Fintech in Hong Kong

Powerful on Fintech Fronts: Hong Kong as Hub, Gateway and Connection Point for Belt and Road Initiative

The Chief Executive, Mrs Carrie Lam, speaks at the opening ceremony of the Belt and Road Conference today (September 28). The conference was organised by the Law Society of Hong Kong.

Hong Kong has since claimed its spot as a global leader in the Fintech space in the last two years, positioning itself as the gateway to China’s tech giants. Private investments in Hong Kong Fintech firms have reached US$546 million in 2017, more than double from 2016’s US$215.5 million and five times its 2015 investment of US$107.5 million. Government investments is set to reach HK$500 million – a provision from its 2018 budget for the development of the Fintech, Green Finance, Talent and other aspects of Financial Services — for the next five years.

The city now hosts over 300 Fintech Startups, three Fintech sandbox cases and three Fintech-focused Accelerators. Thanks to government support, clear finance regulations, a sophisticated financial ecosystem based on excellent technical infrastructures, Hong Kong offers itself up as an exciting hub for local and global Fintech startups and enthusiasts.

A Sophisticated Financial Ecosystem

Hong Kong is a uniquely strategic location on its own. Its geopolitical relationship with China and geographic proximity to the rest of the Asia makes it a center of logistics and communications. The city is a sophisticated financial ecosystem made up of a huge network of customers, investors and funding opportunities – all within the top fifth easiest place in the world to do business. It connects Mainland China to global markets, and puts companies in close proximity with China’s fintech leaders and giants like Alibaba, Tencent and Baidu.

At the core of it all are advanced technological infrastructures that drive Fintech solutions and innovations. Hong Kong has the world’s second-fastest Internet speed with high broadband and smartphone penetration among its population.

Clear Finance Regulations and Policies

Government and financial institutions Hong Kong Monetary Authority (HKMA), Hong Kong Securities and Futures Commission (SFC) and Insurance Authority (IA) create platforms that enhance communications between regulators and the larger Fintech community, keeping all parties up-to-date on regulations, new developments and more.

Charles d’Haussy, who heads the fintech division of InvestHK, points out that startup firms appreciate the clarity in Hong Kong’s regulations in finance. Entrepreneurs can easily follow public regulations and avoid bureaucracy. For Chinese firms especially, Hong Kong’s regulatory, language and product requirements get products ready for overseas markets.

Investment in Talent

The city offers a large and growing pool of local and international talent in finance, entrepreneurship and STEM (science, technology, engineering, mathematics). Hong Kong’s institutions for higher learning are well-respected across the global. For example, the Hong Kong University of Science & Technology was ranked 4th in Asia in the 2015-16 QS World University Rankings. The Hong Kong University of Science & Technology’s EMBA programme ranked second in the Financial Times EMBA Rankings 2015.

Hong Kong has strong commitments to develop its pool of Fintech talent to meet the growing needs in the space. Innovation labs in academic institutions give FinTech firms access to new technologies and innovations. HKMA and ASTRI’s Fintech Career Accelerator Scheme will provide internships to Fintech undergraduate and postgraduate students within affiliate banks and universities. Universities are also set to offer Fintech courses under Engineering and Science programmers.

Belt and Road Initiative

At the Belt and Road Summit in June 2018, Chief Executive Carrie Lam Cheng Yuet-ngor emphasized Hong Kong’s advantage to be a powerful connection point and free trade champion for Belt and Road countries. China’s Belt and Road initiative was rolled out by President Xi Jinping in 2013 to significantly expand trade and infrastructure links across seventy-one (71) South-east Asian, Eastern Europe and African countries. Similarly, experts are recognizing Fintech to be a pioneering sector in the initiative. Given its strategic banking position, Fintech expertise and experience, Hong Kong is the perfect hub for regional developments and disruptive technologies to come together.

Additional References: