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Reducing Risk with RegTech Rules

While most people are in favor of greater efficiency and ease when it comes to shopping or investing, few want to put their hard-earned wealth at risk. In the age of FinTech, deciding how to strike a balance between convenience and security is one of the trickiest challenges facing the Deputy Chief Executive of the Hong Kong Monetary Authority, Arthur YUEN. Along with ensuring the stability of Hong Kong's currency and supervising its banks, the HKMA is also tasked with supporting the integrity and development of the city’s broader financial system. Technology may currently be proving something of a double-edged sword for the HKMA, but Yuen sees it increasingly enabling the authority to discharge its responsibilities with greater efficiency and thoroughness.

Role of RegTech While FinTech makes possible all manner of new digital products and services, RegTech, its counterpart, uses some of the same technology to help regulators and supervisors monitor compliance.

“In general terms, FinTech refers to how financial institutions interface with customers,” explains Yuen. “It’s the use of technology to enhance that interface, enhance the customer experience and speed up processes. RegTech refers to the use of technology to enhance the interface between financial institutions and the regulators or supervisors.” Yuen says RegTech solutions promise to make the system more efficient and forward-looking for both the supervisors and the banks. A central requirement placed on banks is to measure and monitor their risks properly. “The traditional way of doing this was through an iterative process between us and the banks. But technological solutions can speed up that process.”

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