Experts had pointed out that although Hong Kong is among the top three global financial centers in the region, its investment in financial technology (FinTech) doesn’t figure in the top three slots.
If this situation continues, the city could lose its competitiveness as well as its appeal in terms of attracting talented professionals from overseas, the experts warned.
Well, it’s true that Hong Kong does need to boost FinTech investments significantly to protect its competitiveness.
But the good news is that the city has a solid foundation and many advantages to build upon in the industry.
As an international financial center, Hong Kong has strong fundamentals as well as a mature business environment and facilities.
In addition, rich client management experience and diversified wealth management products of financial firms in the city also provide advantages for FinTech development.
The banking industry’s spending on information technology (IT) is generally always high, accounting for a notable part of the firms’ overall operational costs.
According to a study by McKinsey last year, IT expenditure accounts for about 15 percent in banks of developed Asia-Pacific markets. The percentage is close to European banks’ level, which is at 18 percent.
About 70 percent such IT expense is allocated to run the bank, while 30 percent is for enabling strategic change.
In Hong Kong, some banks focus on daily and mid- or back-office operations. For example, after the 2008 financial crisis, regulatory environment changes required banks to strengthen resources allocation for risk management, safety and operation efficiency improvement.
However, to keep their retail businesses competitive, most retail banks in the city put much emphasis — deploying about 60 percent of the IT expenses — on service interface and product-related technologies.
Technologies have broad applications in finance. For example, in banks’ retail businesses, online banking, mobile banking, NFC (Near Field Communication) payment services and big data analysis all help to improve sales and offer clients better experience.
With the development of FinTech, front desk and other strategic projects would demand increasing technology resources. The industry must proactively follow the trend to reduce the impact from a challenging new business landscape.
Training and nurturing of talent form essential components. One crucial assignment of the Hong Kong Institute of Bankers is to improve members’ recognition of FinTech. On practical basis, the Institute provides more related courses and training.
Banks, financial services industries and the IT industry should not keep to themselves anymore. Engaging in exchanges is a must to win both on the talent side and for sharing of professional knowledge.
This article appeared in the Hong Kong Economic Journal on Sept. 21.
Translation by Myssie You
– Contact us at [email protected]