Regtech in Hong Kong Grew 10 Times in Last 5 Years

Regtech in Hong Kong Grew 10 Times in Last 5 Years

by November 3, 2020
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Regtech in Hong Kong has expanded around 10 times in the number of Regtech companies in recent 5 years, and each of the one-fifth of surveyed Regtech companies are targeting to raise over 5 million USD venture investment in 2021, revealed by a study from the RegTech Association of Hong Kong.

RegTech Association of Hong Kong (RTAHK) today released the Hong Kong’s first Regulatory Technology (Regtech) landscape study, titled “2020 Hong Kong RegTech Map”. The study is based on industry-wide research and survey carried out by the RTAHK and co-supported by Cyberport, InvestHK and Moment Fintech, which aims to understand the market and investment potential of Regtech sector in Hong Kong, the technological driving forces behind those rising startups and the sectors which can be benefited from RegTech.

Regtech in Hong Kong RegTech Map 2020

Hong Kong RegTech Map 2020

The study was conducted in October 2020, mostly with Regtech companies from Cyberport and Hong Kong Science Park as well as industry organisations. One of the key findings showed the number of Regtech companies in Hong Kong has increased 10 times in last 5 years, about half of them are start-ups with less than 2 years in operation.

Although the Regtech industry is young in Hong Kong, it is energetically booming and targeting a strong inflow of venture investment. Over 17% of these fast-growing Regtech companies have plans for fundraising of over 5 million USD in 2021, driven by both the technological advances in their solutions and the massive market needs in Hong Kong’s regtech industry.

Among the surveyed Regtech companies, nearly 80% of their solutions are driven by advances in artificial intelligence and machine learning technologies, accompanied with data analytics, cloud computing and rule-based expert systems. Not limited to the financial industry, their solutions can be applied over multiple industries. Some of our surveyed companies target Government/Civil Service, Software Technology Industries, Construction and Real Estate etc.

The study also contains a snapshot of 100 Hong Kong Regtech stakeholders, half of which are some of the best home-grown Regtech startups and solution providers, portraying a blueprint of the strong and growing Hong Kong Regtech ecosystem.

Regtech in Hong Kong: RegTech helps all industries

Figure 1. RegTech helps all industries

All the surveyed Regtech solution providers targeted financial institutions as potential clients and more than half are targeting clients outside the Financial industry. 64% claimed to target the Government/Civil Service and 36% claimed to target the Software Technology industries.

AI empowers RegTech

Figure 2. AI empowers RegTech

Survey findings confirm the artificial intelligence, data analytics, cloud computing and rule-based expert systems are the primary tools and technologies involved in Regtech solutions.

Figure 3. RegTech is young and booming

Figure 3. RegTech is young and booming

Regtech is a young industry in Hong Kong. Almost 93% of the Regtech solution providers in the survey have been operating for less than 5 years, and about one half of those have been operating for less than 2 years in Hong Kong.

RegTech expecting investment to skyrocket in 2021

Figure 4. RegTech expecting investment to skyrocket in 2021

Regtech solution providers are expecting a strong investment scene in 2021. About 60% of the responded Regtech solution providers are planning to raise over US$2m and 17% are planning to raise over US$5m next year.

 



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