In his opening keynote, HKMA chief executive Eddie Yue announced that the central bank is exploring a new data strategy and considering building a new financial infrastructure called Commercial Data Interchange (CDI) to enable more efficient financial intermediation in the banking system.

The CDI is a consent-based financial infrastructure that would enable more secure and efficient data flow between banks and sources of commercial data. It has the potential of solving long-standing pain points in SME financing by allowing small business owners to use their own data to enhance their access to financial services, says Yue.

To study the technical feasibility of the CDI, the HKMA is conducting an initial Proof-of-Concept (PoC) study on using trade-related data to facilitate trade finance applications in collaboration with banks. The next phase of the study will begin in 2021 to cover other commercial data sources that could facilitate alternative credit scoring conducted by banks.

To this end, the HKMA has separately commissioned the Hong Kong Applied Science and Technology Research Institute (ASTRI) to study the use of artificial intelligence in SME loan applications.

In trade finance, Yue reported the completion of a project to connect the operators of eTradeConnect and the People’s Bank of China Trade Finance Platform. Following a successful trial run, seven banks have already successfully used the connection to conduct trade financing transactions, with the total trade value exceeding HK$26 million. Phase 2, tentatively scheduled for early 2021, is expected to cover more types of trade activities and financing products.

On central bank digital currencies, Yue reported back on the latest developments concerning Project Inthanon-LionRock, a joint study on the application of CBDC to cross-border payments conducted by the HKMA and the Bank of Thailand. Yue says the project has now entered a second phase, which will explore business use cases in cross-border trade settlement and capital market transactions. At the moment, the Hong Kong Exchanges and Clearing Limited, 19 participating banks, and five other corporates are going to participate in the project.

The two authorities also intend to enhance the cross-border corridor network prototype1 to support CBDCs of other central banks in the region. Yue says they will soon bring banks and large corporates into trials using actual trade transactions. The project findings are expected to be delivered in Q1 2021.

The HKMA also laid out a two-year roadmap aimed at fostering a more diverse and interactive Regtech ecosystem in Hong Kong.

Says Yue: “Hong Kong has embraced a new era for smart banking, but to prepare for the next era, there is a need to continuously enhance the ecosystem and empower the people in it. The fintech initiatives announced today are examples of the HKMA’s focus on applying technology to achieve better banking and drive financial inclusion.”