Welcome to the latest edition of Protiviti’s Asia-Pacific (APAC) Financial Services Insights. In this monthly newsletter, we provide a summary of important developments across the APAC financial services sector, including those related to the ever-changing regulatory landscape.
As we enter the second half of the year, news headlines across APAC continue to highlight the transition to digital technology within the financial services industry, accelerated by the COVID-19 pandemic. In Hong Kong, the Securities and Futures Commission (SFC) has ordered the Hong Kong Exchange and Clearing Company (HKEX) to focus on internal conflicts of interest on new listings, while in Singapore facial recognition technology will allow for the opening of digital banking accounts. Australia faces hurdles to becoming a financial hub due to large tax burdens on managed funds and in China and Japan the focus is on setting up and testing new digital currencies.
This is causing personal relationships with banks to break down as technology makes it seamless for customer data to move, with the customer’s consent, to merchants, fintech companies, e-commerce platform - anywhere the customer wishes it to go, in order to receive a desired service.
Recession risks threaten the prospects for APAC financial institutions as the effects of the COVID-19 pandemic continue to weigh on bank credit quality in the region. Many large banks in APAC demonstrated strong metrics at the onset of COVID-19 that have since deteriorated.
SingPass holders will be able to sign up for DBS' digital banking services by taking a picture of themselves using face verification technology, following a rise in digital banking amid the COVID-19 pandemic.
(Channel News Asia, 29/07/2020)
Commodity trade financiers in Singapore are teaming to improve lending practices and transparency after a spate of defaults. Commodity trade finance chiefs from about 20 firms have formed a working group to propose new guidelines.
(Straits Times, 03/06/2020)
Singapore has developed a blockchain-based payments network that enables payments to be carried out in different currencies on the same network. The network prototype may serve as a test network to facilitate collaboration with other central banks and the financial industry for developing next-generation cross-border payments infrastructure.
The SFC has ordered the HKEX, which operates the third-largest stock market in Asia by market capitalisation, to do more to prevent internal conflicts of interests over new listings.
(South China Morning Post, 03/07/2020)
Hong Kong as a jurisdiction was slow out of the gate when it came to Fintech innovation. However, this initial hesitancy was soon made up by a dedicated public-private partnership determined to establish Hong Kong as a top Fintech hub – a successful move.
(Crowdfund Insider, 05/07/2020)
HK virtual bank WeLab opens 10,000 accounts in first ten days
WeLab's new virtual bank in Hong Kong has picked up 10,000 new accounts within ten days of opening to the public. WeLab was the first first homegrown applicant to be granted one of Hong Kong's new virtual banking licenses back in 2019.
Didi Chuxing Technology Co. will test a pilot version of China’s digital currency in a “strategic partnership” with the central bank’s Digital Currency Research Institute. The People’s Bank of China has been researching a national digital currency known as Digital Currency Electronic Payment since 2014.
China imposed a program to keep large transactions in check amid heightened concerns over the state of its financial system as bad debt balloons in the wake of the coronavirus outbreak. The People’s Bank of China this month kicked off a pilot plan in Hebei province that would require retail and business clients to pre-report any large withdrawals or deposits, according to a statement.
China's banks should brace for a big jump in bad loans due to coronavirus-induced economic pain as the asset quality at some small and mid-sized financial institutions was accelerating. China's Banking and Insurance Regulatory Commission said in a statement that profit growth would slow sharply at some banks while others could see profits decline.
The Bank of Japan said it is forming a working group to explore central bank digital currencies in depth. The Bank has also had a multiyear CBDC research collaboration with the European Central Bank, Project Stella.
(Ledger Insights, 15/07/2020)
Japanese banks' liquidity buffers are likely to remain comfortably above the regulatory minimum despite recent weakening at some lenders, as the growth in deposits is set to continue to outpace lending while individuals save more amid the COVID-19 pandemic.
According to the Financial Services Council, Government rules are holding Australia back from being an international financial services hub as it imposes one of the largest tax burdens on managed funds.
(Money Management, 17/07/2020)
On 1 July 2020, open banking started in Australia. Open banking, more formally called the Consumer Data Right (CDR), is designed to give consumers more control over their personal data, enabling them to use it to choose the best products and services and access new services.
APRA has wound back capital management guidance placed upon the banking and financial services sector after the onset of COVID-19 created an uncertain economic outlook.