A recent
report chronicled how Hong Kong is investing heavily to be Asia’s leading
fintech hub.
It has transformed itself into the conduit
between China's technological giants and the rest of the world.
The territory sees its strong laws and
financial regulations as an advantage, even as mainland cities like Shenzhen
are vying hard to attract the same investments, according to its investment
promotion agency InvestHK.
Hong Kong has a HK$500 million fund to develop financial services over the next five
years, along with other preferential policies Hong Kong has put in place this
year.
These services include fintech – the
combination of finance with technologies such as blockchain and
cryptocurrencies.
Hong Kong-based
fintech investments more than doubled in 2017 to nearly S$744 million,
eclipsing Singapore's S$311 million.
Those in leading the fintech
division at InvestHK argue that the growth of the Guangdong-Hong Kong-Macau Bay
Area (GBA) provides an "excellent use case" for cross-border
financing that will power China's Belt and Road projects.
An area where Hong
Kong is competing keenly with Singapore.
An authority on the
fintech scene in Hong Kong said that between Hong Kong, the mainland with
Shenzhen and Guangdong cities, as well as Macau, one ends up with three
different jurisdictions.
This creates a valuable
exercise for all of everyone involved regarding how to move things forward in
the Belt and Road Initiative.
Entrepreneurs from
both sides of the border also spoke about the benefits of deeper fintech
cooperation.
Hong Kong entrepreneur
Tim Lee said that when he moved to China a decade ago, the mantra that prevailed
was to copy US technologies.
"But in this era
of mobile payments, the front-runner is
China… and we have arrived at 'copy from China'," he said.
Just two years ago, Mr Lee's firm processed less than US$1 million
(HK$7.85 million) of payments in six months.
Today, his company handles
US$600 million (HK$4.71 billion) worth of transactions in a month.
Experts said Chinese
fintech giants, having dominated the home market, are looking to expand
globally.
These include a
spin-off e-commerce and trade financial services groups, which raised US$14
billion in June 2018.
Experts, especially
those in the advisory sector of finance, are confident that they are watching
significant moves being made, particularly in South-east Asia where a large
population and similar cultural dynamics make for compelling growth
opportunities.
For the Chinese firms,
Hong Kong is a "polishing place".
Hong Kong's
regulatory, language and product requirements help these firms refine and
develop their products and get them ready for overseas markets.
Serial entrepreneur
Sun Jiangtao said, "When I list in Hong Kong, I don't have to pass a
single penny under the table and just have to follow the public
regulations," he said. "The advantage of the rule of law is very
obvious to me."
While some figures from
consulting firms showed that investments in Hong Kong-based fintech firms fell
sharply in the first half of this year even as they continue to grow in China,
most experts agree that more Chinese firms are recognising
Hong Kong's value proposition.
Pundits who have
conducted interviews and held conversations with various CEOs, CFOs, chairs, and members of the board of the big companies,
it is evident that they want to have clarity about regulations in finance.
This clarity and ability
to trust in the rule of law is what Hong Kong offers
As reported on earlier,
Hong Kong announced its dedication to fintech promotion last year.
The country has sustained
its commitment to investing in technologies that will enable Hong Kong’s financial
sector make use of the most sophisticated technologies the modern world has to
offer.
