The Hong Kong government continues to focus on fintech, and making the city an attractive place for the industry.
According to Financial Secretary John Tsang in his 2016-17 Budget speech, Hong Kong’s extensive trade network, the open market operating under the rule of law and total transparency, together with the resilience and resourcefulness of the people, will provide the required conditions for this new economic order.
The city has been one of the fastest growing start-up hubs in the world; there are more than 1,600 start-ups, up 50% since 2014. And, the government is setting up a HK$2 billion Innovation and Technology Venture Fund to invest in local technology start-ups together with private venture-capital funds.
Companies should explore the existing Hong Kong fintech eco-system and the support they can receive from the local government, incubators and accelerators, economic development agencies, strategic investors, angel investors, venture capitalists and use of co-working spaces.
Hong Kong’s commitment as a fintech hub
According to the Financial Secretary, the potential to develop fintech in Hong Kong is enormous. The government has set up Invest Hong Kong, an official online platform to help start-ups, investors, as well as research and development institutions establish a presence in Hong Kong.
The Hong Kong Monetary Authority, the Securities and Futures Commission as well as the Office of the Commissioner of Insurance will also be establishing dedicated platforms respectively to enhance communication between regulators and the fintech community.
Impact of business operations
The global market place is multi-channel; financial institutions and merchants are offering a ‘consumer self-service’ point of sale evolution in order to stay competitive. The increasing trend towards mobile and the ever-growing security and compliance requirements create a complex real time business landscape that puts a huge strain on existing back office systems and processes.
The amalgamation of real time and legacy applications lead to high cost work around processes that bring down potential business returns.
According to research from McKinsey, banks are looking for a pay-off from investments made in digital processes, which should focus on back office automation projects and steer clear of multi-channel integration.
Real time will be the way forward.
Despite the continuous support from the government, the city’s high cost of living, a limited pool of talented IT professionals and lack of venture investors are challenges that companies face. Although it is not a big problem for companies to raise the first round among angel investors, they may find there is a funding gap later on.
In order to overcome these challenges and take on the combined advantages of ‘one country’, ‘two systems’, Hong Kong needs to increase global know-how among entrepreneurs, improve the availability of top technical talent, and grow the tech angel investor community and government support.
The global economy is displaying ‘a new normal’ – the volatile financial markets we have been experiencing will be around for a while.
Need more information? Get in touch with our experts in Hong Kong.
TMF Hong Kong provides a wide range of corporation services for companies seeking to establish themselves or looking for a global expansion in the jurisdiction.
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