Why Hong Kong should become a Fintech Hub for the world

Caption: 
Janos Barberis, founder, Fintech.hk

Fintech or the application of technology in the financial services industry in the name of market development has been around for many years. But it’s only in recent years that a concerted effort appears to be in place to accelerate development. Whether it is the unbanked, the underbanked, high or net worth customers, financial services institutions are looking at every conceivable technology or idea that would lead or enable the next industry disruption.

Why the interest? An Accenture-sponsored research by CB Insights in 2014 says global investment in Fintech companies tripled in value in 2014, reaching US$12.2 billion, with Europe showing the fastest growth at US$1.48 billion. That figure is three times compared to the previous year.

CB Insights: Global FinTech Financing Activities

In Hong Kong, interest in Fintech continues to accelerate spurred by industry, academic and government players. Startups across multiple Fintech disciplines are setting up in Hong Kong to take advantage of the interest. Financial institutions, such as AIA and DBS, are investing on their own Fintech programs independent of startups, to accelerate their search for the next Fintech disruption.

Among the world’s financial centers, including New York, London, Tokyo, Hong Kong and Singapore, it is arguable that London may have lead in coining the Fintech hub phrase. But in recent months, Hong Kong and Sydney have been marketing their experience and expertise in financial services vyying for the title of fintech hub of the world.

Esmond Lee, JP, executive director for financial infrastructure with the Hong Kong Monetary AuthorityEsmond Lee (photo right), JP, executive director for financial infrastructure with the Hong Kong Monetary Authority (HKMA) says any city aspiring to become a fintech hub must have in place effective regulation to support the sustainted development and adoption of innovation. He says regulations must foster innovation, promotes competition, and boosts confidence. 
 
The regulator has been adopting a ‘two-pronged’ strategy in promoting the development of retail payment services in Hong Kong underpinned by (i) visionary development of market infrastructures, and (ii) effective regulation of market players. 
 
According to Lee, the HKMA will closely monitor market development, and initiate or facilitate the development of appropriate infrastructure, hard or soft, to create an environment that is conducive to the healthy growth of retail payment services, which the regulator believes is an important part of Fintech.
 
Lee sees a future in which the financial sector of Hong Kong will comprise four pillars: banks, securities companies, insurance companies and, a new group of stored value facilities - a type of ‘technology-intensive’ financial services. 
 
Janos Barberis, founder and CEO of Fintech.hk, explains why Hong Kong is the ideal center for the next Fintech hub in Asia and around the world. He argues that Hong Kong's long history as a regional financial center lends to strength to the idea of the SAR as an idea Fintech hub for the world.

 

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