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Increasing regulatory requirements are putting more focus on how the latest technology can be harnessed to enhance regulation and regulatory compliance, also known as “regtech”, in Hong Kong in 2017, says a report from Deloitte.
According to the report, various new solutions will emerge during 2017 for use by both regulators and regulated areas. The areas that are progressing quickly are in KYC (know your client) compliance processes, automated regulatory reporting, and communications monitoring.
“While the marriage of technology and regulation to address regulatory challenges has existed for some time, increasing levels of regulation and a greater focus on data and reporting has brought the regtech offering into greater focus thereby creating more value for the firms that invest in these solutions,” according to Deloitte.
Hong Kong regulators in particular are interested in leveraging on new technologies to maintain the security of financial systems and to understand how to address new risks associated with regtech.
“I envisage that the fintech innovation hub will also benefit the Hong Kong Monetary Authority (HKMA),” says Norman Chan, chief executive of HKMA. “We could explore with innovators options and possibilities of using new technologies, such as big data analytics and other regtech initiatives, to achieve our objectives more effectively without creating undue risks or burden for our internal systems or databases.”
However, those that are less regulated, such as cloud providers, could still create cyber vulnerability to the financial market. Hence, cyber risk management will also remain a major focus, according to Ashley Alder, CEO of Hong Kong Securities and Futures Commission.
“Cybersecurity incidents are now frequent across the financial industry,” says Alder. “There is no doubt that cyber security threats are now the top risk for banks and the broader financial system.”
Authorities in Asia are urging firms to upgrade their capabilities in safeguarding cyber security. The Monetary Authority of Singapore, for instance, has recently announced that a financial services information sharing and analysis centre will set up in Singapore to coordinate co-operation and sharing of cyber intelligence between companies.
6 Jan 2017