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.
Across APAC, the past month has seen new ways of using artificial intelligence in both digital payments and in the fight against financial crime. In Hong Kong, US - Hong Kong sanctions dominated the headlines and in Japan the fintech industry continues to push the boundaries for traditional banking. In Singapore, the financial sector looks ahead to a stronger than expected second half while China faces its slowest economic expansion in the past four decades.
Asia is rapidly emerging as a paytech hub due to increased mobile and internet penetration, rising fintech adoption and huge amounts of available funding. One rising trend is artificial intelligence-powered payments using voice command, a sector that is expected to see rapid growth over the next three years.
(Fintech News, 12/08/2020)
Advancements in technological fields, including artificial intelligence and biometrics, are providing new ways for financial institutions and startups to handle the surge in fraud and financial crime resulting from the rise of digital banking and fintech.
(Fintech News, 18/08/2020)
According to Fitch Ratings, the digital bank entrants in Asia may struggle to attain the stability necessary to reach business viability amid the pandemic-related economic shock, especially in developed markets where competition from incumbent banks was already fierce.
Despite COVID-19’s impact to Singapore’s economic growth the financial sector is one of its remaining strongholds, registering positive growth in the first half of 2020. Employment in the financial sector grew by 1,500, and retrenchments in the first quarter remained on par with the average quarterly retrenchment in 2019.
(Insurance Business, 13/08/2020)
Singapore is making efforts to replace the London Inter-Bank Offered Rate (Libor), becoming one of the first countries to auction debt linked to an alternative benchmark. The move is part of a broader push as policymakers around the world develop new benchmarks to replace Libor by the end of 2021.
(Business Times, 19/08/2020)
The Monetary Authority of Singapore today announced that it will commit S$250 million over the next three years under the enhanced Financial Sector Technology and Innovation Scheme to accelerate technology and innovation-driven growth in the financial sector.
Hong Kong, S.A.R.
According to a study by GlobalData, the economic downturn caused by the Covid-19 pandemic is going to stagnate Hong Kong’s insurance industry growth. The life insurance segment, which makes up more than 90 per cent of the Hong Kong market, is expected to grow by 1.51 per cent in 2020 - against the pre-Covid forecast of 6.7 per cent.
(International Travel & Insurance Journal, 04/08/2020)
Companies and lawyers are rushing to work out the implications of US sanctions on Chinese and Hong Kong officials, which have raised temperatures between the world’s two biggest economies.
(Financial Times, 11/08/2020)
Hong Kong's banking regulator said it would relax commercial property mortgage rules, in a move to boost liquidity in a market that has been hit hard by US-China trade tensions, ongoing protests and the coronavirus crisis.
The federal government has finally unveiled its delayed cyber security strategy but left much of the detail to forthcoming legislation that is yet to be put before parliament.
Reserve Bank of Australia (RBA) Governor Philip Lowe said that policymakers had no concerns about the stability of the country’s banking system. Banking analysts have warned of larger loan losses, weaker profits and smaller dividends, particularly when the government’s COVID-19 jobless benefits run their course at the end of this year.
The long-term loans to Chinese companies and advances to small businesses grew at the fastest rates in more than two years. China's economic recovery appears to be on a firmer footing, as credit demand is driven more by the manufacturing, infrastructure, and private sectors, instead of real estate and investments in stocks and bonds as in the previous economic cycles.
(S&P Global, 04/08/2020)
China will further facilitate cross-border use of the renminbi by promoting pilot programs to boost trade and investment, making it possible for more foreign central banks and monetary authorities to hold the currency as a reserve asset, according to a report from the nation's central bank.
(China Daily, 17/08/2020)
According to China Banking and Insurance Regulatory Commission data, Chinese commercial banks overall posted a 9.4% fall in first half net profit, while the six biggest posted a 12% profit fall from a year ago.
The regional lenders in Japan may need to merge with peers or seek new capital from nonbank investors, as their already weak profitability is further hit by rising default risk and loan-loss provisions due to COVID-19.
(S&P Global, 05/08/2020)
According to a report by The Nikkei, the Japanese Bankers Association plans to allow financial technology firms to carry out money transfers and inter-bank payments as early as fiscal year 2021. According to the report, enabling fintech companies to compete in the sector will potentially lower transaction fees.
(S&P Global, 05/08/2020)
According to Japan's senior financial regulator, the country will likely see more financial tie-ups that extend beyond traditional boundaries. It is also expected that advances in financial technology could trigger structural changes in Japan's banking industry by breaking barriers between lending and other services.
(Deccan Herald, 31/08/2020)