APAC Financial Services Insights: October - November 2020

APAC Financial Services Insights: October - November 2020

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.

In recent weeks, a focus on fraud prevention has dominated headlines across APAC with financial institutions looking to invest heavily in new technology heading in to 2021. In Hong Kong and Singapore authorities have been increasing attention on green and sustainable banking initiatives by conducting in-depth risk assessments and new rounds of research. Looking to Japan and China, digital currencies are a top priority with China drafting new laws to help regulate the digital yuan currently in the testing stage and Japan aiming for initial experimentation of the same in 2021. In Australia regulatory reviews of payments systems strive to ensure its regime supports innovation amid rapid changes in technology, particularly in the areas of contactless and other alternative payment methods.



APAC financial industry sees surge in new account creation fraud

According to a new study by LexisNexis, new account creation fraud in the first half of 2020 saw the highest rate of attack across all transaction types within financial services. APAC continued to see higher attack rates than North America or Europe, the Middle East and Africa during the period, with some significant bot activity recorded coming from Japan, India and Australia.

(FinTech News, 08/10/2020)

Financial institutions in APAC to invest millions in fraud prevention

A recent study found financial institutions in APAC are projecting an average estimated budget of USD $83.3M to purchase new fraud prevention technology in 2020-2021. Furthermore, financial products such as e-wallets are becoming a hygiene factor for 90% of financial institutions as they look to expand their digital channels and deliver superior customer experiences.

(Security Brief, 16/10/2020)

APAC catastrophes highlight importance of reinsurance

According to a report by S&P Global Ratings, while reinsurance programs are effective for mitigating losses, insurers and reinsurers must maintain focus on underwriting discipline. A strong understanding of the urban and geographic landscape, a defined risk appetite, and prudent balance sheet management are key to sustainable profits.

(Insurance Business Mag, 23/10/2020)

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Hong Kong, S.A.R.


Battle under way between Hong Kong’s virtual banks and traditional lenders as new players join

Hong Kong last year approved eight virtual banks to spur financial innovation and competition in the industry. They are competing with 155 traditional banks to serve a city of 7.5 million people. Virtual banks are offering spending rewards and other gimmicks to attract customers.

(South China Morning Post, 01/10/2020)

Hong Kong Monetary Authority pushes forward Green & Sustainable Banking initiatives

Over the past year, a common assessment framework has been developed to measure the “greenness baseline” of individual authorised institutions. This has already been used to complete the first round of self-assessments by 47 authorised institutions (AIs). The second phase will focus on the development of supervisory requirements on climate risk management for AIs.

(Regulation Asia, 02/10/2020)

Hong Kong open to collaborate with People’s Bank of China on digital currency trials

Hong Kong’s authorities have signalled their openness to collaborate with the People’s Bank of China (PBoC) in the area of digital currency/electronic payments. The PBoC and the HKMA will continue to maintain communication and explore the possibility of collaboration with the PBoC.

(FX News Group, 21/10/2020)

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Singapore banks to develop digital trade registry for better transparency

To be built on blockchain technology, the platform aims to drive greater transparency and reduce the risk of trade fraud, including duplicate financing. Led by DBS Bank and Standard Chartered, the initiative is supported by 12 other banks including ABN AMRO, ANZ, Deutsche Bank, ICICI, OCBC, and UOB. Singapore-based blockchain technology startup DLT Ledgers has been tapped to develop the platform.

(Zdnet, 06/10/2020)

Big banks give backing to Singapore Green Finance Centre

The Monetary Authority of Singapore and nine international banks have lent their weight to the establishment of a research institute dedicated to green finance research and talent development. The Singapore Green Finance Centre, run by Imperial College Business School and the Lee Kong Chian School of Business at Singapore Management University, will pursue research to help develop strategies for policy makers and financial institutions to support Asia’s transition to a low carbon future.

(Finextra, 13/10/2020)

Singapore senior manager personal accountability regime launched

In a continuing effort to improve conduct, integrity and public confidence in financial and insurance markets, the Monetary Authority of Singapore recently announced the Individual Accountability and Conduct Guidelines. While the guidelines establish a total of five outcomes that must be achieved, the most conspicuous is that senior managers will become personally accountable for the conduct of business and the actions of employees in their area of responsibility.

(Mondaq, 29/10/2020)

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Australian banks strong enough to withstand economic shock, support recovery

Australia's financial system has the strength to withstand the nation's large economic contraction and support the recovery even though risks are "elevated", as stated by country's central bank. Risks to the financial system would be exacerbated by a weaker than expected economic recovery, stemming from further setbacks on the coronavirus-related health front or international political tensions.

(Business Times, 09/10/2020)

Australia orders regulatory review of payments network

Australia ordered the first regulatory review of its payments systems in over two decades, as it tries to ensure its regime supports innovation amid rapid changes in technology. The use of contactless and other alternative payment methods has increased due to COVID-19, and the review will seek input from the private sector as well as consumer and privacy advocates to ensure the system remains “fit for purpose”.

(Reuters, 21/10/2020)

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China central bank's draft law provides legal basis for digital currency, outlaws all digital tokens

China's central bank has included the digital yuan in the latest version of a proposed banking law, providing more legal ground to the regulation of its electronic currency that is now in the testing stage. The proposed law made public by the PBoC recognizes the national currency, the renminbi, in both physical and digital form, with particular clarity on the digital yuan to be the one and only official yuan-pegged token in China to "prevent the risk of virtual currency."

(CGTN, 24/10/2020)

China's banks facing persistent bad loan pressures after Q3 earnings drop

According to some analysts, China's largest state-owned lenders will see bad loan pressures persist in coming quarters as some borrowers face difficulties in repaying loans after months of inactivity. Five of the country's top banks posted declines in third-quarter profits though they recovered slightly from record profit dives in the second quarter.

(Business Times, 30/10/2020)

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Japan eyes stress test on major banks to gauge impact of COVID-19

Authorities plan to conduct further stress tests on Japan’s five major financial institutions this year. They plan to conduct such stress tests regularly, with the one this year likely to scrutinize how resilient the financial institutions are to risks posed by COVID-19.

(Japan Times, 06/10/2020)

BOJ to begin experimenting with digital currency next year

The Bank of Japan (BOJ) will begin experimenting next year on how to operate its own digital currency, joining efforts by other central banks to catch up to rapid private-sector innovation. The move came in tandem with an announcement by a group of seven major central banks, including the BOJ, on what they see as core features of a central bank digital currency, such as resilience and a clear legal framework.

(Business Times, 09/10/2020)

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Jeffery Naquin
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Raymond Tsui, Protiviti Hong Kong
Raymond Tsui
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