Hong Kong Fintech Week 2021’s 2nd day continues to be abuzz with activities, announcements, and sessions with industry leaders. From insurance to crypto-assets, CDBCs here are some of the key highlights from day 2 of Hong Kong Fintech Week.

Insurance Authority widens support for Insurtech

Mr Clement Cheung, CEO of the Insurance Authority, announced further support for insurtech in Hong Kong and the Greater Bay Area. The Authority is examining the possibility of allowing more users to access the Insurtech Sandbox, launched in 2017, to test innovative ways of doing business. “We are also thinking about enabling an open API framework for the insurance sector in 2022,” he said.

HKSTP unveils FinTech Virtual Lab

Hong Kong Science and Technology Park Corporation (HKSTP) unveiled the FinTech Virtual Lab to accelerate fintech R&D and commercialisation in Hong Kong. Operating under HKSTP’s flagship STP Platform and supported by the Hong Kong Monetary Authority (HKMA), the lab enables banks, institutions and tech ventures to build and test their latest fintech innovations.

Hong Kong’s first-ever Digital Employee Compensation Insurance revealed

AMTD Digital, REAP and FWD General Insurance have launched the city’s first-ever digital compensation insurance for corporate employees today.

Businesses will now be able to purchase the government-mandated employee compensation insurance in less than five minutes using REAP’s award-winning payment management platform. The entire process from application, quotation to credit card payment is fully digitised, and brokered exclusively by AMTD Risk Solutions Group.

The process minimises tedious and manual input and back-and-forth email correspondence between applicants for insurance, intermediaries and insurers. Employees can complete their applications on their phone or laptop anytime, and receive a notice of insurance automatically.

Hong Kong Youth FinTech Association marks new era in talent development

The Hong Kong Youth Fintech Association (HKYFA) was officially launched today at Hong Kong Fintech Week 2021 to raise awareness of and interest in fintech among young people. The association will stimulate innovative thinking and fintech talent development to sustain and strengthen Hong Kong’s role as a global financial centre.

HKYFA is led by Dr Calvin Choi, Chairman of AMTD Group and the lead promoter and Founding Chairman of HKYFA, together with AMTD Digital. The joint promoters include Hong Kong Youth Association, the Greater Bay Area Young Entrepreneurs Association, Deloitte China, 36Kr, Zebras, Shared Value Initiative Hong Kong, FinStep Asia, and the Regional Banks + Strategic Cooperation Alliance.

Evolution of Global Capital Markets

Mr Nicolas Aguzin, Chief Executive Officer, Hong Kong Exchanges and Clearing, said “China’s growing economic and financial influence presents huge opportunities for Hong Kong as a capital raising, wealth management and risk management centre, and as a gateway to the China innovation growth story.” He revealed he country’s capital value will increase to US$100 trillion by 2030, equivalent to the total market capitalisation of every listed company in the world’s developed economies.

He predicts that capital market activity in China will benefit from the release of domestic savings, which accounts for around 45% of national GDP and is double the global average.

mBridge: Building a Multi CBDC Platform for International Payments

Ms Bénédicte Nolens, Head of the BIS Innovation Hub Centre Hong Kong (BISIH), moderated the deep dive into the mBridge CBDC platform, a collaboration between the HKMA, BISIH, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China and the Central Bank of the United Arab Emirates.

Mr Colin Pou, Executive Director (Financial Infrastructure) of the Hong Kong Monetary Authority (HKMA), said the platform’s success is due to the ability of technology to “tackle issues that we have not been able to handle in the past. Now that the right climate is in place for global payments, we need to invest fast and we need to make sure we are doing it right.”

Mr Mu Changchun of the People’s Bank of China, said the mBridge is built with end users in mind according to a ‘Lego brick approach’ instead of a typical silo architecture. This means it can accommodate the requests of various parties across several different jurisdictions.

