Emergence of Fintech and cybersecurity in a global financial centre. Strategic approach by a regulator
| Pages | 422-434 |
| DOI | https://doi.org/10.1108/JFRC-01-2017-0013 |
| Published date | 13 November 2017 |
| Date | 13 November 2017 |
| Author | Artie W. Ng,Benny K.B. Kwok |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation |
Emergence of Fintech and
cybersecurity in a global
financial 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 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
1. Introduction
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
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:
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