

To assist the HKMA in this assessment, all licensed banks with significant operations in Hong Kong are expected to participate in the Tech Baseline Assessment.

Each of the covered banks will be required to prepare and submit a Three Year Plan for fintech adoption to the HKMA.

The Three Year Plan should include:

  • A review of the bank’s current adoption of fintech, and clear indications of how and the degree to which fintech will be incorporated within different aspects of the bank’s front to back-end operations by 2025, including details on fintech business areas and specific technology types
  • Concrete action plans on how the bank intends to reach the desired level of fintech adoption, covering relevant factors of consideration such as budget and resource allocation, talent development and leadership/governance arrangements
  • An assessment of how fintech adoption will impact the bank’s longer-term business strategy and competitiveness, including the scope of business services and products offered and the ensuing benefits to customers.

For locally-incorporated banks, the Three Year Plan should be endorsed by the board of directors. For foreign bank branches, it should be developed under the scrutiny of their head office or regional headquarters.

To facilitate the development of the Three Year Plan by banks, the HKMA will soon circulate for completing a questionnaire on fintech adoption, highlighting the specific factors that should be taken into account.

The Three Year Plan must be submitted to the HKMA by 31 December 2021.

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