Jetco’s approach to advancing open banking in Hong Kong

As one of the leading financial hubs in the world, Hong Kong is moving at pace to embrace the concept of open banking. Despite COVID-19 derailing momentum—triggered by rising business continuity, remote working and security concerns—86 percent of global banks are looking to use open APIs to enable open banking capabilities within the next year. In Hong Kong, just 89 per cent of financial institutions are currently adopting or seeking to adopt open APIs, according to new findings from Finastra.

“Growing the API economy is an important step to achieve open banking,” observed Yvonne Che, CIO of Jetco, which represents the largest network of ATMs in Hong Kong and Macau. “To grow the API economy, the need is not for more advanced technology because the technology to support large-scale development and innovation already exists.”

For Hong Kong-based Che, the challenge centres around persuading enterprises of al sizes to realise the benefits of joining a common platform instead of building proprietary platforms. In response, the fintech specialist launched an API exchange platform in early 2019 to aid open banking development efforts, with Jetco APIX providing connectivity for users in both banking and non-banking sectors. The platform is designed to facilitate the collaboration and co-creation of new products and services in a safe and standardised environment.

“Common platforms like Jetco APIX ensure that all users work in a safe environment and follow the same standards, and undertake due diligence of users,” Che added. “This will result in quicker and more seamless connectivity, and saving a lot of administration time and resources, eventually helping to grow the API market as a whole. The government, which already has initiatives in place to support the growth of the API market in Hong Kong, has the opportunity to lead by example. Not just by opening their data, but more government service APIs, to enable more automation to increase efficiencies and business continuity.”

With fintech at its very core, Jetco operates as a bank consortium chartered to develop innovative and secure financial technology services for member banks. In addition to providing ATM switching services to more than 30 member banks in Hong Kong and Macau—spanning more than 3,000 machines across both markets—the Jetco also offers payment gateway services for e-commerce and mobile payment solutions.

The COVID-19 crisis is also an opportunity

“Today, a large part of the global economy is in lockdown, and one of the most interesting trends to come out of this is that both consumers and businesses are embracing technology in unprecedented ways, and demanding more online services,” Che added. Che said such a trend presents an opportunity for small and medium businesses—representing more than 90 per cent of local businesses and forming the backbone of Hong Kong’s economy—to embrace technology to digitise offerings. “[They] overwhelmingly operate on lean teams and budgets and such lack of resources and expertise can hinder their digital development,” added Che, when speaking to CIO ASEAN. “But due to this changed mindset, they can no longer afford to lag behind from this perspective.”

In observing local industry conditions, it’s impossible to separate 2020 from the impact of COVID-19, which has affected every market, industry and investment. But while growth in Hong Kong has slowed, it has not stopped, observed Che. “We will still push ahead with our plans but adapt them appropriately to complement the evolving plans of our business partners.”

One of Jetco’s primary areas of focus is to help banks comply with evolving regulatory requirements in line with the Hong Kong Monetary Authority (HKMA)’s four-phase Open API Framework for the banking sector.

Following the launch of Phase 1 and Phase 2 in 2019, banks are already opening APIs related to product information and customer acquisition. “Jetco APIX now provides over 540 APIs from 14 banks, covering product and service information including deposit, foreign currency exchange, loans, investment, insurance and other general banking services such as safe deposit box, branch and ATM,” Che outlined. “These APIs play an important role in the digital transformation of the financial and banking sector in Hong Kong, and in 2020 we will continue to launch initiatives to support Phase 3 and Phase 4 implementation of the HKMA’s framework.”

Che leads the API charge at Jetco for business value

Che joined Jetco as CIO in 2019, drawing on almost 30 years of technology expertise in the banking and finance sector following senior roles at Dah Sing Bank, DBS Bank, Standard Chartered Bank, Peregrine Investment Holding and Jardine Fleming Group.

As CIO of Jetco, responsibilities span beyond the traditional role of setting and leading the technology strategy for the business. “With technology playing such an integral role in all of Jetco’s products and services, IT is far more than a back-office operation,” Che said. “My team and I play an active role in innovation for customers, getting involved at the beginning of the product development process and going beyond just technology in our thinking and planning.”

Through adopting a collaborative approach to engaging other business departments, Che and her team are invoiced in product ideation and technology integration, alongside ensuring compliance and adhering to privacy guidelines. “Today’s CIOs and CTOs are far more than back-office managers taking care of organisational infrastructure—their mandate has expanded,” Che added. “They provide the vision and thought leadership that drive company technology agendas, helping to push forward overall business goals and objectives. They also must increase the uptake and appreciation of IT across the organisation.”

“We measure the impact of technology not in terms of operating costs but rather on business and bottom-line outcomes as a whole. For example, one key metric we track is adoption rate, which means the popularity of our products and services among our target customers—the more users, the more successful it is at a holistic level.”

That approach extends to the hiring process as well. “When I look for someone to join my team, I look beyond just their technical skills, important though they are,” she qualified. “It’s important for technology professionals to break out of the traditional ‘box’ of procedures and processes and work collaboratively with stakeholders across the organisation.”

The enabling technologies for enhanced customer service

Driven by the advancement of technology—coupled with a changing consumer and business environment—Jetco has evolved from a pure ATM switching service provider to a fintech specialist offering an expanded product portfolio including both ATM and non-ATM solutions for banks as well as multiple industry sectors. “Enabling this evolution is one of my major responsibilities,” Che said. “We are on the brink of an explosion in several powerful enabling technologies that will drive efficiencies and enhanced customer service.” Those technologies include artificial intelligence, cloud computing, and 5G cellular networks.

“Artificial intelligence and natural learning technologies offer great potential for the financial and banking industry. From chatbots to completely automated loan approvals, AI and natural language processing will drive a transformation in the customer experience.”

Meanwhile, Che said cloud technology has enabled businesses to become “extremely agile”, whether through scaling capacity up or down, or adopting new platform; “cloud enables businesses to get to market fast and with minimal capex”.

This is in addition to 5G, which is expected to provide a significant increase in bandwidth and processing speeds, allowing banks to shorten processing lead times as well as driving product innovation.

“Security is also a key focus,” Che added. “Whether it is for closed networks, isolated from the public internet, such as the ones used by our ATM network, or open platforms such as Jetco APIX, top-grade security is essential. We are proactively investing in strong cyber security mechanisms.” Despite Hong Kong housing talented engineers and creative developers, Che said the business is actively seeking expertise in security on cloud platforms.