A general view shows Victoria Harbour next to commercial and residential buildings in Hong Kong on Sept 20, 2020. (MAY JAMES / AFP)

HONG KONG - The Hong Kong Monetary Authority (HKMA) announced it had developed a two-year roadmap to promote the adoption of Regulatory Technology (Regtech) in the city’s banking sector, as banks are increasingly looking at technology to enhance risk management.

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Referring to a series of suggestions compiled in a white paper, the road map aims to boost awareness by issuing practical guidance and organizing targeted events; promote innovation among the local and global Regtech community and facilitating access to infrastructure; enhance regulatory engagement with the Regtech ecosystem through ongoing dialogue and collaboration; develop the talent pool by formalizing a Regtech training and skills framework; and sustain adoption via continued industry engagement and effective tracking of progress.

The banking industry should seize the opportunity to capitalize on the benefits of Regtech. The HKMA's two-year roadmap will help to build a thriving ecosystem, transforming Hong Kong into a Regtech hub.

Arthur Yuen, HKMA deputy chief executive

Arthur Yuen, deputy chief executive of the HKMA, said in a statement on Tuesday: "The HKMA has been promoting fintech adoption since the announcement of our seven Smart Banking initiatives in 2017. The resulting development in fintech has been phenomenal. We are now putting the same emphasis on Regtech considering its pivotal role in revolutionizing risk management and compliance. The banking industry should seize the opportunity to capitalize on the benefits of Regtech. The HKMA's two-year roadmap will help to build a thriving ecosystem, transforming Hong Kong into a Regtech hub."

Yuen said in a media briefing that although it remains unclear at this stage that how much expenses Regtech can save for banks, Regtech can improve the sector’s efficiency in the long run, such as examining transaction procedures and loan applications.

The HKMA also said it will roll out a series of events and initiatives in the coming two years, including hosting a large-scale event to raise the banking sector’s awareness of the potential of Regtech, launching a Regtech Adoption Index, organizing a Global Regtech Challenge to stimulate innovation, publish a Regtech Adoption Practice Guides series, create a centralized Regtech Knowledge Hub to encourage information sharing, and establish a Regtech skills framework to develop talents.

The white paper was put together after a HKMA-KPMG research following a survey of 133 authorized institutions in Hong Kong, conducted during July and August 2020.

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Also on Tuesday, Hong Kong’s Securities and Futures Commission (SFC) said Hong Kong will regulate all cryptocurrency trading platforms operating in the financial hub, changing its previous “opt-in” approach.