Hong Kong had an Internet Finance Summit in the city last weekend, with top industry players in attendance. Now, it’s time to ask this question: what progress has the territory achieved in financial technologies (Fintech) over the last year?
2016 was the second year of the summit. Last year, speakers complained about slow response from the government in the face of sweeping trends in internet finance. Some officials even had no idea about Fintech, let alone any relevant regulation or policy.
But now there has been some progress. The government has established the Steering Group on Financial Technologies, which is chaired by the Secretary for Financial Services and the Treasury K C Chan. And the Steering Committee released in February its first report.
The 70-page report has made a number of proposals. For example, the government would establish a dedicated team under Invest Hong Kong to organize international events and help start-ups, investors and R&D institutions to establish their presence in Hong Kong.
It will set aside a dedicated space of 3,000 square meters in Cyberport as Smart-Space for Fintech activities and roll out a designated incubation program for 150 Fintech start-ups over the next five years.
Also, it will arrange 300 university students, through Cyberport, to join Fintech training camps in overseas universities to gain more in-depth understanding of career prospects in the sector.
In addition, a partnership between HKMA and other stakeholders would see a three-pronged cyber security program being set up, helping deal with issues such as risk assessment exercises and professional certification.
In other news, a Payment Systems and Stored value Facilities Ordinance (PSSVFO) took effect in November last year, putting electronic payments under government regulation for the first time.
Octopus, Zhifubao, Weixin payment and other e-payment operators all are required to apply for license. More than 20 companies have already submitted applications so far. Authorities will grant licenses from the third quarter this year.
Meanwhile, it’s quite encouraging that WeLab, an online lending platform, has completed B-round financing with 1.2 billion yuan in January this year. The company has lured investors like Malaysian sovereign wealth fund Khazanah Nasional Bhd and ING.
It is the first Hong Kong company to become a “unicorn startup”, attaining a market value of over US$1 billion. WeLab intends to tap into the Southeast Asian market.
Meanwhile, many companies have launched e-payments over the last year. The Tap & Go app by PCCW (00008.HK), TNG, and Tencent’s Weixin payment, have joined existing players in the city including Octopus and Zhifubao.
Nevertheless, many entrepreneurs are still not satisfied with this progress. Bitcoinnect CEO Jase Leung noted that Hong Kong still lags far behind many other cities in blockchain development.
The Steering Committee report said the government should encourage studies on blockchain technology in order to cut costs and enhance security. However, we are yet to see any policy or regulation in this regard.
Responding to the slow development of e-payments in Hong Kong, some observers have noted that leading local banks still lack a strong incentive to take the initiative.
In addition, local residents in Hong Kong seem more conservative, which undermines the development of Fintech industry, according to TNG founder. He revealed that Singapore government has invited him to move the company there with various preferential measures.
Many agreed that Singapore government is more aggressive in attracting tech start-ups, while Hong Kong is more complacent. In fact, Singapore, with a short history of 51 years, is a start-up itself, and finance is one of the key industries the city tries to develop.
Hong Kong is an open financial hub, which has various advantages to dig into the Fintech sector.
The coming year will be critical in terms of how things develop in the industry.
This article appeared in the Hong Kong Economic Journal on April 18.
Translation by Julie Zhu
[Chinese version 中文版]
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