Hong Kong must dig deep into the financial technology sector during China’s 13th five-year plan period (2016-2020), leveraging the city’s well-established financial infrastructure and highly educated workforce.
The Hong Kong Monetary Authority had released a study entitled “Financial Technology Infrastructure for Hong Kong” as early as 1997.
Various government departments were very keen about the initiative, but for some reason the ambitious plan was not implemented and the city has made very limited progress in the area so far.
One needs to bear in mind that financial technology has shown explosive growth in western countries. And it has tremendous market potential. In 2013, the sector was worth several dozen billions of dollars, and the growth trend is set to continue for the next five years, according to a global survey.
Simply put, Financial Technology (FinTech) is new innovations and technologies be applied to almost anything within the financial service industry. As the digital revolution drives structural change throughout the financial services sector and global demand for financial products, FinTech has vast market potential.
For example, the new internet technology allows customers to access financial services anywhere across the world. And cloud computing technology allows large groups of remote servers to process complex information and improve services. Also the User Interface (UI) technology enables customers to easily access financial services through Bring Your Own Device (BYOD).
For most Hong Kong people, FinTech applications like Octopus, online stock trading platform, online payment have already become part of their life.
Another interesting area to explore is peer-to-peer lending, which has become a popular trend in the West amid the emergence of innovative enterprises. The lending is based on disintermediation, which means removal of intermediaries in a supply chain, or “cutting out the middlemen” for online transactions. The typical C2C model has been adopted by Amazon, Ebay and Taobao.
In traditional lending business, banks and other legal financial institutions have acted as the middlemen. But the peer-to-peer lending model allows borrowers to access private capital without going through banks, which would help borrowers reduce costs and let individual savers get involved in the lending business.
Crowdfunding is a perfect example of peer-to-peer lending, which has been highly sought after by start-ups.
However, the government has reacted with little enthusiasm so far for the FinTech sector, although industry participants have been repeatedly calling on authorities to step up efforts.
We hope the Innovation and Technology Bureau will be established soon, so that it can change the policy landscape and ensure that Hong Kong won’t miss the great opportunity.
Translation by Julie Zhu
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