Hong Kong is making a move to challenge Singapore and others as the dominant location for fintech in Asia after the Hong Kong Monetary Authority (HKMA) unveiled a hub and new allowances to spur innovation.
Speaking at an event today — first noted by Bloomberg — HKMA CEO Norman Chan announced plans for a ‘fintech innovation hub’ where new financial products and services can be tested and trialled away from internal banking and finance systems. The hub, which will be open to large and small companies alike, would also be a place where regulators can check in on works in progress before they are implemented in the public domain.
Chan suggested that emerging technologies such as biometric authentication, facial recognition, voice recognition, and big data could be worked on and developed for real-world application within the hub.
In addition, the HKMA will also introduce a ‘regulatory sandbox’ that will enable banks and fintech startups to test cutting edge technology and services without needing to adhere to the full regulations in the country. Strictly for trials and tests, the sandbox will “enable banks to gather real-life data and user feedback on their fintech products or services more easily and in a controlled environment, so that they can make suitable refinements to their products before the full launch,” Chan explained.
The push is part of a move that some may feel is much needed in Hong Kong.
“There is also a quite commonly-held perception that the development of fintech in the financial services sector in Hong Kong has been slow. I do not subscribe to this view, at least insofar as the banking sector is concerned,” Chan countered, pointing out that banks are introducing new authentication methods and working on new technologies.
“Blockchain, robotics and augmented reality are also being explored by banks to improve their services or streamline their operations,” he added.
It’s certainly true to say that, despite its reputation as a global financial hub, Hong Kong is yet to become a major location for technology startups. A handful of companies have emerged, but few are in the fintech domain.
Singapore has instead jumped the list, thanks primarily to government-led initiatives and local investors keen to take punts on young companies that aim to fill the gaps in Southeast Asia, where credit card penetration is sub-10 percent and many millions remain unbanked. Hong Kong’s relationship with Beijing — which came under pressure this week with a pro-independence vote — may be a factor that causes some unease, but it’ll be interesting to see how these new initiatives play out.
Away from fintech, MIT last year picked Hong Kong as the site for its latest overseas innovation center. That project is aimed at helping companies prototype new innovation, with Hong Kong’s proximity to Shenzhen’s manufacturing base a key reason behind its selection.