A Letter From – Hong Kong & Tokyo
By Phillip Straley (FNA President & CRO)
We had an excellent trip to Tokyo and Hong Kong this month, meeting with central banks in bWe had an excellent trip to Tokyo and Hong Kong this month, meeting with central banks in both locations, current and prospective bank Treasury (Liquidity Optimization) clients, and professional service firm partners. Phillip also had the opportunity to speak at the GFTN Forum Japan, taking part in a great panel discussion on the battle against consumer scams and fraud.
(Pictured: Visit to the Hong Kong Monetary Authority / Beautiful Shamisen performance at the GFTN Forum Japan)
Here are our key takeaways from the week on the ground:
Key takeaways from the week:
1. Political Will is Rising Across Asia to Fight Scams and Fraud
The consumer scam epidemic is global, with the tactics and tools used by scammers getting continuously more sophisticated and fraud motifs constantly evolving. Understanding the scam and fraud difference is critical for regional leaders; criminals are shifting from unauthorized hacks to manipulating consumers into authorizing instant payments.
Fortunately, in most countries in the Asia Pacific region, the political will to combat this with joined-up, national approaches is intensifying. New legislation allowing for enhanced data sharing between financial institutions, law enforcement, and other stakeholders is being passed in one country after another.
At the same time, an increasing number of jurisdictions are taking steps to put in place shared national technology infrastructures, such as a National Fraud Portal. These systems include both enhanced “pre-settlement” scoring for real-time payment fraud detection and “post-settlement” case management and real-time track-and-trace capabilities. In many ways, we see the APAC region leading the globe with these “all society” collaborative approaches.
2. Offshore Renminbi Business is Booming
Offshore trading and settlement in renminbi (CNH) is exploding for China and APAC-based institutions as well as many of the largest global banks, including several of our clients. Hong Kong remains far and away the dominant venue for CNH clearing and settlement.
This rapid growth is placing rising demands on banks from a treasury and liquidity management perspective, as well as on the infrastructures and agents (HKICL, BOCHK) facilitating CNH payments. Navigating these highly active corridors requires more than static buffers; it requires Intelligent Liquidity Optimization (ILO) to ensure that intraday liquidity is managed cost-effectively across multi-currency operations without increasing settlement risk.
3. National Payments Infrastructure Upgrades are Multiplying
While much of the attention over the past five or so years in APAC has been on rolling out instant (“faster”) consumer payment systems, we see an increasing focus in the region on modernizing interbank high-value payments (RTGS) systems.
Many have been in place now for two or three decades, and we counted from discussions on this trip at least half a dozen regional jurisdictions planning to re-platform these systems. Upgrading these networks using advanced financial network analytics will allow system operators to move onto more modern technology, bring participants new opportunities for liquidity efficiency, and pave the way for a future of true cross-platform interoperability.
Beautiful Shamisen performance at the GFTN Forum Japan
The weather didn’t cooperate with us on this trip, with more or less nonstop rain (and in Tokyo, some unexpected snow and slush!) the whole week. Of course, being in two of the world’s best cities for dining, this was easily compensated for by a few incredible meals—including a great little teppanyaki place in Shibuya and a new, eclectic fusion spot in Sai Ying Pun.
We look forward to continuing our work with our partners in the region to make the global financial system safer and more efficient.