Mr Shu-Pui Li, Advisor, The Governor Office of Central Bank of U.A.E., said “It was critical that mBridge did not just become another alternative to a banking network. It needed to make a difference and it does.”

Project Genesis: Deep Dive

Mr Marcel Bluhm, Advisor at the BIS Innovation Hub Centre Hong Kong, moderated a discussion on Project Genesis, a partnership between the BIS Innovation Hub and HKMA that aims to democratise and demystify the tokenisation of green bonds.

The panel shared the results of the tests of two prototype digital platforms that will allow policy makers and stakeholders to develop their own innovative approaches to green bond distribution and transparency.

Raising Capital in Hong Kong

Mr King Leung, Head of FinTech at Invest Hong Kong, led a discussion on fundraising in the post-pandemic era. He exchanged ideas and insights on raising capital in Hong Kong with the expert panellists.

Dr Calvin Choi, Chairman of AMTD Group, said Hong Kong’s investment in fintech makes it possible for the financial services industry to secure capital funds from the city to connect with the rest of the world, adding that financing is only the beginning for firms accessing the market.

Ms Cindy Chow, Executive Director of Alibaba Entrepreneurs Fund, advised entrepreneurs to recruit teams that are agile enough for their new companies to pivot and scale-up. She said the majority of applications for funding in the Alibaba Entrepreneurs Fund Jumpstarter global pitch competition still originate from fintech firms and this trend is only set to continue.

Mr Mark Munoz, Managing Partner at Vectr Ventures, agreed that fintech investments are very much alive and running from a financial perspective, and are being driven by regulation. He revealed the company is set to launch a second fund dedicated to fintech in January 2022.

Mr Eric Poon, Executive Vice Chairman of the Association of Family Offices in Asia, spoke of the widespread interest in business opportunities in the fintech ecosystem and infrastructure among the second and third-generation family offices, who prefer to invest “as a club”.

HSBC to invest US$ 5 billion to be a “digital first” bank

Ms Jayne Chan, Head of StartmeupHK at InvestHK, was joined by Mr. Barry O’Byrne, Chief Executive of Global Commercial Banking at HSBC, to talk about the future of banking and ways the banking sector can reinvent itself through fintech.

“HSBC puts its focus on growth in Asia and we are on a journey to transition into a digital-first bank,” he said. Since the bank launched the cloud-based SME banking app Kinetic this year HSBC is broadening its investment focus to new digital applications in payments, customer service, banking as a service (BaaS) and trade finance, he said.

He further revealed that HSBC will be investing US$ 2 billion over 5 years to be a digital-first bank and that they will continue to work with the 100 fintechs they are already partnered with

Crypto Assets – Investing for a New Age

Ms Etelka Bogardi, Partner of Norton Rose Fulbright, led a discussion on what institutional investors can do to seize opportunities in the crypto market.

Ms Toya Zhang, Deputy COO of AAX, said crypto has now moved beyond its infancy stage. The three major trends she observed this year include integration between traditional finance and the crypto space in lending and ETFs, increased appetite for virtual assets, and higher adoption rate of crypto. Over 800% growth this year was driven by developing countries. She anticipates crypto will play a key role in ownership of assets in gaming and Esports.

Mr Michel Lee, Executive President of HashKey Group, said the key driver for crypto growth is market infrastructure supported by clear regulatory frameworks and auditing and taxation models. These will make it easy for existing institutional investments to come in, he said. He also revealed HashKey, one of the biggest digital asset managers in Asia, would submit more license applications in the region.

Mr Ken Lo, Co-founder & Chief Strategy Officer of HKbitEX, explained the role of the institutional investors now goes beyond simply holding new cryptocurrencies. He said family offices have become some of the largest partners in crypto, directly investing in blockchain and crypto funds which power the region’s startup ecosystem. Looking ahead, Lo sees more institutional investors entering the crypto space as early seeders, venture capital firms and limited partnerships.

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Featured image: Mr Edward Yau, Secretary for Commerce and Economic Development, Hong Kong SAR