December 5, 2020

We are creating some awesome events for you. Kindly bear with us.

We are creating some awesome events for you. Kindly bear with us.

Hong Kong is Asia’s FinTech hub

Hong Kong is one of the few places in the world that attracts FinTech companies from both East and West, InvestHK notes. The city has had a longstanding reputation for being welcoming of business and talent. This is reflected in it being named the world’s freest economy for the 25th consecutive year in January 2019.

Moreover, Hong Kong is the world’s third-largest and Asia’s biggest financial centre. It is also second in the world for insurance and number one in Asia for asset management.

Hong Kong has long been a gateway to mainland China. However, currently, its location means it on the precipice of being a global standout in FinTech development. Its Mainland links are set to grow stronger in coming years in conjunction with the economic importance of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) which accounts for about 12% of China’s gross domestic product and is a huge market and a huge resource.

The blueprint for China’s GBA strategy is to transform the 11 cities into one of the world’s largest innovation and development powerhouses. The Central Chinese government announced the ‘Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area’ in February 2019, which placed emphasis on developing financial products and services within the GBA. Launching FinTech pilot projects and boosting the development of fintech carriers are listed among the priorities.

Hong Kong’s accumulation of market intelligence, regulatory insights, and technical know-how from both East and West make the city a cradle for truly global fintech products that can be tailored to any market and applied anywhere in the world.

Hong Kong is now home to 550 fintech companies of which 52% have founders from overseas, with the remainder being entrepreneurs from Hong Kong and mainland China. According to Accenture, Hong Kong fintech companies have raised over US$1.1 billion from 2014 to 2018.

With over 160 licensed banks and more than 160 authorised insurers, there is a recognition that digital payments, along with other aspects of fintech, provide a crucial building block for innovation and inter-connectivity driven by big data.

The city also provides companies from overseas a combination of location, infrastructure, financial hub, legal system and local talent that simply cannot be matched elsewhere. And to help bring all that together, it offers genuine on-the-ground support through InvestHK.

Upcoming Opportunities in Hong Kong

  • HKMA: New virtual banking licenses

The Hong Kong Monetary Authority (HKMA) has recently announced the award of eight virtual banking licences. The virtual banks are required to only have one physical office in Hong Kong and will otherwise operate online only. They are expected to offer mainly retail services, thereby accelerating the move to electronic payments. Virtual banks will not only help drive fintech and innovation but also bring about brand-new customer experiences and further promote financial inclusion in Hong Kong.

  • Banking Open APIs

The HKMA published the Open API Framework in July 2018. The first phase was launched in January this year as scheduled. Twenty retail banks launched over 500 Open APIs, covering information on deposits, loans, insurance, investments and other banking products and services, to address various financial needs of customers.

  • Blockchain

Hong Kong Stock Exchange (HKEX) teamed up with Digital Asset to build a blockchain platform for post-trade allocation and processing of northbound trading. HKEX has been testing a prototype system for Stock Connect using Digital Asset’s platform and smart contract modelling language in an effort to accelerate the post-trade process and reduce settlement risk. Stock Connect is a collaboration between HKEX and the Shanghai and Shenzhen stock exchanges, which lets international and mainland Chinese investors trade in each other’s markets through their home exchanges’ platforms.

HKMA had launched its new blockchain-based banking trade finance platform at the end of 2018. The platform, ‘eTradeConnect’, combines the services of 12 major domestic banks including HSBC and Standard Chartered Bank to enhance cross border trade, and will link up with another blockchain platform called ‘we.trade’, to allow better trading among a network of nine banks across 14 European countries including Deutsche Bank, Rabobank, and UBS.

HKMA and the Monetary Authority of Singapore (MAS) agreed to collaborate on developing the Global Trade Connectivity Network (GTCN), a cross-border financial infrastructure platform based on distributed ledger technology (DLT).