Technical Analysis and the Fintech Market in Hong Kong

Technical Analysis and the Fintech Market in Hong Kong

by July 27, 2020

Hong Kong is a bustling hub of FinTech activity. A core market in Asia, Hong Kong is also central to global FinTech operations.

In 2020, the largest component of FinTech activity in Hong Kong is digital payments solutions, valued at $16,431M, compared to personal finance which makes up just $1,491M, and alternative financing at $190M.

Fast forward projections to 2024, and digital payments are expected to top out at $24,670M, personal finance at $6,374M, and alternative financing at $268M. Cloud computing capabilities, AI, AR, and the Internet of Things are still in their infancy stages in Hong Kong, and the rest of the world. Traditional banking services in Hong Kong are being supplemented with robo advisors, integrated digital payments, and microfinancing options.

The Current State of the FinTech Market in Hong Kong

Source: Statista (Forecasts are COVID-19 Adjusted) through June 2020 Attribution Required

The FinTech transformation across Hong Kong is widespread and includes dramatic developments in multiple arenas, including data analytics, and stock trading. As indicated by the latest technical analysis by FBS experts, FinTech developments are having an outsized impact on Hong Kong’s GDP. Since financial services comprise 18% of GDP in Hong Kong, and a sizeable component of overall employment at 6%, FinTech’s impact be will dramatic.

As a Special Administrative Region (SAR), Hong Kong (under the broader umbrella of China) is going to benefit immeasurably from the rampant growth in FinTech. Not only is Hong Kong a gateway to China, it’s also a leading authority vis-à-vis global FinTech. Many leading FinTech companies are already invested in Hong Kong’s market, by dint of its proximity to the mainland, and language and cultural considerations.

What FinTech Sectors Are Available in Hong Kong?

fintech sector hong kong

Source: SP Global Hong Kong in Terms of Technology, Regulation, Industry, and Preferences

HK Financial Services Development Council authorized an in-depth research paper – FSDC Paper No.29 titled, ‘The Future of FinTech in Hong Kong’. According to the research, FinTech start-ups, in tandem with e-commerce and technology companies are growing at a steady clip. FinTech developments are set to reduce expenses for financial services clientele, and with Hong Kong’s special status in terms of trusted regulatory standards, it also features good relations between the East & West. Yet for all its merits, Hong Kong is a relatively small financial market, with limited coordination with the public sector, high costs, and a severe lack of technological innovation. A government-appointed FinTech study was commissioned by the ‘Steering Committee’ in 2016/2017. Among the many strengths of the financial sector in Hong Kong are Payments and Securities Settlement, Cybersecurity, WealthTech and InsurTech, Digital ID and KYC, and RegTech.

Some 7M + people are serviced by the Hong Kong FinTech market. In 2018, 50 million visits from Mainland China to Hong Kong were reported. Chief among the industries in the SAR are wealth management. Dozens of companies expressed interest in virtual banking licenses with the Hong Kong Monetary Authority (HKMA), resulting in 8 licenses from almost 3 dozen official applications.

Companies like ‘WeLab’ are now offering services on the go with AI and risk-management tech. FinTech companies mainly service clients from Hong Kong and China. FinTech is available for use with personal financial services, and SMBs too. Some 150,000 [offshore] companies are incorporated in Hong Kong annually. Blockchain tech, like distributed ledger options are widely used in the SAR, particularly with Artificial Intelligence. Hong Kong’s dynamic FinTech developments were initiated by the HKMA, and set into motion in 2017. It was the SARs official monetary authority – the Hong Kong Monetary Authority.

Fueling strong growth in Hong Kong’s FinTech arena is the Internet. According to stats, Hong Kong (SAR) Internet growth ranks among the top 10 in the world. At speeds of around 150Mbps – 200Mbps, Hong Kong bests countries like the USA, Hungary, Andorra, Taiwan, Switzerland and Lichtenstein, among others. In terms of 4G connectivity options, Hong Kong is #4 in the world at close to 95% coverage across the SAR. In Hong Kong, Internet connectivity [According to S&P] was 67% for 4G, 21% for 3G, and 12% for 2G. The 7 FinTech initiatives according to Hong Kong’s Monetary Authority include the following:

  • FPS (Faster Payment System)
  • FSS (FinTech Supervisor Sandbox)
  • Virtual Banking Services
  • Banking Made Easy Initiative
  • API (Application Programing Interface)
  • Closer Cross-Border Collaboration
  • Enhanced Research & Talent Development

That Hong Kong announced Virtual Bank licenses was certainly a key development in the SAR. The disruptive capabilities of FinTech in the SAR are bringing tremendous innovation, growth and development to the special administrative region. Both wealth management and insurance development have accelerated since the outbreak of the coronavirus, with relaxed regulations designed to facilitate robust growth.