HKMA Sees Potential In DLT For FinTech
On June 14, 2017, Chief Executive of the Hong Kong Monetary Authority (HKMA) Norman Chan released a statement that was reflective of his one-day visit to the Office of Financial Development Service under the People’s Government of Shenzhen Municipality and the People’s Bank of China (PBOC) Shenzhen Central Sub-branch. According to Chan, distributed ledger technology (DLT) is crucial to the region’s financial services ambitions and is a principal facilitator for FinTech innovation. As per Chan:
“Coupled with intensified external competition, many banks have been driven to speed up the development and application of fintech. The most notable example is their active participation in the research and application of the latest biometric identification technology, such as fingerprints, facial and voice recognition, as well as distributed ledger technology.”
In the statement, Chan highlights that he paid a visit to Ping An Technology and WeBank, which according to Chan are “two pioneering fintech firms” that are making progress in Shenzhen. In May 2016, Ping An became one of the first Chinese financial institutions to join the R3 banking consortium. A year later, the financial service conglomerate assisted in the consortium’s Series A fundraising round that raised $107 million. According to the South China Morning Post, all the R3 financial partners are currently collaborating on the development of a DLT platform that will ultimately revamp the financial services industry. In April 2017, Tecent, parent company of WeBank, announced plans of a new suite of blockchain services called TrustSQL, which it hopes will be used to build safe and efficient solutions for enterprises and institutions.
Further, Chan believes that Shenzhen and Hong Kong should fortify the connection between the two financial sectors. As a result, Chan stated that he and the head of the PBOC Shenzhen Central Sub-Branch, Xing Yujing, both agreed that mainland China and Hong Kong should “consider embarking on pilot schemes” in order to assist with “the process of the nation’s reform and opening-up.” He went on to say:
“I would also like to point out that Hong Kong and Shenzhen can complement each other in fintech development. Hong Kong is Asia’s premier international financial centre which is home to a multitude of banks and financial institutions and is renowned for its sound and robust financial regulatory system. It is an ideal springboard and hub for both international companies expanding into the Mainland and Mainland enterprises going global.”
This comes as no surprise, as the HKMA has been actively promoting a number of innovative measures such as the Fintech Facilitation Office, the Hong Kong Science and Technology Parks and Cyberport, and the Fintech Supervisory Sandbox for banks. Most recently, the HKMA partnered with Hong Kong’s Standard Chartered Bank to oversee the deployment of a successful DLT Proof-of-Concept for trade finance.