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Hong Kong - Advancing to become the center for FinTech

DIGITAL VENTURES November 29, 2017 4:49 AM

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The financial industry in Hong Kong plays a significant role in the country accounting for 18% of the GDP growth. If we look closer into FinTech in Hong Kong, the industry is quite sizable when compared to Singapore. Hong Kong has given much interest to fully utilize FinTech and strives to be among the top global players. Today, FinTech startups in Hong Kong drastically increased to around 160 companies. Although there are several small-sized startups yet some firms in Hong Kong has become the driver of an efficient growth for FinTech startups.

The government as the main supporter of FinTech’s rapid growth

The Hong Kong government support FinTech development in several ways. They have established a ‘Steering Group on Financial Technologies’ who mainly support early-stage FinTech startups. They initiate platforms for experimenting ideas and conduct accelerator programs. Their objective is to attract the younger generation to FinTech. Also, similar to Singapore and the UK, the Hong Kong Monetary Authority (HKMA) launched a “Regulatory Sandbox” for banks and FinTech startups to explore their technologies and innovation prior to the official launch. Here, they can begin the service and acquire feedback without having to fully conform to HKMA’s regulations. However, they need to abide by certain rules but the main objective is that the regulations shall not obstruct development. Moreover, HKMA plans to boost innovation by establishing the Fintech Facilitation Office or FFO to enhance the FinTech startup ecosystem. Their research and development team focus on using FinTech to solve problems, preparing a communication platform for FinTech startup and related parties as well as connecting FinTech startup and the government

HSBC supporting FinTech in Hong Kong

HSBC, a commercial bank in Hong Kong, is also mindful of the matter. They support FinTech startup by launching the Research and Development Innovation Laboratory (RDI Lab) as a collaboration between HSBC and ASTRI (Hong Kong Applied Science and Technology Research Institute). The lab aims to encourage research for FinTech innovation centering around FinTech development via exploratory activities. They focus on technologies that will solve financial obstacles affecting banks and customers. Examples are identity verification technology and cybersecurity etc. This center is part of HSBC’s strategic escalate FinTech innovation to an international level. This is a promising beginning for FinTech in Hong Kong, showing competency comparable to other countries.

Accelerator and Incubator

Aside from large-scale supporters such as the government, central bank, and commercial banks in Hong Kong, numerous accelerators and incubators line up to support startups. Let’s take a look at an outstanding accelerator in Hong Kong such as Cyberport who is behind several successful startups.

Cyberport is a digital economy consisting of over 800 members. It is managed by the Hong Kong Cyberport Management Company and owned by the Hong Kong SAR Government. Cyberport envisions to become the leader in innovation and technology in Hong Kong. It seeks to build business opportunities for startups via 3 core areas.

  • Enhance innovation and technology for younger generations with internship programs for work experience and educational programs.

  • Introduce programs for entrepreneurs with workshops and co-working spaces to create a digital community.

  • Assist Hong Kong startups in international business opportunities and support networking in the industry.

Hong Kong and Singapore: From competitors to alliance

Hong Kong and Singapore were once competing for the title Asia’s FinTech leader. The competition was neck and neck as both countries had full support. For example, Singapore’s MAS announced its support for FinTech while Hong Kong launched their FinTech Regulatory Sandbox only 3 months after Singapore’s announcement. Moreover, events such as the HKMA FinTech Day were organized shortly after the Singapore Fintech Festival. Nonetheless, Singapore seems to have the upper hand. One reason is that Singapore uses English for official business communication which is an advantage when compared to Hong Kong.

Although there were once opponents, today, the two countries have become alliance for FinTech development. HKMA and MAS signed a co-operation agreement that will assist collaborations in international businesses, develop innovative programs, as well as share knowledge and skills among the two countries.

Following the agreement, Hong Kong launched the Hong Kong Trade Finance Platform (HKTFP) which transcribes trade documents to digital files to help prevent fraud. Also, HKMA and MAS are looking to create an infrastructure that connects the HKTFP system to a similar platform in Singapore for easier and more convenient collaborations.

 

Outstanding FinTech startups in Hong Kong


  1. WeLab is an online platform for online loans in Hong Kong and China. Established in 2013, WeLab provides service through WeLend in Hong Kong and Wolaidai in China. Today, WeLab holds over 25 million users with over 28 billion USD loans. In early 2016, WeLab received 160 million USD or around 5.2 billion THB in a Series B fundraising round. This ranked as the fourth largest fundraising globally.

  1. TNG is an e-wallet platform with 370,000 application downloads which accounts for 5% of the population in Hong Kong. TNG e-wallet services consist of instant money transfer, foreign currency exchange, global bill payment, and global sim card top-up. Moreover, TNG launched a peer to peer lending for Nepal, Bangladesh, Thailand, China, Vietnam, Philippines, Indonesia, Sri Lanka, India, and Pakistan. TNG is a large-scale and highly successful e-wallet platform in Hong Kong.

These are promising pathways for FinTech in Hong Kong with both public and private entities dedicatedly supporting the development. This has made Hong Kong FinTech as competent as those in FinTech leading countries around the world. Follow our blog and find out more about FinTech around the world including the UKChina, and Thailand.

 

Images from http://cw.com.hk/