Banks are increasingly exploring latest biometric identification technology, including blockchain or distributed ledger technology, Norman Chan, Chief Executive, Hong Kong Monetary Authority, recently said in an official statement.

Chan issued an official statement following his visit with the Office of Financial Development Service under the People’s Government of Shenzhen Municipality and the People’s Bank of China (PBOC) Shenzhen Central Sub-branch. He also visited two companies focusing on fintech, Ping An Technology and WeBank.

Although conventional financial industry is currently facing unprecedented challenges as a result of fintech, it will not turn upside down or become obsolete, Chan said. He explained that while not much attention was paid to fintech in the past, banks are actively developing fintech solutions to maintain their competitiveness and to meet customer demands.

“Coupled with intensified external competition, many banks have been driven to speed up the development and application of fintech. The most notable example is their active participation in the research and application of the latest biometric identification technology, such as fingerprints, facial and voice recognition, as well as distributed ledger technology”, he said. “Having said that, one cannot rule out that for various reasons a small number of banks are unable to keep up with technological advancements and may therefore risk losing customers”.

Secondly, Chain said that while fintech enables customers to enjoy more efficient and convenient financial services, the fundamental issue of understanding the associated risks before making an investment decision still remains.

“The question is how to make sure that the convenience offered by fintech will not lead customers into making hasty decisions that may result in a material loss when investment products are sold with the use of fintech. Another question is how to ensure that investors understand the terms and conditions and the risks involved when financial products with a complex structure or high risk are sold online. These questions show that there is a need to strike a reasonable balance between convenience and investor protection”, Chan explained.

He went on to say that techfin (technology firms entering the financial field) will create immense competitive pressure on the traditional financial industry and change the mode and ecology of the provision of financial services. However, he believes that it will be hard for techfin to completely replace the traditional financial sector.

“Many banks, for one reason or another, have difficulties in developing their own one-stop platform. They can however partner up with some fintech or techfin firms to reduce costs and time and to strive for an earlier enhancement of their competitive edge. Competition brings efficiency and advancement, which will benefit consumers and investors alike”, he added.