Hong Kong boosts regional fintech development amid Covid-19 pandemic
- Financial institutions in city increasingly use AI and other emerging technologies to meet customers’ rapidly changing needs
- Launch of new FinTech Centre in Kowloon Tong will provide ecosystem that encourages creation of new solutions
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The continuing Covid-19 pandemic has highlighted the need for cities around the world to implement smart solutions to meet evolving customer needs and encourage economic growth.
In Hong Kong, financial technology, or fintech, has taken on an increasingly important role as it makes financial services and products more accessible to the public.
Last November, the city held Hong Kong FinTech Week 2020, an industry-wide virtual event which attracted more than 1.2 million viewers and led to more than 18,000 business contacts being made.
To help capture new growth opportunities and accelerate cross-industry innovation, the Hong Kong Science and Technology Parks Corporation (HKSTP) recently launched a new FinTech Centre.
The centre, located at HKSTP’s InnoCentre in Kowloon Tong, aims to make it easier for different stakeholders to meet and work with fintech companies and co-create projects that harness advanced technologies including artificial intelligence (AI), blockchain, cybersecurity and data analytics.
Move to ‘empower digital transformation’
“The FinTech Centre is a key pillar of HKSTP’s growing ‘fin+tech ecosystem’,” said Albert Wong, CEO of HKSTP, referring to its initiative to connect regulators, finance companies, the academia and tech start-ups to develop financial technology around the world.
“HKSTP’s initiatives are aimed at creating a vibrant ecosystem which connects stakeholders, facilitates knowledge transfer and nurtures talents.
“Innovative solutions [will] help empower the digital transformation of Hong Kong’s financial sector to grow stronger in the evolving macro environment, support Hong Kong’s quest to become a leading fintech hub and reinforce Hong Kong’s status as a global financial centre.”
The centre run by HKSTP, a statutory body offering expertise and all-round support to drive the development of innovation and technology (I&T) start-ups across the region, will also play an important role in providing overseas fintech companies with a soft landing – the controlled launch of a business in a new market where it faces fewer risks or costs – nurturing talent and offering laboratory and proof-of-concept trials.
With world-class support in the adoption of AI, blockchain, cybersecurity and data analytics, the centre aims to promote a close-knit ecosystem so that financial institutions and technology companies can more easily collaborate on new ideas.
Its launch comes as banks and other traditional financial institutions are increasing their use of fintech and teaming up with fintech start-ups to expand their customer bases and develop innovative solutions to meet the market’s ever-changing needs.
Technology enhances competitiveness
The FinTech Centre has opened at a time when Hong Kong’s banking landscape has become more diversified following the launch of a new wave of licensed virtual banks last year. The eight virtual banks have made it easy for customers to take greater control of their finances and use banking services via their mobile phones or personal computers.
The growing competition has also highlighted the need for traditional financial institutions to use technology to improve their service offerings and maximise the convenience of customers.
To help financial institutions leverage technology to its full potential, HKSTP has also launched its Banking Virtual Lab initiative, which aims to accelerate fintech innovation by encouraging cooperation between developers and banks.
In partnership with financial institutions, the lab will host synthetic banking data – highly accurate copies of real datasets, created mostly by AI, which contain 99 per cent of the original valuable information, but cannot be used to identify real individuals – and relevant application programming interfaces (APIs), which can be used by developers and banks to work together to rapidly initiate, test and validate new solutions.
Hang Seng Bank, the lab’s first partner, has already provided synthetic data and will also create a sandbox – or computer system testing environment – so that innovators can collaborate and address specific business pain points.
“Hang Seng welcomes new initiatives that will drive innovation in fintech,” Eunice Chan, Hang Seng Bank’s chief operating officer, said. “We are supporting HKSTP in the establishment of the Banking Virtual Lab platform by contributing synthetic banking data.
“We hope that by strengthening our collaboration, it can shorten early-stage preparations to facilitate Hang Seng Bank in the development of new products.”
Another key HKSTP development is the establishment of its new Fintech Innovation Hub (FIH) at the FinTech Centre. The FIH – set up in a collaboration with Hong Kong Applied Science and Technology Research Institute (ASTRI) and HKMA – will serve as a workspace where financial institutions, technology companies, corporations, universities and government bodies can explore and develop new fintech solutions.
Martin Szeto, acting co-CEO and chief operating officer of ASTRI, a government-backed research institute, said: “ASTRI actively participates in driving the development of the fintech ecosystem. The opening of the FinTech Centre at HKSTP has brought us a brand new fintech innovation hub, which also marks a new milestone.
“We will organise different training courses to explain the laws, regulations and codes of HKMA, hold FinTech Day, showcase fintech, and hold exchange sessions to promote stakeholder exchanges.”
Cheney Cheng, co-founder of Apoidea, a fintech start-up based at the Science Park which leverages AI to present and analyse business data, said the FinTech Centre would play a “crucial” role in connecting financial institutions with fintech solution providers to communicate and interact.
“I’m confident that the new FinTech Centre will serve as a bridge to ‘connect the dots’, so we can bring more innovations to Hong Kong’s financial industry,” Cheng said.
He also anticipated that AI would replace up to 90 per cent of the low-value repetitive documentation work carried out by banks, so that staff could focus on value-added operations that required a high level of human intervention.
In this regard, the FinTech Centre serves as an ideal platform to nurture and cultivate a talent pool to build up Hong Kong’s R&D capabilities and develop financial technologies that can be used worldwide, he said.