Fintech Hong Kong http://fintechnews.hk - FintechNewsHK Tue, 16 Jul 2019 05:12:47 +0000 en-US hourly 1 https://wordpress.org/?v=5.2.2 China’s New Fintech Strategy Includes a “Chinese Version” of Regulatory Sandboxes http://fintechnews.hk/9686/fintechchina/china-fintech-sandbox-pboc/ http://fintechnews.hk/9686/fintechchina/china-fintech-sandbox-pboc/#respond Tue, 16 Jul 2019 05:11:58 +0000 http://fintechnews.hk/?p=9686 China’s central bank, the People’s Bank of China (PBoC) has revealed at the 4th Global Fintech (Beijing Summit) that it is currently drafting new policies for China’s fintech sector. This

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China’s central bank, the People’s Bank of China (PBoC) has revealed at the 4th Global Fintech (Beijing Summit) that it is currently drafting new policies for China’s fintech sector.

This new plan, will include regulatory sandboxes for at least 10 major cities including the usual suspects like Beijing, Shanghai and Shenzhen according local media report.

Li Wei who heads the technology department of PBoC told local media that they will be exploring a Chinese version of the fintech supervisory sandbox with focuses on “risk compensation” and “withdrawals mechanisms for the financial markets” through the pilot zones with the 10 major cities.

Details of the new plan is expected to be released soon.

Image Credit: Wikimedia Commons

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At Long Last, iPhone Users Will Soon be Able to Use Their Phones Instead of The Octopus Card http://fintechnews.hk/9667/mobilepayment/apple-pay-octopus-card-iphone/ http://fintechnews.hk/9667/mobilepayment/apple-pay-octopus-card-iphone/#respond Fri, 12 Jul 2019 09:05:57 +0000 http://fintechnews.hk/?p=9667 Octopus cards will soon be usable virtually via an iPhone, according to the city’s e-payments giant. With the iPhone’s Apple Pay, Octopus users would be able to use their phones

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Octopus cards will soon be usable virtually via an iPhone, according to the city’s e-payments giant. With the iPhone’s Apple Pay, Octopus users would be able to use their phones to pay for travel, or other purchases, or even their Apple Watch.

More details will be shared soon including the exact launch date, reported the South China Morning Post.

SCMP further reported that Francis Fong Po-kiu, the president of the Information Technology Federation, said the system would be made available in Apple’s iOS 13 software for iPhone, and opines that it will come around September.

He also said he learned the smart Octopus functions would be compatible with iPhone 8 or newer models.

Apple users have been calling for this update since the NFC-powered function has been made available on Samsung phones in 2017. Through mobile wallet app Samsung Pay and select Samsung smartphones, Octopus users can transfer the physical card to Samsung Pay and use it on their phones.

The Octopus card is seen as an essential part of the Hong Kong experience for both locals and tourists, and has been a mainstay since 1977. More than 36 million Octopus cards and products are in circulation in Hong Kong, which has a population of about 7.4 million.

While it is primarily known for use on public transport, the Octopus card can also be used everywhere from restaurants, convenience stores, vending machines, and even taxis.

Hong Kong seems to be on a spree in digitising payments for public transportation, with QR payments by Alipay for MTR being slated for next year.

Featured image via U4get on YouTube

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Fintech is Hong Kong’s Strongest Innovation Sector, Study Concludes http://fintechnews.hk/9658/various/fintech-hong-kong-innovation-hub/ http://fintechnews.hk/9658/various/fintech-hong-kong-innovation-hub/#respond Fri, 12 Jul 2019 08:37:43 +0000 http://fintechnews.hk/?p=9658 KPMG and Alibaba Entrepreneurs Funds’ joint report has made it official—fintech is ranked as Hong Kong’s strongest innovation sector, beating out segments like smart city, artificial intelligence, e-commerce, big data,

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KPMG and Alibaba Entrepreneurs Funds’ joint report has made it official—fintech is ranked as Hong Kong’s strongest innovation sector, beating out segments like smart city, artificial intelligence, e-commerce, big data, and many others.

