The Hong Kong Monetary Authority (HKMA) is to set up a fintech innovation hub and supervisory “sandbox” for financial technology innovation in the banking sector, according to a statement issued by the watchdog today.
The news comes shortly after the Monetary Authority of Singapore for a regulatory sandbox for fintech startups aimed at making it easier for financial institutions and other companies to experiment with fintech offerings, as reported by Finance Magnates in June.
The Hub
The watchdog announced the new facility to support research and adoption of fintech business models in collaboration with the Hong Kong Applied Science and Technology Research Institute.
According to the HKMA: “The Hub is intended to be a neutral ground of the fintech industry, a place where various stakeholders can collaborate to innovate.”
“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 accommodate around 200 workstations alongside virtual private networks connecting users to 30 external development laboratories in Hong Kong and overseas.
Regulatory “Sandbox”
In a related initiative, HKMA chief executive Norman Chan also announced plans to create a regulatory sandbox, where startups and banks can test solutions before applying for authorisation.
Chan said: “The sandbox allows banks to conduct tastings and trials of newly developed technology on a pilot basis. 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.”
He added that it would “only apply to banks looking to use fintech, not to standalone fintech firms”.
The initiative is in line with similar efforts by banking regulators in the UK, Singapore and Australia and is aimed at ensuring that Hong Kong doesn’t fall behind rival economies in creating a supportive regulatory environment in which fintech can grow.
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