Opinion | Hong Kong must embrace innovation or risk irrelevance

Technology-driven disruption has permeated nearly every form of industry, forcing enterprises to adapt or be left behind. Global finance has been among the quickest to embrace technology to drive measurable efficiencies. The rapid rise of big financial data and raw processing power promises to deliver further gains for every aspect of the industry.

This has not gone unnoticed in Hong Kong. Chief Executive Carrie Lam Cheng Yuet-ngor this month reiterated at a Bloomberg investment conference that innovation and technology will be a key area for government support, where she plans to build up enough critical mass to help the city stay economically competitive. Technology will play such an important role in the future of finance, that firms, regulators and institutions in Hong Kong will need to fully embrace and understand it, or risk irrelevance.

Hong Kong is one of the world’s most important financial centres, and it is shaping its own unique future as a global gateway into China. Technology is already playing a sizeable role in finance here, where we have been operating for 25 years. Some of the latest financial tools are already being deployed in cutting-edge firms that require the latest in natural language processing, trade surveillance and liquidity risk management.

At the recent Boao Forum, President Xi Jinping announced measures that will be beneficial for Hong Kong. One was the further relaxation of China’s financial services industry, paving the way for more foreign participation. A second measure was to create a more favourable investment environment and enhance China’s alignment with international rules. This is where Hong Kong is likely to benefit the most, where international best practices have already been adopted.

Carrie Lam in response said that the city will continue to be the “conduit”, providing the needed professional services to access “the more favourable investment environment in the mainland”. From the launch of the Shanghai-Hong Kong Stock Connect in 2014, the Mutual Recognition of Funds in 2015, the Shenzhen-Hong Kong Stock Connect in 2016 to Bond Connect in 2017, there have been strong supportive policies that help the city play an important role in global finance.

At another recent Bloomberg event, Adena Friedman, president and chief executive of Nasdaq, told a room of C-suites that new marketplace technologies – machine intelligence, blockchain and quantum computing – will inevitably become of integral importance in how capital markets impact the investment world of the future.