Ah Si: In the past few years, I have heard a lot about Fintech (financial technology), and the country has developed to include Regtech and Suptech.
Komori: That’s right, Regtech in English stands for regulatory technology, and Supptech means supervisory technology.
Ah Si: What’s the difference?
Komori: Generally speaking, the users of Regtech are financial institutions, while the users of Sutech are regulatory agencies. They both use technology to improve the effectiveness of supervision and compliance. They are usually collectively referred to as Regtech. Comprehensive market analysis shows that there are more than 200 Regtech companies in the world, and the total investment in Regtech in 2017 reached US$1 billion. It can be seen that the market demand and development potential are considerable.
Ah Si: Can Regtech improve the effectiveness of supervision and compliance?
Komori: Since the global financial crisis, in order to strengthen supervision and reduce the risk of another crisis, coupled with the rapid development of the financial industry, the guidelines for supervising banks have inevitably become more numerous and complex, and have to be updated from time to time in response to new developments. , banks need to invest a lot of human resources to follow up and process, so the introduction of new technology has become a general trend. For example, the industry is studying the introduction of "machine-readable" technology, hoping to help banks "interpret" the revised regulatory requirements, and then find and modify relevant parts of the bank's internal compliance procedures on their own, thereby shortening the time for banks to update their internal compliance procedures. time for regulatory guidelines and procedures to improve the efficiency of compliance work. The application of "machine readability" in compliance work is a relatively new concept, and industries and regulatory agencies around the world are still in the exploratory stage.
Ah Si: How does the Hong Kong Monetary Authority promote the development of Regtech in Hong Kong?
Komori: Last year we launched the "New Era of Smart Banking", which was mainly to promote the application of financial technology to banking products and services. This year it is Regtech's turn! The HKMA will open a sandbox for banks and technology companies to test their Regtech projects or concepts. In addition, the Hong Kong Monetary Authority will study how to apply Regtech in (1) combating money laundering and terrorist financing, (2) prudent risk management and compliance, and (3) "machine-readable" regulatory requirements. The Hong Kong Monetary Authority will also look at ways to use suptech to improve regulatory efficiency and effectiveness!
If you would like to ask more about the work of the Hong Kong Monetary Authority, please send an email to the dedicated mailboxes of Komori and Ah Si:
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