Fishing for fintech: Hong Kong to hunt for companies in London, New York as InvestHK sets up dedicated team to chase hub goal

Cybersecurity, blockchain, e-payment and regulatory technology among top niches being targeted as city looks for greater recognition as financial technology hub

PUBLISHED : Thursday, 10 March, 2016, 9:00am
UPDATED : Thursday, 10 March, 2016, 9:00am

InvestHK will build a team dedicated to bringing financial technology (fintech) companies to Hong Kong, with representatives in London and New York hunting out start-ups and established firms.

A government report by the Steering Group on Financial Technologies, a committee formed in the city’s 2015 budget, laid out plans for the foreign direct investment body to develop a focus on the sector.

Charles Ng, associate director of InvestHK said the organisation will look for companies involved in cybersecurity, the distributed ledger system blockchain, e-payment, and regulatory technology.

“Promoting Hong Kong as one of the world’s fastest-growing fintech hubs is one of the major thrusts for us. The other one is attracting fintech talent, and we want to continue to attract the best and brightest,” Ng said.

Government support for fintech start-ups in Hong Kong is growing as the sector is seen as complimentary to the city’s strength in financial services and its existing talent pool.

On a broader scale, the city mapped out plans for its first Innovation and Technology Bureau late last year, while chief executive Leung Chun-ying announced a HK$2 billion fund to boost investment in innovation and technology during his policy address in January.

The interest in fintech in Hong Kong follows a worldwide trend as global investment in this area rose to US$12.2 billion in 2014, up from US$4.05 billion in 2013, according to a report by Accenture.

The management consultancy firm reported almost US$3.5 billion was invested in fintech in Asia-Pacific in the first nine months of 2015, up from US$880 million in 2014.

READ MORE: ‘Fintech is about to disrupt the banking world’ - no of start-ups in Hong Kong doubles in 2015 but city unlikely to become Silicon Valley of the East anytime soon

The number of start-ups in Hong Kong reached 1,558, up 46 per cent on 2014, an InvestHK survey found. Of those, there were 86 fintech start-ups, up 16 per cent on the previous year.

Last year, InvestHK helped eight financial technology companies to set up in Hong Kong.

InvestHK’s new fintech team will promote the city as a place for start-ups to develop their ideas and as a showcase or launch pad into China and Asia for more established companies, Ng explained.

“Where we think there is the real uptick, is that there are a lot of companies that are at the mid-to-growth stage level which have some traction,” Ng said.

“And this is where Hong Kong can really offer a benefit ... they’re more likely to get investors and very likely to continue the root of what they started.”

Critics claim the city’s regulators have been slow to adapt regulations to the needs of fintech start-ups.

READ MORE: Hong Kong ‘ideally placed’ to become fintech start-up hub: experts

A recent report on fintech in Britain by accounting firm EY found that regulators in Hong Kong were viewed as complex, conservative and in some cases opaque, but Ng said there is still much room for start-ups to innovate.

As part of the steering group’s recommendations, InvestHK will hold an annual fintech event and competition to attract international fintech companies and experts to Hong Kong.

Ng said InvestHK will help overseas firms to establish fintech accelerators or incubators in the city to join the mixture of formats already on offer from Accenture, DBS and Standard Chartered.