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Hong Kong financial summit 2022
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Panelists included Rob Kapito, president of BlackRock; Daniel Pinto, COO of JPMorgan Chase; Noel Quinn, chief executive of HSBC; Bill Winters, chief executive of Standard Chartered. Photo: SCMP Handout

Cryptocurrencies, blockchain are reshaping future of finance, say global banking chiefs

  • The biggest challenge for institutions is navigating security issues related to public blockchain networks, says Daniel Pinto, COO of JP Morgan
  • Senior figures from JPMorgan, BlackRock, HSBC and Standard Chartered shared their thoughts at a global banking summit in Hong Kong
Technologies such as blockchain and central bank digital currencies are reshaping the future of finance, leaders of major banks said during a global financial conference in Hong Kong.
Senior figures from JPMorgan, BlackRock, HSBC and Standard Chartered shared their thoughts on how the fintech industry is shaking up the banking sector during a panel discussion at the Global Financial Leaders’ Investment Summit on Wednesday.

President and chief operating officer of JPMorgan, Daniel Pinto, said cryptocurrencies were at the “beginning of the journey” and without a doubt will increasingly be integrated into the banking industry.

“Bitcoin and other cryptocurrencies have started to be more popular [at JPMorgan]. Positive or negative, we are all fully aligned about the power of the technology,” said Pinto, referring to the blockchain technology behind most digital coins.
Daniel Pinto, president and Chief Operating Officer of JPMorgan Chase at the Global Financial Leaders’ Investment Summit. Photo: Sam Tsang

The various uses of blockchain are increasingly being realised, and the biggest challenge for institutions is navigating security issues related to public blockchain networks, said Pinto.

Rob Kapito, president of BlackRock, said blockchain is a space that is “picking up” and an area more of his clients are keen to understand and invest in.

“Digital assets and blockchain is an ecosystem that is really starting to pick up pace … I do believe that [these] technologies are going to become very relevant for asset managers and portfolio allocation,” said Kapito.

The adoption of fintech innovations at banks will become more commonplace, the panel heard. Lenders like HSBC have ploughed millions of dollars into products such as its three-year-old digital wallet app, PayMe.

PayMe was an important milestone for HSBC, providing a different banking solution for customers. The app now has a near 50 per cent market share.

“As an institution you have to embrace the fintech sector,” said Noel Quinn, chief executive of HSBC.

Fintech competition is ubiquitous and “healthy”, and the industry should “embrace it”, according to Quinn.

He said institutions should learn from and collaborate with tech companies rather than passively invest, so that innovations and capabilities can be brought into the company.

Noel Quinn, group chief executive of HSBC, at the Global Financial Leaders’ Investment Summit. Photo: Sam Tsang
The long-awaited finance summit, organised by the Hong Kong Monetary Authority (HKMA), coincides with FinTech Week, which saw the government announce plans to develop the virtual asset industry through a new licensing regime for service providers.

Chief executive of Standard Chartered, Bill Winters, said regulators needed to take a proactive approach to digital assets like cryptocurrency and called for them to be integrated “into the system”.

“Bring [cryptocurrency] into the system, [where] you can watch it, observe it, understand where it’s getting, because outside the system, it’s going to be very hard to control,” he said during the panel discussion.

“I think the proactive approach that the HKMA has taken is exactly the right one, the opportunity to bring [digital assets] into the system is correct.”

Earlier this week, Hong Kong’s financial secretary announced plans to launch several pilot programmes for virtual assets such as non-fungible tokens, green bond tokenisation and e-HKD – the digital form of the local currency.

Hong Kong’s ambition to bring central bank digital currencies (CBDCs) into the mainstream to facilitate international cross-border payments is very positive, according to Quinn.

Winters, however, said there will need to be regulatory “guardrails” so as not to displace central banks entirely.

He added that CBDCs can help streamline international payments in an efficient manner.

“At the end of the day, you can get a better customer experience, and less friction costs through CBDC, this can be a successful venture and can coexist in the private and public sector,” said Winters.

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