A positive year for FinTech development is anticipated in 2020, according to two new Fintech indices launched by the University of Hong Kong.
The HKU FinTech Index Series Project introduced the Hong Kong FinTech Growth Index (FGI) and the Hong Kong FinTech Buzz Index (FBI) to gauge local FinTech companies’ outlook on the industry and the general sentiment on the sector as reported by the local press.
Hong Kong is a global financial centre, the HKU FinTech Index Series is the first in the region to provide index indicators on the development of the sector.
The aim is to provide information in a timely manner to track the growth and development of the financial technology industry in Hong Kong. The five-year project is sponsored by a major Shenzhen data tech firm.
FGI provides a reference for different stakeholders such as policymakers, business partners or investors who are looking to build their strategic business plan, while the FBI captures society’s sentiment from Fintech-related news reports.
It serves as an important indication to show the market confidence of the industry and provides insights to investors and to the government in policy formulation and implementation, the Professor leading the project noted.
FGI is a yearly index with four sub-indices on Business Environment, Business Performance, Investment on R&D and Demand on Talent. It reflects the Hong Kong FinTech sector’s forecast of the market situation in the coming year and an assessment of the situation in the current year.
The index represents responses to an annual survey by 38 companies (84% are Start-ups, 11% are Unicorns and 5% traditional bank/insurance) selected by an Advisory Board which comprises professionals from HKU and the local FinTech industry. It is compared to the companies’ responses in the base period of 2018-2019 set at 100 points.
FGI for 2019-20 grew by 52.9%, compared with its base period from April 1, 2018, to March 31, 2019, which represents an optimistic outlook by partnered companies. It can be attributed to policies and measures which act as accelerators to foster a positive impact on the industry’s development.
The anticipated growth of business performance, indicated by FinTech customer adoption rate, grew by 113% compared with the previous financial year, reflecting an optimistic outlook of business development by 38 surveyed FinTech companies.
The top three desired skills for new hires in the industry are programming skills, marketing expertise and knowledge in artificial intelligence.
However, a weak sub-index in the business environment has drawn caution to insufficient support to the sector which would hamper companies’ confidence in further investing in the business. The companies, in general, refer to constraints from external factors such as investment environment, government policy and regulations.
FBI is a quarterly index representing a quantified sentiment of the local FinTech-related news articles in Chinese in the past three months. The index has a base value of 100 points which represents the sentiment of nearly 10K FinTech related news articles in major local news media outlets in 2016 and 2017.
FBI is further broken down into six sectors: Insurance Technology (InsurTech), Wealth Management and Credit Technology (WealthTech & CreditTech), Blockchain & Cryptocurrency, E-Payment & Digital Banking, Regulatory Technology (RegTech) & Cybersecurity and other related business including AI and big data.
The long-term goal of the HKU FinTech Index Series is to establish a framework to be extended to the Greater Bay Area including Shenzhen and other neighbouring cities.
A global leading financial centre, Hong Kong is robustly utilising information technology in the provision of financial services. The new HKU index will continue to monitor the sector’s progress.