The Hong Kong Monetary Authority is to set up a fintech innovation hub and supervisory sandbox, following in the footsteps of regulatory bodies in the UK, Australia and Singapore.
Embracing the tidal wave of innovation from technology startups and banks alike, the HKMA has set up a 'fintech facilitation office' with its own dedicated e-mail account to act as a platform for the exchange of ideas between the regulatory body and banks and tech firms.
In a memo to the chief executives of all authorised institutions, the watchdog announced the establishment of a new facility to support research and adoption of fintech business models in collaboration with the Hong Kong Applied Science and Technology Research Institute.
"The Hub is intended to be a neutral ground of the fintech industry, a place where various stakeholders can collaborate to innovate" states the letter. "Industry players, such as banks, payment service providers, fintech start-ups, the HKMA, etc. can get together at this facility to brainstorm innovative ideas, try out and evaluate new fintech solutions, conduct proof-of-concept trials, and gain an early understanding of the general applicability of creative solutions for banking and payment services."
The Hub will house a minimum of 200 workstations alongside virtual private networks connecting users to up to 30 external development laboratories in Hong Kong and overseas.
In a related initiative, HKMA chief chief executive Norman Chan announced plans to create a regulatory sandbox, where startups and banks can test solutions and hone their ideas before applying for authorisation.
"The sandbox allows banks to conduct tastings and trials of newly developed technology on a pilot basis," Chan told a conference in Hong Kong. "Within the sandbox, banks can try out their new fintech products without the need to achieve full compliance with the HKMA’s usual supervisory requirements."
The initiative is in line with similar efforts by banking regulators in the UK, Singapore and Australia.
Chan says the innovation push will ensure that Hong Kong doesn't fall behind rival economies in creating a supportive regulatory environment in which fintech can flourish.