Hong Kong has long been known as one of the world’s leading financial centers, able to attract some of the best global talent and multinational organizations. While its strengths are widely recognized, the city, however, cannot afford to rest on its laurels. As new and alternative hubs begin to develop across the region, Hong Kong needs to look at other ways to maintain its leadership. One area that offers vast opportunity, and scope for innovation, is FinTech.
FinTech technologies, like mobile payments, have been developing quickly across the region as companies seek to outdo competitors and bring in new profit streams. WeChat launched its payment service ‘WeChat Pay’ in Hong Kong earlier this year, which includes a new Wallet in-app payment feature. This followed the launch of SmarTone’s ‘Kiss’ app last year, an online-to-offline marketing and payments platform with its own wallet and pay functions.
So what does the future hold for FinTech in Hong Kong and what are some of the opportunities it offers for businesses looking to participate in an increasingly digital-centric global marketplace?
Traditional payment methods start to fade as disruptors rise
The rapid increase in the use of mobile devices across Asia, coupled with the nearly limitless capabilities of the cloud, has paved the way for non-traditional entrants and new players to compete in the financial sector.
Up until recently, only the largest players had the financial, technical and managerial resources to combine all the components for customer-ready services. However these new players are able to bypass decades’ worth of capabilities that traditional commerce payments companies have accumulated, and develop something completely new, and specifically designed, for the mobile generation. Take, for example, Apple, Facebook, Twitter, and Snapchat, which are creating their own mobile wallet, e-payment and peer-to-peer transfer solutions.
Traditional payment methods will continue to disappear as simplified online purchasing and in-app transfers, such as Amazon’s One-Click Buy and Visa Checkout, reduce the visibility of transactions. Uber is an excellent example of payments disappearing into a richer and more valuable commerce experience, and one that many in the financial industry in Hong Kong are looking to replicate.
Embracing interconnection for FinTech success
Whilst the tap of a smartphone or card might look like a simple way to make a purchase, it comes with hidden complexity. Transactions like these involve financial institutions, mobile device makers, and retailers, all of whom need to match a device to an account, verify the user’s funds and identity, and authorize the transaction in mere seconds.
The best way to ensure speed, safety and satisfaction is for the parties to interconnect in the same digital ecosystem. Here, all the different players can take advantage of proximate, direct and secure interconnection with their partners and markets. This means high-speed, low-latency transactions that make paying with a mobile device a smooth experience.
Balancing innovation with security and privacy
Despite the demand for digital payments, companies are still having to balance customer demands for convenience with data security and privacy. This is particularly true in a market as highly regulated as Hong Kong, where those who can strike the right balance between security and ease-of-use will likely come out on top.
Meanwhile, stronger authentication methods and improved fraud detection remain important across all markets. The emergence of non-traditional and new players, inconsistent regulations, and multiple stakeholders in a transaction create security concerns that will need to be addressed. Partnerships will evolve that will weave together security infrastructure capabilities such as geo-location technology, biometric authentication, and context aware applications to reduce fraud. Companies will need to stay on top of security by constantly identifying potential vulnerabilities and innovating new solutions to ensure that security concerns are addressed.
The good news is that there is plenty of opportunity for those across all of Hong Kong’s industries to benefit from the rise of FinTech innovation. From retail to technology, banking to hospitality, digital payments will have a lasting impact on the consumer journey, and the wider economy.
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