The fintech ecosystem in Hong Kong is rapidly growing with now some 130 startups in the space, according to Invest Hong Kong (InvestHK).
Year 2017 saw many developments in the space. In particular, the year was marked by numerous collaborations and initiatives being launched to foster fintech, some by the government itself, notably the Hong Kong Monetary Authority (HKMA), others by the private sector.
The HKMA, the city’s central bank and banking regulator, has committed to developing a healthy and sustainable fintech ecosystem with industry players, and in this regard, the authority initiated numerous ambitious projects.
Here are some of the key events that happened throughout 2017 in the Hong Kong fintech space.
Thousands attend second annual Fintech Week
Hong Kong Fintech Week 2017, which took place in October, was the second annual event by InvestHK focusing on fintech innovation. The event drew more than 4,000 attendees from over 50 countries and more than 300 speakers.
Alongside the packed events in the main hall and workshop rooms, more than 150 one-on-one meetings took place involving entrepreneurs, regulators, incubators, venture capitalists and service providers.
InvestHK’s program partners for Fintech Week, NexChange and Finnovasia, each curated two days of events, respectively focusing on two themes, blockchain and artificial intelligence (AI). Also featured under these themes were insurtech, wealthtech and cybersecurity, as well as all core areas within fintech.
HKMA sets out 7 initiatives to boost fintech
The chief executive of the HKMA Norman Chan announced a series of initiatives that he claims will open up “a new era of smart banking” in Hong Kong.
The seven initiatives include the Faster Payment System (FPS), which is scheduled to be launched in September 2018 and will support the use of mobile phone numbers or email addresses for payments in Hong Kong dollar and Renminbi, the Enhanced Fintech Supervisory Sandbox (FSS) 2.0, which includes new features such as a Fintech Supervisory Chatroom, several initiatives to promote virtual banking, a policy framework on Open Application Programming Interface (API) and several cross-border fintech collaborations with authorities in other jurisdictions.
Blockchain and distributed ledger technology (DLT) has been a particular area of interest for banks in Hong Kong recently, especially around trade finance, digital identification and KYC.
The HKMA is focusing on facilitating the development of blockchain and DLT platforms and launching its very own projects in the field. These include the development of a DLT platform to digitalize banks’ trade finance processes in Hong Kong with connectivity with Singapore’s trade platform. The collaboration is part of a broader fintech cooperation agreement signed between the HKMA and the Monetary Authority of Singapore (MAS) in October.
Other fintech collaborations being pursued include cooperation agreements with the Office of Financial Development Service of the Shenzhen Municipal Government, and the Dubai Financial Services Authority (DFSA).
HK Fintech Association signs partnerships with foreign organizations
The Fintech Association of Hong Kong (FTAHK) signed three separate Memoranda of Understanding with the Singapore Fintech Association, the Swiss Finance + Technology Association and the Taiwan Fintech Industry Development Association to collaborate in the promotion of the global fintech industry.
The partnerships aim to launch initiatives to support fintech development, including potentially making joint responses to their markets’ respective regulators and other relevant local bodies.
Hong Kong issues guidance on ICOs
The SFC issued a statement in September declaring that “depending on the facts and circumstances of an initial coin offering (ICO), digital tokens that are offered or sold may be ‘securities’ as defined in the Securities and Futures Ordinance (SFO), and subject to the securities laws of Hong Kong.”
The move by the SFC was followed by a public notice from the People’s Bank of China – the country’s central bank – banning fundraising activities through ICOs from September 7, 2017.
Launch of the SFC regulatory sandbox
The SFC Regulatory Sandbox was launched on September 29 to provide a confined regulatory environment for qualified firms to operate regulated activities under the Securities and Futures Ordinance (SFO).
The purpose of the sandbox is to maintain market integrity and investor protection by examining and monitoring the selected firms’ internal control systems and the reliability of the delivery of such financial services in a confined regulatory environment at the initial stage.
Featured image: Hong Kong via Unsplash