In a speech to a banking conference, Norman Chan, chief executive of the Hong Kong Monetary Authority, hit back at suggestions that Hong Kong was running the risk of becoming a fintech backwater.

"I believe that in a couple of years’ time, there will be a high degree of convergence in the way in which banks and tech firms conduct their businesses and compete in the arena of finance," he said. "This means that the landscape of banking and finance will undergo a profound change during this process. So how does Hong Kong move from here to there and what role will the HKMA, as bank supervisor, play in preparing the banking sector for the change?"

Chan proceeded to outline seven new initiatives intended to propel the territory to the forefront of a "new era of smart banking".

In retail payments, the introduction of a new faster payments system in September 2018 will provide the necessary infrastructure for full person-to-person and person-to-business connectivity, he said, and will usher in a new spirit of competition between banks and non-bank competitors. In addition to FPS, the HKMA is also leading a working group on the development of a common QR code standard that would work across multiple payment schemes, and promote the roll-out of fully-fledged mobile commerce.

The HKMA is also currently consulting the banking industry to formulate a framework for the development of Open API.

"We aim to finalise our policy on Open API for the banking sector around the end of the year," Chan said. "We believe that the wide adoption of an Open API framework would promote collaboration between banks and tech firms, a crucial element for stimulating innovations and improved services for customers in Hong Kong."

Fintech firms wishing to enter the market will also be catered for, with a revamp of the territory's regulatory sandbox to enable direct participation without the need for a bank sponsor, and the establishment of a "Fintech Supervisory Chatroom" that would engage stakeholders at a much earlier stage of project development.

A streamlining of the regulatory rulebook is similarly on the agenda under an initiative dubbed "Banking Made Easy".

"We will set up a new task force within the HKMA and work with the banking industry to identify and, where appropriate, modify or streamline those regulatory requirements or processes that may hinder technological innovations," said Chan. "We will seek to clarify regulatory expectations, review our own guidance and rules to make them more user friendly, thereby facilitating innovations in products and services for better customer experience."

He cited remote onboarding of customers and account maintenance as two examples in which the use of new technology may lower operating costs and hinted at legislative change in anti-money laundering rules and the creation of a know-your-customer utility to ease the process.

"In addition to customer onboarding and account maintenance, Banking Made Easy would seek to facilitate the use of technology in the areas of online finance, online wealth management and robo advisers," he added.

"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," Chan summarised. "It is a question of whether we make the best out of banking and technology by marrying the two."