apidays LIVE Hong Kong - The Open API Economy: Finance-as-a-Service & API Ecosystems Going API First in Financial Services within Greater China Greg Au-Yeung, Senior Advisor, Shanghai Fudan University

1. Going API First in Financial Services within Greater China
Greg Au-Yeung
Senior Advisor, Fudan University
Oct 8, 2020

2. China
Source: PRC Government
China Securities Regulatory
Commission
(CSRC)
China Banking & Insurance
Regulatory Commission
(CBIRC)
People’s Bank of China
(PBOC)
Financial Stability &
Development Committee
(FSDC)
2
Financial Regulatory
Structure

3. Banking, Trust, Financial
Leasing, Lending.
Insurance
Banking&Insurance
Financial Licenses
Fund Sales, Brokerage, Futures,
Mutual Funds
Securities &Futures
3rd Party Payment
Internet Insurance
Consumer Finance
Online Fund Distribution
Online Trust
Internet Banks
Internet Broker
Personal Credit Bureau
Equity Crowdfunding
OnlineFinancialEntities
Traditional
Financial
Licenses
New
Financial
Licenses
CBIRC
CSRC
Mixed
Microfinance, Guarantee, etc
Other Financial Mixed
The information above is not exhaustive
3
Local
Financial
Service
Bureau
PBOC
 Direct Banks
 Internet Banks

4. The information above is not exhaustive
The Players
4
Source: Goldman Sachs

5. This is regarded as the first step of API regulation in China.
API Regulations
5
PBOC released COMMERCIAL BANK API SECURITY MANAGEMENT GUIDELINE in Feb 2020
Security Design – from user identity authentication, API service monitoring, service logs,
to removal of user information upon transaction complete
Secured Deployment – from network control, to intruder detection & prevention,
ŽSecured Integration – from API application review & approval, identification authentication,
SS:/TLS secured connectivity, to API entitlement control
Security Maintenance – API monitoring platform, risk, transaction control mechanism, BCP.
Service Termination – Termination process & requirement
Security Management – Audit process. Consumer protection, roles & responsibility
Source: mpaypass.com.cn
API Secure Management
Specification

6. Industrial Bank of China (CIB)
Source: Reformatted CIB FinTech 6

7. Construction Bank of China (CCB)
Source: Reformatted 2019 China Open Banking Ecosystem Analysis
TGI: Target Group Index 7
Open
Strategy
Open
Ecosystem
Client
Centricity

8. Source: HKSAR Government
The Hong Kong
Monetary Authority
(HKMA)
Securities & Futures
Commission
(SFC)
Insurance Authority
(IA)
Hong Kong
8
Financial Regulatory
Structure

9. Three-tier banking system
 Licensed Banks,
 Restricted License Banks,
 Deposit-taking Companies
Banking
Financial Licenses
Dealing:  Securities,  Futures,  FOREX
Advisory: Securities, Futures,  Corp.Fin.
 Automated Trading Services
 Securities Margin Financing
 Asset Management
 Credit Rating Services
Securities
Virtual bank: a bank which primarily delivers
retail banking services through the internet
or other forms of electronic channels instead
of physical branches.
Virtual banks apply to the minimum criteria
for authorization in the Seventh Schedule to
the Banking Ordinance (Ordinance) &
reference made to the Guideline on
Minimum Criteria for Authorization issued
by the HKMA.
VirtualBanks
Traditional
Financial
Licenses
New
Financial
Licenses
HKMA
SFC
HKMA
9

10. Source: InvestHK & internet
The information above is not exhaustive
The Players
10

11. The regulator has provided clear guideline in API standards with a liberal approach about the timeline:
API Regulations
11
HKMA announced 7 INITIATIVES that supports HK in new era for SMART BANKING
Open API Framework
-- 4 Phases
 Product Info (Q1 2019)
 Customer Acquisition (Q3 2019)
 Account Info
 Transactions
① Faster Payment System
② FinTech Supervisory Sandbox (FSS) 2.0
③ Virtual Banking
④ Banking Made Easy
⑤ Open API (Jan 2019)
⑥ Closer Cross border Collaboration
⑦ Enhanced Research & Talent Development
2020: Tech Standards
Source: HKMA

12. Banks in Action
Source: HKMA, fintech news hk 12

13. Banks in Action
The information above is not exhaustive 13

14. Thank You
Greg Au-Yeung