The conclusion was found when entrepreneurs and students were surveyed about whether they agree Hong Kong is well-positioned to be an innovation hub in a number of emerging technology areas.

The results suggest a need for continued effort to drive growth across all of the government’s four key innovation sectors outlined in the Hong Kong budget and the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area (GBA Outline Development Plan): fintech, smart city, artificial intelligence (AI) and biotechnology.

The report stated that it is “unsurprising” that fintech appears to be the most vibrant among these sectors, with 67% of entrepreneurs and 61% of students surveyed agreeing that Hong Kong is well-positioned to be a fintech innovation hub.

Image via KPMG

In 2017, the Hong Kong SAR government announced four priority sectors for I&T investment: artificial intelligence, biotechnology, fintech and smart city. To spur innovation in these sectors, the government has been investing in major new research and development (R&D) facilities, supporting funding schemes for start-ups and reforming the tax code to further boost R&D.

Of these verticals, fintech seems to have generated the biggest impact.

The Fintech Association of Hong Kong was also launched within the same year, and later in 2018, the government introduced the Faster Payment System (FPS), providing opportunities for innovation in the fintech sector.

Cindy Chow Executive Director Alibaba Hong Kong Entrepreneurs Fund agrees:

Cindy Chow

 

“Fintech and e-commerce ranked as the strongest sectors for innovation in the study. Our cohesion with these two areas allows us to provide a solid network, resources, and advice to our portfolio companies in these areas – our unique contribution to the Hong Kong start-ups working with Alibaba Entrepreneurs Fund.”

 

 

 

Fintech is The Golden Child

hong fintech startups

A snapshot of of Hong Kong’s Fintech Ecosytem

The state of the ecosystem is reflected in how there are nearly 50% more fintech startups in Hong Kong than any other sector.

Hong Kong’s largest fintech community is located at Cyberport, which houses more than 200 fintech companies working in areas as diverse as blockchain, cybersecurity, big data and wealth management.

Hong Kong-based online brokerage platform Futu Holdings raised US$90 million when it listed on the US’s Nasdaq Stock Market earlier this year.

Other major funding rounds completed in the past year include Airwallex, joining the unicorn club with a US$100 million round of funding led by DST global in March, while virtual insurer Bowtie completed a US$30 million funding round led by Sun Life and Hong Kong X Technology Fund.

Two recent government initiatives introduced since last year’s Transforming Hong Kong Through Entrepreneurship report are expected to further drive fintech innovation.

Faster Payment System (FPS) enables real-time money transfers and payments using a mobile phone number or email address, while the Common QR Code Standard for Retail Payments makes it easier for small and medium-sized enterprises to accept payment using QR codes.

There is also the launch of the first phase of the Open Application Programming Interface Framework in January, where third-party service providers can access Hong Kong’s banking system in a bid to spur integrated financial services like account aggregation apps and price comparison tools.

The city is also becoming a location for virutal banks, with the Hong Kong Monetary Authority (HKMA) awarding the first eight virtual banking licences earlier this year, with more applications currently under review.

The HKMA is also cooperating with the Office of Financial Development Services of the Shenzhen Municipal Government in a number of areas relating to fintech, including creating a soft-landing scheme to support Hong Kong fintech firms establishing a presence in Shenzhen.

The regulator has also signed a Co-operation Agreement with the Monetary Authority of Singapore to promote collaboration on fintech projects, including the development of a cross-border trade finance platform using Distribution Ledger Technology.

In order for Hong Kong to further develop its capabilities as a fintech innovation hub, there needs to be a focus on talent, both home-grown as well as attracting overseas entrepreneurs, KPMG financial services partner Arion Yiu points out.

Arion Yu

“The use of AI to improve efficiency and provide a greater customer experience will see the demand for data scientists and software developers continue to increase,” Yiu says. “Hence, there will be an ongoing need to train and attract new talent in these areas.”

 

 

 

 

Conducive to Startups

Fintech’s growth in Hong Kong is correlated with the dynamic and vibrant startup ecosystem, which sees the agreement of 70% of those surveyed in Hong Kong—up from 56% last year.

