Hong Kong and UK ink fintech accord

17 May 2017   Category: News, Asia, Hong Kong, United Kingdom   By Asia Asset Management

Hong Kong and British regulators have signed an agreement to foster greater collaboration in supporting financial technology (fintech) innovation.

The agreement between Hong Kong’s Securities and Futures Commission (SFC) and the UK’s Financial Conduct Authority (FCA) aims to make it easier for fintech companies to enter each other’s market by cooperating on information sharing and referrals of innovative firms, the SFC says in a statement on May 12.

“This agreement will help both regulators stay abreast of innovation in financial services while providing innovative fintech firms seeking to develop and grow their businesses internationally with enhanced channels for communicating with regulators,” SFC Chief Executive Officer Ashley Alder says in the statement.

Christopher Woolard, the FCA’s executive director of strategy and competition, believes cooperation agreements are vital in fostering global fintech innovation.

“We want to build a common understanding of the principles of good innovation and we look forward to working closely with the SFC,” he says in the statement.

Last December, the FCA signed a similar agreement with the Hong Kong Monetary Authority to promote financial innovation with initiatives including referrals of fintech firms, joint projects, information exchange, and experience sharing. This March, the FCA signed an agreement with the Financial Services Agency of Japan on a co-operation framework to support fintech.

Last week, Hong Kong’s Financial Services Development Council (FSDC), an advisory body for the financial services industry, published a report calling for more effort on the development of fintech.

It says that although Hong Kong has the potential to support international fintech companies seeking to expand in the Asia Pacific region, there are three main barriers. This includes a small base of retail customers and small and medium enterprises that limits demand for fintech; lack of talent and support that makes it challenging to build capability for technological innovation; and financial regulation that is based on traditional business models involving many paper-based processes.

The report urges the government to set up a fintech office to monitor, support and coordinate implementation of strategies.

It also suggests that Hong Kong narrow its focus to five fintech areas: cybersecurity; payments and securities settlements; digital identification and know-your-client utility; wealth technology and insurance technology (data analytics, automation and artificial intelligence); and regulatory technology.

Focussing investment in these areas would allow Hong Kong to attract talent and transactions to form an ecosystem for the development of fintech, the report says.