Hong Kong’s position, both geographical and economic, offers many advantages in the development of fintech. Proximity to the hi-tech hub in neighbouring Shenzhen is one. Its complementary relationship with local banking needs is another.
Unfortunately, they are being eroded by ongoing tough Covid-19 restrictions. A Google survey of top executives at fintech companies confirms what most in the industry already know: a “severe talent gap” has opened up due to intense competition from other hi-tech hubs such as Singapore to secure skilled and experienced manpower.
Call it a brain drain or talent shortage, business prospects are hurting as more fintech firms see Hong Kong as becoming less competitive relative to other places in the region, including those on the mainland.
The problem is faced by practically all service sectors in the local economy, but is seen as acute because of the constant need for fresh talent in fintech, a field that tends to have high turnovers and where top people command a high premium.
Another common complaint in the survey is regulatory hurdles that make set-up costly, complicated and time-consuming. Given the priority assigned to promoting fintech, every effort needs to be made to face the challenges. Easing red tape would be a good start in a city once famous for its freewheeling and dealing environment.
But the city’s self-isolation thanks to the pandemic has been a tremendous drag on the economy as a whole and fintech in particular. Foreign talent has been reluctant to relocate to Hong Kong.
The crunch is especially severe at senior levels as the most experienced staff tend to have families and children to worry about. Hong Kong wisely allows the travelling spouse on a dependent’s visa to work.
However, though more places have become available at both local and international schools, erratic school closures have been a big turn-off for many expatriate families.
In June, the Hong Kong Monetary Authority released a four-year plan for the development of the fintech industry, pledging to “groom all-round fintech talent, both students and practitioners”, and providing funding for qualified fintech projects.
This may help train local talent in the mid to long term. But a global business hub requires highly mobile international manpower. For now, it’s hard for Hong Kong to compete for talent when more cities in the region are adopting a “living with Covid” health strategy.
The Greater Bay Area offers Hong Kong and its tech industry great growth potential, but cross-border travel restrictions and quarantine measures have neutralised the advantage.
Until the city reopens its borders and lifts restrictions, it will find itself in a difficult position to compete.