Emergence of Fintech and cybersecurity in a global financial centre. Strategic approach by a regulator

Author:Artie W. Ng, Benny K.B. Kwok
Position::School of Professional Education and Executive Development, The Hong Kong Polytechnic University, Kowloon, Hong Kong
Pages:422-434
SUMMARY

Purpose This paper aims to explore how the regulator of a global financial centre (GFC) under an international trend of adopting emerging technologies for financial services (Fintech) articulates such opportunities and risks strategically. Design/methodology/approach With a literature review on the global regulatory environment and the underlying risks related to Fintech, it... (see full summary)

 
FREE EXCERPT
Emergence of Fintech and
cybersecurity in a global
nancial centre
Strategic approach by a regulator
Artie W. Ng and Benny K.B. Kwok
School of Professional Education and Executive Development,
The Hong Kong Polytechnic University, Kowloon, Hong Kong
Abstract
Purpose This paper aims to explore how the regulator of a global nancial centre (GFC) under an
international trend of adopting emerging technologies for nancial services (Fintech) articulates such
opportunitiesand risks strategically.
Design/methodology/approach With a literature review on the global regulatory environment and
the underlying risks related to Fintech,it looks into the formulation and implementation of complementary
regulatory policiesin the case of Hong Kong as a GFC. Relevant policy documents disclosed by the nancial
regulatoron cybersecurity and pertinent issues are examined.
Findings Adopting a strategic approach that seizes opportunities associated with Fintech, the
nancial regulator harnesses comprehensive risk-based mechanisms to embrace exposures to cyber
risks while promoting institutionalization of cybersecurity among the regulated rms with strategic
controls. This study suggests a pathway for the evolution of a profession with both technical and ethical
competence for mitigating the emerging risks arising from Fintech. However, such an approach is yet to
be tested with respect to efcacy for the unexplored territories of fraud exposures, resultingfrom swift
Fintech developments across borders.
Research limitations/implications As Fintech has only emerged rapidlyin the recent years, it is not
conclusive in this reviewof performance and effectiveness of the nancial regulator in its strategicapproach.
Further studies may utilize a longitudinal method to analyze and examine the regulatory measures
undertakenby nancial regulators in various GFCs.
Originality/value This study reveals a strategic approachadopted by an emerged GFC in embracing
Fintech innovation that howeverbrings about unidentied risks and potential frauds to its nancial services
sector. Pertinentanti-fraud and cybersecurity measures are highlighted.
Keywords Hong Kong, Fraud, Cybersecurity, Fintech, Global nancial centre, Risk-based approach
Paper type General review
1. Introduction
Subsequent to the nancial crisis in 2008, global nancial centres (GFCs) and nancial
institutions have looked into new business development opportunities to sustain their
industry, as increased regulatory measures escalate the cost of operations. One of their
recent initiatives is to adopt emerginginformation and internet technologies to enhance the
delivery of their nancial services (Fintech). There are high hopes that Fintech, particularly
Blockchain as a solution for secure information technology and data security, will bring
along development of innovative nancial products and services as well as potential
improvement in efciency of operations in the nancial services industry (Guo and Liang, 2016;
Zhu and Zhou, 2016). The nancial regulators around the world tempt to embrace such an
JFRC
25,4
422
Journalof Financial Regulation
andCompliance
Vol.25 No. 4, 2017
pp. 422-434
© Emerald Publishing Limited
1358-1988
DOI 10.1108/JFRC-01-2017-0013
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1358-1988.htm

To continue reading

REQUEST YOUR TRIAL