Featured Article: RegTech in the Eyes of the Association
By RegTech Association of Hong Kong founding members
The RTAHK is an independent and not-for-profit organization founded by a group of RegTech entrepreneurs in 2019. Our main goal is to promote RegTech and its adoption in Hong Kong and beyond. After more than a year, it would be interesting to explore how all these founding members perceived the evolvement of the RegTech Ecosystem around them. We have interviewed representatives from each founding member company and summarized their insights below.
Internationally, governments and regulatory authorities have tightened compliance regimes in response to the massive innovations in the technology of the New Economy. To fulfill compliance responsibilities at lower costs, there is an increasing demand for RegTech to reduce the regulatory burden and to enable effective regulatory management.
RegTech can have wide applications. Any company, irrespective of whether they are large, medium, or small, will need RegTech to comply with rules and regulations for the sake of avoiding a hurtful penalty. Thus, the demand for RegTech increases upon the expansion of other industries such as FinTech.
RegTech’s contribution to Hong Kong becomes more and more important. As Hong Kong has a comprehensive compliance system as well as a mature legal and regulatory infrastructure, Hong Kong’s RegTech ecosystem will increase our influence in China as we are part of the one Belt one Road Strategy and one of the core cities in the Greater Bay Area.
There is a well-balanced representation of local and international RegTech companies in Hong Kong. Locally, more entrepreneurs are already utilizing the deep GRC expertise and experience to address industry pain points using technologies like AI, machine learning, data analytics, and blockchain. There is also a growing number of international RegTech firms expanding into Hong Kong, bringing along with them international perspectives and advanced skills.
While RegTech firms mainly focused on the financial industry in Hong Kong, the largest sector is rested on AML and KYC where the buckets are still full of heavy regulations. In particular, the upraise of virtual banks requires more seamless on-boarding, verification, screening, and monitoring technologies.
There are two specific RegTech growth areas in Hong Kong, namely, regulation change identification and implementation. They are underdeveloped in Hong Kong and there are increasing demands for adoption to match with the overseas market.
Last but not least, Environmental Social Governance is an area of great potential. It is expected that the RegTech community is about to explode with innovation to tackle the challenges.
Being the RegTech community leader, the RTAHK can become an effective device to support and enable community development. We can provide market information and analysis, an opportunity for business development as well as industry knowledge sharing. We are establishing relationships with organizations in Hong Kong to enable communication between market participants and our RegTech startups to showcase their products. We will reach out, connect, attract interested players to join the community, making Hong Kong RegTech ecosystem a strong and influential player in the world.