There are, however, notable differences between how entrepreneurs at different venture stages rate the city’s start-up landscape—for example, 86% of early stage entrepreneurs agree Hong Kong has a dynamic and vibrant start-up ecosystem, compared to 59%t of growth stage entrepreneurs.

Image via KPMG

Startups expect to increase their use of formal funding sources, but more education is still needed to improve access to funding Currently, 70% of entrepreneurs surveyed use their personal savings to fund their business.

This is expected to change, with 80 percent of those surveyed expecting to be using venture capital (VC) in three years’ time compared with 20 percent at present. Similarly, more entrepreneurs expect to use other formal funding sources such as bank loans, business angels, crowd funding, government funding and private equity in three years’ time compared to now.

Analysis of VC investment over the past six years highlights a 20-fold increase in capital directed at Hong Kong-based start-ups. Average deal size for private VC investments increased more than 35-fold within the same period.

The findings suggest Hong Kong’s VC ecosystem is maturing and that priority innovation & technology focus areas including artificial intelligence, biotechnology, fintech and smart city are gaining a greater proportion of the total capital invested.

Image via KPMG

Hong Kong’s status as a fintech hub exists because of the region’s conducive environment towards startups, and is then bolstered due to strategic advocacy from the regulators like HKMA and collaborative fintch environments like Cyberport—and all signs point to this continuing on.

Featured image via Wikipedia‘s Yukakei

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Fintech Infographic of the Week: Ethical AI http://fintechnews.hk/9644/infographic/infographic-ethical-ai/ http://fintechnews.hk/9644/infographic/infographic-ethical-ai/#respond Wed, 10 Jul 2019 08:48:31 +0000 http://fintechnews.hk/?p=9644 Artificial intelligence (AI) is set to play a key role in the future of financial services and more broadly in what UBS and the World Economic Forum refer to as

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Artificial intelligence (AI) is set to play a key role in the future of financial services and more broadly in what UBS and the World Economic Forum refer to as the “Fourth Industrial Revolution.”

The global economy is on the cusp of profound changes driven by “extreme automation” and “extreme connectivity.” In this changing economic landscape, AI is expected to be a pervasive feature, allowing to automate some of the skills that formerly only humans possessed.

In the financial services industry in particular, there has been a lot of noise around the potential of AI and data supports that investors are excited about the impact the technology could have across the industry. VC-backed fintech AI companies raised approximately US$2.22 billion in funding in 2018, nearly twice as much as 2017’s record.

AI applications are rapidly improving and the technology has proliferated into virtually all aspects of financial services, from personal finance and asset management, to credit scoring and insurance.

As AI is set to radically change the world we live in, it is critical for organizations to address ethics in AI.

For our Fintech Infographic of the Week series, we look today at a visual from Capgemini that addresses the ethical issues surrounding the use of AI and how consumers and organizations are reacting to this.

 

Ethical AI

Capgemini qualifies ethical AI as AI-enabled solutions that are ethical in their purpose, design, development and use, with key components that include being transparent, explainable, interpretable, fair and auditable.

The Capgemini Research Institute, which surveyed 1,580 executives in 510 organizations and over 4,400 consumers internationally to find out how consumers view ethics and the transparency of their AI-enabled interactions and what organizations are doing to address their concerns, found that ethics drive consumer trust and satisfaction.

In particular, the research found that when consumers and citizens feel an organization offers ethical AI interactions 62% said they would place higher trust in it, and 61% said they would share their positive experiences with friends and family. More than half said they would be more loyal, purchase more, and advocate for it.

The research also found that ethical issues resulting AI are common with most organizations surveyed having encountered ethical issues over the last two to three years.

Executives in nine out of ten organizations said they were aware of at least one instance of the use of AI systems that resulted in ethical issues with examples such as collection of personal patient data without consent in healthcare, and over-reliance on machine-led decisions without disclosure in banking and insurance.

Additionally, almost half of consumers surveyed (47%) believe they have experienced at least two types of uses of AI that resulted in ethical issues in the last two to three years.

