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Financial Secretary Paul Chan Mo-po, at the opening of Hong Kong FinTech Week in Wan Chai on November 3. Photo: K.Y. Cheng
Opinion
Editorial
by SCMP Editorial
Editorial
by SCMP Editorial

Hong Kong cannot afford to be second best when it comes to fintech

  • Recent successes have been rather limited to payments and transfers when China on the other hand is fast becoming the world’s first cashless society
SCMP Editorial
SCMP Editorial
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Hong Kong prides itself on being a fintech hub. On the first “fin” part, there is no doubt. On the second “tech” bit, much work remains to be done.

The Hong Kong FinTech Week that ended last week has exposed both the city’s strengths and weaknesses. Rather than thinking that Hong Kong needs to catch up with fintech, perhaps it’s more accurate to say that fintech is giving the city no choice but to adapt to survive.

Hong Kong’s centrality in the nation’s financial architecture was highlighted at the FinTech conference by featuring Yi Gang, the governor of the People’s Bank of China, as the keynote speaker. It was, of course, also attended by top local officials and bankers, and executives of exciting fintech start-ups from the city and around the world, all eager to take part in the fast-growing Greater Bay Area.

There have been some recent successes achieved in Hong Kong, and Financial Secretary Paul Chan Mo-po, who attended the event, was more than happy to advertise them. But they have been rather limited to payments and transfers.

David Liao of HSBC (seated) and Alibaba’s Joe Tsai during FinTech Week. Photo: K.Y. Cheng

Fintech is much more than that – artificial intelligence, big data, cloud computing, blockchains and digital currencies. On these fronts, the city is lagging the mainland and most advanced economies.

Data analytics was helping companies better understand their clients and AI could gauge risks for financial firms, Joseph Tsai of Alibaba, owner of the Post, said.

Until recently, though, many would have said that the Octopus stored value system, introduced in 1997, was Hong Kong’s most successful fintech app. But the Faster Payment System (FPS), first launched in 2018, conducted about 740,000 daily transactions as of September, mostly for fund transfers and retail payments, worth more than HK$5.2 billion.

That was more than Singapore’s Fast and Secure Transfers (FAST) system and Octopus combined.

The government’s electronic consumption voucher programme, introduced in April to support battered retailers and restaurants amid the pandemic, has added more than 3 million sign-ups to the city’s stored value facilities (SVF). More than 80,000 merchants including grocers, taxi drivers and wet market vendors now accept e-payments.

Hong Kong hits fintech milestone with 700,000+ FPS transactions a day

But the mainland is fast becoming the world’s first cashless society and is leading in many fields of fintech. President Xi Jinping has said the nation must be proactive in “international digital economy cooperation” to put “China solutions” on the table and to make “China voices” heard.

In a recent annual survey, local banks, including “virtual” ones, were found to be behind their international peers in mobile banking apps and other digital services. Needless to say, to connect China and the world, Hong Kong’s fintech needs to be at least as good as theirs.

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