Hong Kong has launched a regulatory regime, known as "sandbox", for banks to make their financial services more efficient and compete with other countries like China, Singapore and Australia.
"Sandbox" was implemented on 6 September 2016 to provide financial organisations with data feeds and development tools. The sandbox is only applicable to banks looking to use fintech models, such as ledgers or robo-advisors to increase efficiency.
"The sandbox concept allow regulators to become familiar with new business models," said James Lloyd, Fintech Leader at Consultancy Firm, EY, Hong Kong.
With the help of sandbox, banks can manage flow of customers, and provide better banking services. However, they need to test the system first to ensure customer data is protected and constantly monitored for security purposes.
On a global scale, countries like Singapore, Australia and Britain have established a more regulated system to experiment with new fintech models without complying with financial rules.
Hong Kong has fallen behind Singapore with its banking efficiency, despite governmental efforts to promote Hong Kong as a Fintech centre.
According to Reuters, Singapore deployed a combination of state-funding and light-touch regulation to become Asia's leading Fintech spot.
Banks wishing to use sandbox will need to directly apply to HKMA for permission.
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