Findings suggest that consumers are concerned about how organizations could use AI with 76% advocating regulations that define the just use of AI. This is fueled in part by rising awareness of ethical issues in AI, as well as the positive perception of recent data privacy regulations, such as the General Data Protection Regulation (GDPR) in the European Union (EU).

Thankfully, executives are waking up to the importance of ethical AI and increasingly taking actions. 51% of executives believe that it is important to ensure that AI systems are ethical and transparent, and 41% of senior executives report that they have abandoned an AI system altogether when ethics concerns were raised.

“Many organizations find themselves at a crossroads in their use of AI. Consumers, employees and citizens are increasingly open to interacting with the technology but are mindful of potential ethical implications,” said Anne-Laure Thieullent, AI and Analytics Group Offer Leader at Capgemini.

“This research shows that organizations must create ethical systems and practices for the use of AI if they are to gain people’s trust. This is not just a compliance issue, but one that can create a significant benefit in terms of loyalty, endorsement and engagement.”

 

Infographic: Why addressing ethical questions in AI will benefit organizations, Capgemini, July 2019

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A Look into South Korea’s Booming E-Wallet Scene http://fintechnews.hk/9629/mobilepayment/e-wallet-south-korea-digital-wallets/ http://fintechnews.hk/9629/mobilepayment/e-wallet-south-korea-digital-wallets/#respond Wed, 10 Jul 2019 07:55:35 +0000 http://fintechnews.hk/?p=9629 South Koreans are increasingly going cashless as more people turn to e-wallets in South Korea for both online and offline purchases. Figures can attest of the rapidly growing trend with

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South Koreans are increasingly going cashless as more people turn to e-wallets in South Korea for both online and offline purchases.

Figures can attest of the rapidly growing trend with 2.12 million won (US$1,800) worth of mobile payment transactions being made daily in 2017, up by a staggering 147.4% on-year, according to the 2017 Electronic Pay Service Usage report released last year. The total volume of payments facilitated by simplified mobile payment services reaching a record 67.2 billion won (US$57 million), up 158.4% from 2016.

 

South Korea’s mobile payment and e-wallet players

To tap into this growing opportunity, tech firms, credit card companies and even the government have launched varied mobile payment services.

Samsung Pay is undeniably one of the leading mobile payment systems in South Korea. Samsung Pay, which the smartphone manufacturer launched in 2015, is a mobile payment and digital wallet service that uses near field communication (NFC) and magnetic secure transmission technologies to allow users to make contactless payments using compatible phones by linking a debit or credit card.

Samsung Pay, Samsung - e-wallets, south korea

Samsung Pay, Samsung

The total transaction volume of Samsung Pay had exceeded 40 trillion won (US$33.68 billion) at the end of April with the number of subscribers surpassing 14 million, reports Business Korea. In 2018, the service accounted for 80% of the offline simple payment market in South Korea, according to the Financial Supervisory Service.

Among the early pioneers of mobile payments in South Korea, Kakao, the operator of South Korea’s number one messaging app KakaoTalk, launched Kakao Pay in 2014 to allow users to make online transactions and mobile payments using NFC and QR codes.

Since its release, Kakao has expanded into other financial services by releasing for instance its own debit car and launching its own bank (Kakao Bank) and investment service (Kakao Investment). Kakao Pay has also added more features like the ability to send remittances, send invoices, and complete online transactions on mobile, with an aim to become an “integrated financial platform.”

Kakao Pay crossed the 10 million user mark 20 months after being released and transactions made using the service exceeded 2.3 trillion won (US$2.04 billion) monthly, as of October 2018.

With the rapid increase in users and transactions, Kakao Pay received a US$200 million investment from Alibaba’s Ant Financial in 2017.

Naver, South Korea’s leading web portal and search engine, launched Naver Pay in 2015. Naver Pay is a mobile payment service that allows both mobile payments through the app and online checkouts for online shopping similar to PayPal. As of October 2018, the total number of Naver Pay users exceeded 26 million and the industry estimated its monthly average transaction amount to be around 900 billion won (US$797.17 million).

Naver Pay is the firm’s second mobile payment service after Line Pay, an e-wallet integrated into the Line messaging platform, the top messaging app in Japan. Line Pay allows users to request and send money from users in their contact list and make mobile payments in store. Since its introduction in 2014, the service has expanded to allow other features such as offline wire transfers when making purchases and ATM transactions like depositing and withdrawing money. Like Kakao Pay, Naver Pay seeks to establish an ecosystem.

 

QR code payments on the rise

QR code payments, though still nascent, are rapidly growing in South Korea with Kakao QR Pay recording 190,000 partner stores and 3 trillion won (US$2.562 billion) worth of transactions as of December 2018.

Kakao Pay, kakaopay, Facebook, e-wallets south korea

Kakao Pay, kakaopay, Facebook

In late 2018, three South Korean credit card companies, namely BC Card, Shinhan Card and Lotte Card, unveiled plans to commercialize a solution called Joint QR Pay that would be compatible at 8 million franchise stores in South Korea. What makes this solution different is that payment requests would be accumulated and paid in full on the monthly due date, similar to how credit cards work.

The South Korean government itself launched in March a mobile payment system called Zero Pay. Initiated by the city of Seoul and the Ministry of Small and Medium-Sized Enterprises (SMEs) and Startups in partnership with local banks and finance companies, Zero Pay is a mobile payment system that allows users to make payments by scanning a vendor’s QR code.

Zero Pay can be accessed through the mobile apps of major banks, including KB Kookmin Bank and Woori Bank, as well as Bank Pay, a multifunctional app that links to 19 local banks.

 

Favorable regulations

As South Korea’s digital payments market heats up, the country’s Financial Services Commission (FSC)’s decision to open the closed inter-bank payment networks to non-bank financial companies will likely see the market get even more crowded.

The move would allow domestic banks and fintech companies to freely access the payment networks set up by other banks, and enable them to more easily create innovation financial products and services.

The FSC is also planning to establish an open banking system by the end of this year and will revise the Electronic Financial Transaction Act.

Image Credit: Edited from Freepik here and here

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WeLab Eyes to Launch Virtual Bank by This Year http://fintechnews.hk/9633/virtual-banking/welab-virtual-bank-hong-kong/ http://fintechnews.hk/9633/virtual-banking/welab-virtual-bank-hong-kong/#respond Wed, 10 Jul 2019 02:59:34 +0000 http://fintechnews.hk/?p=9633 It’s been several months now since the Hong Kong Monetary Authority (HKMA) announced the 8 licensees granted approval to operate a virtual bank in Hong Kong. Since then all the

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It’s been several months now since the Hong Kong Monetary Authority (HKMA) announced the 8 licensees granted approval to operate a virtual bank in Hong Kong.

Since then all the players were clamoring for talent and racing to launch their respective virtual banks. Among these players is WeLab, the only homegrown and standalone fintech startup to be granted a license by HKMA.

In an interview with Bloomberg on the sidelines of the wildly popular tech conference RISE, Simon Loong, CEO, WeLab, said that he is eyeing to have WeLab’s virtual bank to be up and running by end of this year.

Simon sees that virtual banks like WeLab will have an inherent advantage in being mobile first as they do not have to deal with legacy systems and unwinding layers of work done over the years. In building WeLab’s virtual bank, Simon said they are looking at “three I’s” — instant, intelligent and interactive.

He further added that their current priority is to “rebuild the core functions of a bank but in a more innovative and a more tech driven approach.” and to hire talent. In particular Simon told Bloomberg that they are massively hiring specifically for talent in technology, products and compliance.

Simon predicts that when the virtual banks launch in Hong Kong, many of the older generation will use it as a secondary account and slowly transition into using it as their primary account. With the younger generation who are opening their account for the first time, he foresees that virtual banks will end up being their primary account.

