October 17, 2016
Hong Kong is quickly establishing itself as one of the hubs of FinTech revolution worldwide. The former British colony has transformed to one of the world’s most significant financial centers and consistently ranks as the most competitive and laissez-faire economy in the World Competitiveness Yearbook. Hong Kong has evolved into a global finance hub with the presence of 70 banking conglomerates. As one of the traditional big financial capitals in the world, Hong Kong provides an opportunity for financial technology to gain traction in the local market. Global trends like Brexit are creating a conducive environment for HK to market itself as the new destination for FinTech innovation instead of London and other Western cities.
Hong Kong’s strong financial prowess can be attributed to its trifecta of location, infrastructure and strong trade legacy. It has a legal system trusted by international business, free flow of information, ease of access to major markets, political stability and a pool of managerial talent. Hong Kong's legal framework, based on the rule of law, provides the much-needed certainty for business setups and forms a strong foundation for free trade and competitive economy. With close proximity to China, it has an added advantage of serving as an inbound gateway to the Chinese economy. The open and flexible economy offers an enormous potential for developing a FinTech hub. The location serves a huge value proposition for future FinTech innovators to experiment and shorten their learning curve. Hong Kong demonstrated collaboration with Chinese major platforms like Tencent and Alibaba. Alibaba even launched its Hong Kong Entrepreneurs Fund, valued at HK$1 billion or about US $129 million. The fund is dedicated to Hong Kong startups working in industries relevant to Alibaba’s various businesses: e-commerce, logistics, mobile, cloud computing and finance.
In 20I5, in a step towards becoming a leading FinTech hub, the government announced the creation of a steering group on FinTech in order to identify gaps and recommend measures to develop Hong Kong as a FinTech hub. The Hong Kong Monetary Authority has been at the forefront of this development of trying to create an environment of innovation. For example, the authority has created a regulatory sandbox that allows banks to try out the newly developed technology on a pilot basis without having to achieve full compliance with HKMA's supervisory requirements. The banking regulator has also taken active measures to facilitate the FinTech ecosystem by establishing a FinTech Facilitation Office, whose core function is to act as a platform and an interface between regulators and FinTech entrepreneurs. Further, in order to secure customer data, which is of paramount importance in FinTech, the regulator has provided an industry-specific code of practices and guidelines on how customer data may be handled in the banking industry.
HK FinTech scene is burgeoning with more than 130 startups, three accelerators and over 200 events associated with the FinTech space. Several innovation labs, co-working spaces, accelerator programs run by both local and multinational financial and professional services firms are acting as platforms to expediting the FinTech growth. InvestHK has been spearheading efforts to strengthen Hong Kong as Asia’s leading international business and financial center. StartmeupHK is an initiative aimed at building the startup community that supports local entrepreneurs and attracts others from around the world, is starting to gain traction in its effort to promote Hong Kong as the right place to start a business.
InvestHK is seeking to give the needed fillip to continuing FinTech engagement by playing host to the first Hong Kong FinTech Week from 7–11 November at PMQ. The event will see the debut of FinnovateAsia where the most cutting-edge companies will demonstrate their innovation from and for the Asian market. The FinTech week will delve in deep on the latest trends in FinTech, including workshops, plenary sessions and networking events. The event will increase greater collaboration between different regulatory agencies and will aim at simplifying establishing FinTech ventures. Most importantly, it will give a new impetus to Hong Kong’s long tradition of entrepreneurship and establish it as a leader in FinTech among its peer cities.