Hong Kong and Singapore have dumped decades-old rivalry for trade flows in South East Asia and signed a fintech co-operation deal to foster the development of innovative financial technology across the region, beginning with a cross-border linkage of DLT-based trade finance platforms.
Announced at a Fintech Day organised by the Hong Kong Monetary Authority (HKMA), the two countries have committed to work on a strategic project on trade finance cross-border infrastructure, based on distributed ledger technology, as their first collaborative initiative.
The initiative comes as seven banks in Hong Kong have decided to commercialise an HKMA-led, DLT-based, trade finance proof-of-concept into a production system named Hong Kong Trade Finance Platform (HKTFP) to digitise and share trade documents, automate processes and reduce risks and fraud. Under the agreement with the Monetary Authority of Singapore, this will be linked with a similar platform under construction in Singapore.
Hong Kong's central bank chief Norman Chan says: “Technology is a game changer for the future of banking and payment services. It will differentiate winners from losers. I am very pleased to say that Hong Kong has made important progress in cross-border collaboration and the research on DLT applications. The collaborative efforts and enhanced research and talent development are the essential building blocks to facilitate financial innovation."
Ravi Menon, MAS MD, adds: “This is one of our more significant fintech co-operation agreements, given the extensive financial and trade linkages between Singapore and Hong Kong. We are especially pleased that we have a live project to enhance the trade finance corridor between the two financial centres.”
Other initiatives previewed at HKMA's Fintech Day include plans by the central bank to develop working guidelines for banks engaging in blockchain technology, and the creation of a $7 million fintech award to recognise and reward outstanding startups.