Emergence of Fintech and
cybersecurity in a global
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
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
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 ﬁnancial
regulatoron cybersecurity and pertinent issues are examined.
Findings –Adopting a strategic approach that seizes opportunities associated with Fintech, the
ﬁnancial regulator harnesses comprehensive risk-based mechanisms to embrace exposures to cyber
risks while promoting institutionalization of cybersecurity among the regulated ﬁrms 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 efﬁcacy 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 ﬁnancial regulator in its strategicapproach.
Further studies may utilize a longitudinal method to analyze and examine the regulatory measures
undertakenby ﬁnancial regulators in various GFCs.
Originality/value –This study reveals a strategic approachadopted by an emerged GFC in embracing
Fintech innovation that howeverbrings about unidentiﬁed risks and potential frauds to its ﬁnancial services
sector. Pertinentanti-fraud and cybersecurity measures are highlighted.
Keywords Hong Kong, Fraud, Cybersecurity, Fintech, Global ﬁnancial centre, Risk-based approach
Paper type General review
Subsequent to the ﬁnancial crisis in 2008, global ﬁnancial centres (GFCs) and ﬁnancial
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 ﬁnancial 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 ﬁnancial products and services as well as potential
improvement in efﬁciency of operations in the ﬁnancial services industry (Guo and Liang, 2016;
Zhu and Zhou, 2016). The ﬁnancial regulators around the world tempt to embrace such an
Journalof Financial Regulation
Vol.25 No. 4, 2017
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