Hong Kong working towards becoming Asia's top fintech hub

A recent report chronicled how Hong Kong is investing heavily to be Asia’s leading fintech hub.

It has transformed itself into the conduit between China's technological giants and the rest of the world.

The territory sees its strong laws and financial regulations as an advantage, even as mainland cities like Shenzhen are vying hard to attract the same investments, according to its investment promotion agency InvestHK.

Hong Kong has a HK$500 million fund to develop financial services over the next five years, along with other preferential policies Hong Kong has put in place this year.

These services include fintech – the combination of finance with technologies such as blockchain and cryptocurrencies.

Hong Kong-based fintech investments more than doubled in 2017 to nearly S$744 million, eclipsing Singapore's S$311 million.

Those in leading the fintech division at InvestHK argue that the growth of the Guangdong-Hong Kong-Macau Bay Area (GBA) provides an "excellent use case" for cross-border financing that will power China's Belt and Road projects.

An area where Hong Kong is competing keenly with Singapore.

An authority on the fintech scene in Hong Kong said that between Hong Kong, the mainland with Shenzhen and Guangdong cities, as well as Macau, one ends up with three different jurisdictions.

This creates a valuable exercise for all of everyone involved regarding how to move things forward in the Belt and Road Initiative.

Entrepreneurs from both sides of the border also spoke about the benefits of deeper fintech cooperation.

Hong Kong entrepreneur Tim Lee said that when he moved to China a decade ago, the mantra that prevailed was to copy US technologies.

"But in this era of mobile payments, the front-runner is China... and we have arrived at 'copy from China'," he said.

Just two years ago, Mr Lee's firm processed less than US$1 million (HK$7.85 million) of payments in six months.

Today, his company handles US$600 million (HK$4.71 billion) worth of transactions in a month.

Experts said Chinese fintech giants, having dominated the home market, are looking to expand globally.

These include a spin-off e-commerce and trade financial services groups, which raised US$14 billion in June 2018.

Experts, especially those in the advisory sector of finance, are confident that they are watching significant moves being made, particularly in South-east Asia where a large population and similar cultural dynamics make for compelling growth opportunities.

For the Chinese firms, Hong Kong is a "polishing place".

Hong Kong's regulatory, language and product requirements help these firms refine and develop their products and get them ready for overseas markets.

Serial entrepreneur Sun Jiangtao said, "When I list in Hong Kong, I don't have to pass a single penny under the table and just have to follow the public regulations," he said. "The advantage of the rule of law is very obvious to me."

While some figures from consulting firms showed that investments in Hong Kong-based fintech firms fell sharply in the first half of this year even as they continue to grow in China, most experts agree that more Chinese firms are recognising Hong Kong's value proposition.

Pundits who have conducted interviews and held conversations with various CEOs, CFOs, chairs, and members of the board of the big companies, it is evident that they want to have clarity about regulations in finance.

This clarity and ability to trust in the rule of law is what Hong Kong offers

As reported on earlier, Hong Kong announced its dedication to fintech promotion last year.

The country has sustained its commitment to investing in technologies that will enable Hong Kong’s financial sector make use of the most sophisticated technologies the modern world has to offer.

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