 

 

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Hong Kong’s Central Bank is Now Working with France to Cultivate Fintech Innovation http://fintechnews.hk/9609/various/hong-kong-france-central-bank-collaboration-fintech/ http://fintechnews.hk/9609/various/hong-kong-france-central-bank-collaboration-fintech/#respond Tue, 09 Jul 2019 06:31:18 +0000 http://fintechnews.hk/?p=9609 The Hong Kong Monetary Authority (HKMA) and Autorité de Contrôle Prudentiel et de Résolution (ACPR), France’s central bank, entered into a Memorandum of Understanding (MoU) on 5 July 2019 to help

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The Hong Kong Monetary Authority (HKMA) and Autorité de Contrôle Prudentiel et de Résolution (ACPR), France’s central bank, entered into a Memorandum of Understanding (MoU) on 5 July 2019 to help each other grow their fintech.

Under the MoU, the HKMA and ACPR may collaborate on referral of innovative businesses, information and experience sharing, joint innovative projects, and expertise sharing. The HKMA and ACPR share the view that through closer collaboration, both authorities can create an environment conductive to financial innovation in their respective markets, ultimately leading to mutually beneficial outcomes.

Norman Chan said,

Norman Chan

Norman Chan

“To capture more fully the enormous opportunities offered by the new era of smart banking, there is a need to continue our cross-border fintech collaboration with major markets such as Europe. The signing of this MoU with France, one of the largest economies in Europe and a fast-growing fintech hub, signifies the HKMA’s commitment to further strengthening our ties with Europe in the area of fintech.”

Villeroy de Galhau said,

Villeroy de Galhau

Villeroy de Galhau

“This MoU underscores the strong bilateral ties between the HKMA and the ACPR. In particular, Hong Kong has become one of the most dynamic fintech hubs in Asia. This collaboration will help both authorities share their expertise on the regulation of digital finance and ease the international expansion of innovative financial businesses.”

The exact nature of their collaboration will remain to be seen.

The newly minted partnership with France’s central bank is one of the many collaborative relationships that Hong Kong has formed. Others include its collaboration with Bank of Thailand (BOT), to jointly research Central Bank Digital Currency (CBDC) where both authorities apply the knowledge gained from their respective CBDC studies.

Another partnership was struck with the Malaysian central bank to, in parts, facilitate and promote frameworks for Islamic finance, and to promote cross-border activities on Islamic finance standards.

Featured Image of HKMA building via Wikimedia

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Sony and Daiwa Want Their Newly Launched Startup Fund to Hit 20 Bil Yen http://fintechnews.hk/9603/fintechjapan/sony-daiwa-startup-fund-innovation/ http://fintechnews.hk/9603/fintechjapan/sony-daiwa-startup-fund-innovation/#respond Tue, 09 Jul 2019 04:25:17 +0000 http://fintechnews.hk/?p=9603 Sony and Daiwa Capital announced the establishment of Innovation Growth Ventures (IGV), a joint venture company created to establish a joint investment fund. IGV has recently completed the first Limited

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Sony and Daiwa Capital announced the establishment of Innovation Growth Ventures (IGV), a joint venture company created to establish a joint investment fund. IGV has recently completed the first Limited Partner commitment for its Innovation Growth Fund, set up for investing in startups in high-growth industries.

Sony and Daiwa have not disclosed the investments poured into the fund, but its goal is to grow the fund to 20 billion yen in size. To that end, IGV aims to leverage Sony group and Daiwa Securities’ platform to help its portfolio companies grow.

At first closing in June 2019, the fund has attracted companies like Sumitomo Mitsui, Osaka Shoko Shinkin Bank, Mitsubishi UFJ and education institutions affiliated with universities to join as limited partners.

Sony established Sony Innovation Fund, its corporate venture fund, in July 2016. With offices in Japan, North America, and Europe, Sony Innovation Fund has been carrying out investment activities targeting startup companies in business domains such as AI and robotics. It has conducted over 40 investments in the past three years, and put the fund together specifically to invest into startups.

Daiwa Securities is a Japanese investment bank that is the second largest securities brokerage after Nomura Securities. The company’s venture capital arm, Daiwa Capital, primarily invests in seed or startup-stage companies, particularly those in need of management help to grow.

