APEC Working Group on Electronic Financial Transactions Systems (E-FITS)
Final Report 26 July 2002 Contents
Introduction...... 3
Chapter 1 Vertical and Horizontal Case Studies...... 7
Overall Case Study Summary...... 7
Individual Case Study Summaries...... 9
Korea: On-line Securities Trading - Developments and Trends...... 9
Malaysia: Electronic Banking in Malaysia ...... 12
Brunei Darussalam: Environmental Scanning on Paperless Payment Channels...... 13
Thailand: The BAHTNET Initiative...... 17
Hong Kong: The Financial Infrastructure in Hong Kong...... 19
Singapore: E-Government - The Public E-Service Infrastructure (PSi) and E-Payment Capabilities...... 22
Chapter 2 Small-Scale Survey: Issues on Consumer Protection in Cross-border E-finance...... 26
Chapter 3 Conclusion and Recommendations ...... 31
(3A) Regulatory Issues ...... 31
(3B) Payment Issues ...... 35
(3C) Consumer Protection in Cross-border E-finance ...... 39
Annex A Full Reports of Case Studies Annex B Individual Small-Scale Surveys Annex C Glossary Annex D Members of the Working Group
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INTRODUCTION
1. The rapid growth of the Internet in recent years has led to a proliferation of on-line financial services offered by both the public and private sectors. Financial institutions have rapidly expanded their range of banking, securities and insurance business in the on-line environment, while governments have begun to harness the Internet to deliver not just information, but also transactional services that require payments. While the electronic delivery of financial services and electronic payment and settlement of financial transactions (commonly referred to as “e-finance”) to consumers, businesses and financial institutions has generally lowered the costs of business operation, it has also created new risks.
2. E-finance also changes the nature of competition for financial institutions. A borderless environment that drives transaction costs to almost nil could mean footloose customers and businesses. Cyberspace blurs physical distinctions, allowing financial institutions to root themselves anywhere yet seamlessly offer the same services on-line. Jurisdictional boundaries become harder to enforce, while new business models potentially raise new operational, strategic and systemic risks.
3. E-finance is evolving so rapidly that few regulators have put in place regulatory frameworks for e-finance in areas such as prudential restrictions on financial institutions, consumer protection, data privacy, and cross-border transactions. Most governments have responded by expanding the scope of existing laws and regulatory provisions to cover electronic transactions. In a few instances, economies have enacted laws and regulations specific to electronic transactions, though some are in draft form or are non-binding yet.
4. With endorsement from APEC Finance Ministers in September 2000, the Electronic Financial Transactions Systems (E-FITS) Working Group was established to develop and implement programmes to foster and promote the use of electronic means for conducting financial transactions within the region. The Working Group submitted an interim report to Finance Ministers in September 2001
4 which provided a current status of e-finance development in the APEC economies and the relevant frameworks governing the provision of such services, and identified issues for further development of e-finance in the region. The report also gave an overview of the current state-of-play of e-finance work done by other international fora.
5. The interim report highlighted several observations in the development of e-finance in the APEC region. First, policy coordination among government ministries and agencies was identified as a key prerequisite for the development of a coherent strategy to promote and deliver e-finance services. The Internet revolution chal