Currently, transfers among different banks in Hong Kong can take up to two or three days and may entail interbank transfer charges of as much as $HK200 ($A36). The use of FPS will significantly reduce the transfer time and cost for customers by making instant money transfers.
At its launch, a total of 21 banks and 10 SVFs in Hong Kong have participated in the system that supports real-time fund transfer.
At ANZ, we have also introduced FPS for our Institutional customers in Hong Kong and we support batch fund transfer. It is a quick and secure payments solution, enabling customers to make Hong Kong Dollar (HKD) and Renminbi (RMB) transfers to other participating banks in Hong Kong (see the full participants list here).
While this user-friendly platform is a boon for our customers, we are under no illusions – nor is any bank - that this is a minor development. The introduction of FPS will help ANZ keep pace with the change in the payment landscape in Hong Kong and support the needs of our Institutional customers.
In Hong Kong, the average monthly volume of paper cheque transactions and electronic autopay transactions in the first nine months of 2018 were 7.3 million and 8 million respectively. The significant numbers demonstrated a huge demand in the market for payment which FPS can potentially take over. We expect to see retail and corporate customers start shifting to FPS which provides a faster and more convenient payment option.
In October 2018, in the first month after FPS was launched, the volume of FPS turnover was over 1.6 million, demonstrating a large number of early adopters in the market. When FPS becomes more mature, it can also support other currencies such as USD to provide more comprehensive payment options to customers. FPS may even replace the existing Real Time Gross Settlement (“RTGS”) sometime in the future.
Blockchain trade finance platform
eTradeConnect is a trade finance platform using blockchain technology to vastly improve trade finance documentation. ANZ is one of the seven initiating banks and the only Australian bank participating in the platform. A further five additional banks have now joined, adding up to a consortium of 12 member banks.
The project was first announced in March 2017 as a proof-of-concept, leveraging blockchain technology to improve the currently labour-intensive trade finance business, often described as one of the most manual and paper-orientated elements of the financial services industry.
eTradeConnect is a combined public and private sector initiative which went live in late September.
The way it works is by allowing everyone in the supply chain to contribute to the “block” of information in an encrypted way. So you can actually see every time somebody has touched the goods within that supply chain. There is an extra layer of security because everybody can see the same information and each piece validates the previous.
The project has commenced as a minimum viable product (MVP) with the initial focus on Open Account Trade. A rapid build out is of full functionality is expected across Trade Loans and Supply Chain Finance.
It will allow banks and their corporate clients within the ecosystem to submit and record purchase orders, invoices and applications for financing using distributed ledgers, thereby reducing the risks for fraudulent trade and identity theft.
It also allows corporates to track transaction flows, reconcile transactions through invoice or purchase order matching, and reduces the risk of duplicate financing for the participating banks.
With eTradeConnect, cost is a very obvious advantage. A lot of these processes are currently manual and data-driven and a distributed ledger blockchain platform puts all the data into one place, so the cost reduction is immense.
Speed is also an important factor, primarily important from a customer point-of-view. The technology is completely secure and there is an end-to-end record of each transaction – also extremely useful.