Gen Tsuchikawa, Representative Director, Innovation Growth Ventures said:

Gen Tsuchikawa

Gen Tsuchikawa

“By supporting collaborations between the portfolio companies and third parties, including renowned research institutions and other startup companies, we also hope to contribute to the promotion of open innovation. We hope to take full advantage of the wealth of corporate venture capital experience offered by both Sony and Daiwa Securities Group.

 

 

 

 

Featured image credit: screengrab from Youtube

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Ping An’s Operations Across The Board Will Be Powered by AI and Blockchain http://fintechnews.hk/9587/blockchain/ping-an-blockchain-alfa-oneconnect-smart-contract-ai/ http://fintechnews.hk/9587/blockchain/ping-an-blockchain-alfa-oneconnect-smart-contract-ai/#respond Wed, 26 Jun 2019 07:21:47 +0000 http://fintechnews.hk/?p=9587 Chinese conglomerate Ping An Insurance is applying blockchain-driven smart contracts across the full range of its operations—banking, securities, fund and property subsidiaries. A report by Sina that was translated by China Banking

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Chinese conglomerate Ping An Insurance is applying blockchain-driven smart contracts across the full range of its operations—banking, securities, fund and property subsidiaries.

A report by Sina that was translated by China Banking News said that all eight of Ping An’s subsidiaries are making use of the ALFA smart contract cloud platform now, just launched by Ping An’s fintech arm, OneConnect.

The Alfa platform was just launched last week, utilising artificial intelligence and blockchain for end-to-end smart contract management, with the goal of meeting financial institution need for a whole contract cycle and process management. The platform records the entire contract drafting, editing, execution and implementation on blockchain, with all contract parties as blockchain nodes.

According to Reuters, Alfa contains contract databases based on seven major financial industries: bank, fund, security, trust, leasing, futures and insurance. OneConnect claims that the platform contains more than 1,000 standard contract templates, and a label bookshelf consisting of more than 80,000 labels.

The platform can be applied using API, for the purposes of integration into existing operating systems.

OneConnect said that the smart contract platform could reduce the need for time-consuming contract drafting.

OneConnect’s General Manager Assistant, Huang Shao Yu said:

huang shao yu ping an oneconnect

Huang Shao Yu

“In the past when drafting contracts, it was normal to fill in two or three pages of information. A single ABS management plan would need two people to work on it for around two or three weeks.”

“Following the launch of the smart contract cloud platform, one person can complete item entry within just half an hour.”

 

 

OneConnect representatives further elaborated that they have solutions planned for seven or eight sectors, and will be gradually integrating the data required for each sector.

The company estimates that the platform could help reduce operational risk by 80%, and labour costs by roughly two-thirds. The company expects Alfa to appeal to financial products with complex transaction structures that are difficult to standardise, and interbank transactions in particular.

For example, the smart contract platform helps to standardise cross-institutional contracts by using artificial intelligence to sift through for provisions that have a high probability of changes, and utilising standardised versions for the remaining provisions that generally have a market consensus.

Featured image via Ping An

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News Summary: Facebook’s Libra Crypto Project Sparks Fear and Criticism http://fintechnews.hk/9568/blockchain/news-summary-facebooks-libra-crypto-project-sparks-fear-and-criticism/ http://fintechnews.hk/9568/blockchain/news-summary-facebooks-libra-crypto-project-sparks-fear-and-criticism/#respond Mon, 24 Jun 2019 03:36:58 +0000 http://fintechnews.hk/?p=9568 Last week, Facebook unveiled plans for a new cryptocurrency called Libra. Set to launch as early as 2020, Libra will be a stablecoin fully backed by a reserve of real

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Last week, Facebook unveiled plans for a new cryptocurrency called Libra. Set to launch as early as 2020, Libra will be a stablecoin fully backed by a reserve of real assets. The goal, it says, is to avoid high fluctuations of value so the crypto can be used for everyday transactions across Facebook and be useful for commerce.

The project is the result of a year-long effort and aims to spur growth on various of Facebook’s platforms, hopefully turning crypto payments across the company’s WhatsApp, Facebook and Instagram platforms into a business that complements its advertising operation.

