FTAHK welcomes the HKMA’s proposed revision of the “Guideline on Authorization of Virtual Banks”, a key deliverable within its New Era of Smart Banking Initiatives.
The FinTech Association of Hong Kong (“FTAHK”) welcomes the Hong Kong Monetary Authority’s (“HKMA”’s) New Era of Smart Banking Initiatives announcement made on 29 September 2017, and re-enforced during HKMA FinTech Day, 23 October 2017, during Hong Kong’s flagship “FinTech Week”. The HKMA plans to implement multiple initiatives to support innovation in the banking sector and embrace the opportunities brought about by the convergence of financial services and technology.
This response focuses on the initiative to revise the “Guideline on Authorization of Virtual Banks” first published in 2000, and subsequently revised in 2012, in line with corresponding revisions to the Banking Ordinance. FTAHK recognises that there is only one type of full “licensed bank” licence under the Banking Ordinance. In other words, the authorisation criteria for virtual banks and conventional banks are the same. Institutions that meet the financial and prudential requirements as stipulated in the Ordinance may apply for a banking licence from the Hong Kong Monetary Authority (HKMA), irrespective of whether they plan to operate as a virtual bank or a conventional bank. FTAHK understands that the guideline is aimed at clarifying how the authorisation criteria under the Ordinance would be applied in the context of characteristics and risks specific to virtual banks.
FTAHK strongly believes that Hong Kong is at a tipping point whereby a convergence of factors is enabling the emergence of new and improved financial services. Such factors include:
- A quest to upgrade local offerings, functionality and customer experiences;
- Greater connectivity between banks, payment service providers and other ecosystem players including FinTech startups and content providers;
- Greater connectivity with mainland and wider Asia-Pacific e-commerce and payment experiences;
- Greater access, transparency and flexibility of individuals’ financial data.
If well-orchestrated, there is the opportunity to protect Hong Kong’s long-term relevance as a leading financial hub and sustainably position the city as a leading FinTech hub. FTAHK is uniquely positioned in Hong Kong in its comprehensive representation of the FinTech sector and singular focus on the same. Members include Authorised Institutions, FinTech startups, technology firms, law firms, professional services and academic institutions. To this end, we intend to provide an objective response to the proposed revisions, comprising a balanced view from Hong Kong’s diverse ecosystem participants.