According to a recent report, the Hong Kong Monetary Authority (HKMA) announced the issuance of the very first virtual banking licenses last month.
While many jurisdictions around the world are pursuing policies that encourage Fintech innovation and digital banking what was unique about the HKMA’s announcement was the rapidity of the process. Hong Kong went from consultation to licensed banks in less than a year.
Hong Kong may have been slow to adopt FinTech when it first hit the vernacular. However, now the region is adopting FinTech innovation with increasing velocity.
Hong Kong has long been a financial centre and key industrial hub for all of Asia. Just about every global bank has a presence and traditionally Hong Kong has been an important conduit to mainland China. The fact that Hong Kong is now joined philosophically and physically to the second largest economy in the world, makes Hong Kong’s even more vitally important to the realm of innovation in financial services.
InvestHK, an important catalyst for Fintech innovation in Hong Kong, is a publicly supported entity designed to boost global investment in the region by simplifying the process for capital to land in the “autonomous territory”.
The objective of the organization is to attract and retain foreign direct investment which is of strategic importance to the economic development of Hong Kong.
In all its services, InvestHK applies the following core values: passion, integrity, professionalism, customer service, business friendliness, and responsiveness.
The organisation works with overseas and Mainland entrepreneurs, SMEs, and multinationals that wish to set up an office – or expand their existing business – in Hong Kong.
This is a clear policy goal driven by the local government. An important subset of InvestHK is FintechHK – the champion for all things Fintech.
FintechHK states that for centuries Hong Kong has been a gateway to mainland China, but right now its location means that it is on the doorstep – the entry point – to the global standout in Fintech development.
And its Mainland links are set to grow stronger in coming years in tandem with the economic importance of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) – that stretch of land around the Pearl River Delta that accounts for about 12% of China’s gross domestic product. The GBA includes 11 cities, including Shenzhen and Hong Kong, has a population of about 70 million people – a huge market and a huge resource.
From digital payments, blockchain development, virtual banking, Insurtech and more – FinTech has an organization seeking to remove bureaucratic friction to support the growth of vital innovation. And, reportedly, the process is working quite well.
Regulatory sandbox’s, for FinTech in general and Insurtech specifically, have fostered an environment of acceptance. The fact that public money is being dedicated to spurring sector growth, such as the Hong Kong government’s 2018 budget pledge to allocate HK$10 Billion to the development of financial services over the next five years – including Fintech – is a significant commitment. Which other country has done the same?
The Hong Kong Monetary Authority (HKMA), the central bank, has been taking an “active role to support the development of technological innovations,” instead of being viewed as an unavoidable hurdle.
The Fintech Association of Hong Kong, a not for profit member-based association, now boasts over 1,200 representative members of over 300 firms, including big banks & insurers, technology players and start-ups, consultants & law firms, and more.
The combination of public and private entities represents a cohesive full-court press to fuel innovation in financial services and create a business-friendly locale for both early stage and established firms to experiment with and launch digital financial services – the same services that will soon replace their analogue peers.
A “white paper” recently issued, touts the progress of Hong Kong’s evolution into a global Fintech Hub. The goal for Hong Kong, it appears, is not just to maintain the status quo of Hong Kong as a global financial centre but to vault it to the leading spot when it comes to financial innovation. This is more about public policy than just private entrepreneurship.
Countries across the world stand to learn from the perseverance of Hong Kong’s public and private parties and Fintech friendly policy goals.
Hong Kong, with a population of about 7.5 million has seen extensive activity in its start-up ecosystem with over 3,000 start-ups and is home to four Fintech unicorns.
Hong Kong is proof that focused policy initiatives tied with a low tax, pro-business environment, Fintech can flourish – and, perhaps at some point in the not so distant future, become the leading Fintech hub in the world.