Facebook hopes Libra will be accepted as a form as payment and other financial services will be built on its blockchain-based network.

“This is the goal for Libra: A stable currency built on a secure and stable open-source blockchain, backed by a reserve of real assets, and governed by an independent association,” according to the Libra whitepaper. “Our hope is to create more access to better, cheaper, and open financial services.”

 

Libra

Libra will be overseen by the Libra Association, a non-profit entity based out of Switzerland that will operate a validator node and hold sufficient stake in Libra. All founding members, which include Visa, Mastercard, PayPal, Uber, Spotify and Vodafone, have contributed US$10 million to be part of the network, and will have an equal say in how the cryptocurrency is managed.

So far 27 companies have joined, and Facebook hopes another 70 or more will join in the future, including banks.

“This is very early – 27 organizations right now, 100 by the time we launch,” David Marcus, head of the Facebook blockchain team that’s spearheading the project, said in a Bloomberg Television interview. “And by that time, I definitely expect to see banks in there, I definitely expect to see other large technology companies and I definitely expect to see more diversity of organizations in terms of geographical distribution.”

Facebook has also created a subsidiary called Calibra through which Libra related financial services will be offered, including a digital wallet to store and exchange the cryptocurrency. Calibra will seek to be licensed as a money transmission license.

Technically speaking, Libra will be built on an open source blockchain, the Libra Blockchain, which intends to serve “as a solid foundation for financial services, including a new global currency, which could meet the daily financial needs of billions of people.”

Libra infographic by Libra Association via Facebook

Libra infographic by Libra Association via Facebook

 

Skepticism

Libra has sparked considerable skepticism among regulators and financial analysts. One of the main criticism is the fact that the underlying assets of the Libra fund will be made up of bank deposits and other low risk government securities, though customers wouldn’t be able to collect interest on their capital.

Instead, the interest earned from customers’ deposits and securities will be used to pay the system’s operating costs, and if left over, dividend payments to founding members.

The Financial Times’ Alphaville calls it “a glorified exchange traded funded which uses blockchain buzzwords to neutralize the regulatory impact of coming to market without a license as well as to veil the disproportionate influence of Facebook in what it hopes will eventually become a global digital reserve system.”

But Libra’s governance, the highly centralized nature of the initiative, and the monetary risks related to a global digital reserve system backed by powerful firms, were also found to major areas of concern.

In Europe, the announcement was met immediately with political opposition, with calls for tighter regulation of the company.

French Finance Minister Bruno Le Maire called on the Group of Seven (G7) central bank governors to prepare a report on Facebook’s project for their July meeting. His concerns include privacy, money laundering and terrorism finance.

“This money will allow this company to assemble even more data, which only increases our determination to regulate the internet giants,” Le Maire said last week.

Markus Ferber, a German member of the European Parliament, said Facebook, with more than 2 billion users, could become a “shadow bank” and that regulators should be on high alert.

Even Chris Hughes, one of Facebook’s co-founders, said global regulators should intervene to slow the progress of the cryptocurrency, arguing that the companies involved in the Libra Association would be able to “disrupt and weaken” nation states.

“If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies,” said Hughes, who co-chairs the Economic Security Project, an anti-poverty campaign group. “If global regulators don’t act now, it could very soon be too late.”

He warned that if enough people in emerging economies traded local currency for Libra, it would threaten the ability of governments to manage their fiscal policies, and advised emerging markets to place a temporary ban on local banks and payment processors accepting the currency until the implications are fully understood.

“What Libra backers are calling ‘decentralization’ is in truth a shift of power from developing world central banks toward multinational corporations and the US Federal Reserve and the European Central Bank,” he said.

Hughes added that if Libra is successful, Facebook and its partners would hold excessive control over the development of critical technologies such as identify verification, as well as effectively writing the rules on matters such as privacy and response to theft.

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Libra Association founding members, image via theblockcrypto.com

 

Featured image credit: Facebook

The post News Summary: Facebook’s Libra Crypto Project Sparks Fear and Criticism appeared first on Fintech Hong Kong.

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