Hong Kong’s fintech development lags far behind mainland China, Singapore, experts say
Hong Kong, despite its role as a top international financial centre, is lagging far behind the Chinese mainland and Singapore when it comes to finance technology (fintech) development, according to experts.
“The priority for Hong Kong is to pursue further cooperation with China’s major fintech companies who own the most advanced technology and have the largest scale in the industry,” Hu Bin, deputy director of the Finance Institute at the Chinese Academy of Social Sciences, said at the Boao Forum on Thursday.
Fintech financing in China has propelled Asia Pacific to No 1 spot in the sector, accounting for 48 per cent or US$11.2 billion last year, according to data from CB Insights. North America attracted US$9.2 billion in fintech financing while the Europe drew US$2.4 billion.
“China is now developing quickly in fintech, supported by tremendous talent, abundant funds and loose regulation,” said Kelvin Teo, chief executive ofFunding Societies,a Singapore based fintech company.
“Singapore and Hong Kong cannot develop fintech as quickly as China because their strict and mature regulation system cannot provide room for ‘wild growth’ but I do see Singapore as being much more active and aggressive in promoting fintech than Hong Kong,” Teo said. “That’s why we see Singapore standing ahead of Hong Kong in fintech development and narrowing the gap between Singapore and China.”
Hong Kong, being in close proximity to the Chinese mainland, could have faster and better development in fintech if the city leveraged its geographical advantage, said Hu.
“Hong Kong fintech companies [if allowed] should heavily promote their products in the China market and serve Chinese mainland customers, not just be restricted within the city,” he added. “For the regulatory rules, the authorities in Hong Kong and China should study the possibility of further communication to smooth cross-border business cooperation.”
However, Teo said Hong Kong’s proximity to China was not a “perfect advantage” because it could result in an outflow of local talent and funds from the city to the mainland.
“Some Hong Kong talent and funds could easily enter the booming China market to develop their fintech business. The culture and language are also very similar,” said Teo.
With the massive growth in the fintech sector, concerns over data security are rising.
“With technology more deeply employed in finance...and more data being stored in databases, the risk for data loss increases,” said Gregory Gibb, co-chairman of the Shanghai Lujiazui International Financial Asset Exchange. “Data security takes top priority.”