Adoption of fintech has increased significantly in Hong Kong’s traditional financial sector in recent years, particularly in regtech, insurtech, and greentech where it has increased by 16, 27, and 29 percentage points respectively since 2022, according to a new study by the Hong Kong Monetary Authority (HKMA).

This upward trend is expected to continue, as financial institutions maintain strong investment in technology and increasingly embrace innovations such as artificial intelligence (AI) and distributed ledger technology (DLT).

Regtech adoption in Hong Kong reached 97% in 2025, making it one of the most mature fintech verticals in Hong Kong. This near-universal adoption reflects the strategic importance institutions are placing on leveraging technology to enhance risk management while reducing operational costs, amid a shifting regulatory landscape.

Within regtech, the strongest growth 2022 to 2025 was seen in governance and accountability, conduct and customer protection, and risk management, where adoption grew by 116%, 42% and 37%, respectively.

Insurtech also saw significant gains, with adoption rising from 28% to 57% between 2022 and 2025. This represents the largest increase among fintech categories. In Hong Kong, at least one-third of retail banks have already implemented insurtech, according to HKMA. It is expected that all retail banks will have adopted insurtech to support their bancassurance services by the end of 2025.

Greentech also made significant progress, with adoption growing from 26% to 45% between 2022 and 2025. This reflects growing institutional focus on sustainable finance and climate risk management.

Finally, wealthtech adoption rose from 43% to 52% during the same period, underscoring the sector’s ongoing investment in enhancing investment services through digital platforms and automated advisory solutions. This growth is being driven by rising customer expectations for more sophisticated digital wealth management offerings.

AI and DLT drive innovation

Booming adoption of fintech in the financial services industry is accompanied by increased implementation of AI and DLT. In 2025, AI usage climbed to 75%, up from 59% in 2022, while DLT adoption rose from 30% to 45%.

Many institutions are moving from experimentation to operational implementation. In May 2025, Citigroup introduced Citi AI, a suite of AI tools for its employees in Hong Kong. The tools support internal operations including information retrieval from Citi’s policy library, document summarization and creation of electronic communications drafts among others.

That same month, HSBC launched its Tokenised Deposit Service for corporate clients in Hong Kong, claiming the first bank-led blockchain-based settlement service in the city. In its initial phase, the service supports treasury management with real-time HKD and USD payments between corporate wallets, as well as tokenization use cases settlements.

Future growth outlook

Looking ahead, AI and DLT are expected to continue driving innovation across all fintech domains. For example, in wealthtech and regtech, approximately 80% of anticipated use cases that will reach advanced maturity levels or higher are expected to be supported by AI and DLT. For greentech, this proportion is estimated to reach about 70% of advanced use cases, while in insurtech, around 60% of advanced implementations are expected to incorporate AI and DLT.

This momentum is backed by strong financial commitment. 95% of financial institutions plan to maintain or increase their fintech investments over the next three years, with half anticipating budget growth of 10% to 20%.

Financial institutions are also adoption a more strategic approach to technology spending. On average, 43% of technology budgets are allocated to in-house solution development, 30% to vendor partnerships, and 21% to critical support activities. This suggests a more balanced approach, underscoring growing recognition that successful digital transformation requires both new capabilities and robust operational foundations.

Persistent challenges

Despite progress, institutions face increasingly complex challenges. High implementation costs was cited by 75% of respondents as a primary concern, particularly for technologies requiring significant infrastructure investments or specialized expertise. Other major concerns include risks tied to new technologies (73%), such as cybersecurity, operational disruptions, and regulatory compliance issues, as well as challenges relating to integrating new technologies with existing systems (71%), as institutions must navigate complex technical environments while maintaining operational continuity.

HKMA’s Tech Maturity Stock-take study, conducted in January 2025, covers 56 submissions from authorized institutions. It examines both the quantitative progress in technology progress and the qualitative aspects of implementation maturity, aiming to provide insights into the evolution of fintech in the banking sector over the past few years and the challenges that lie ahead.

Featured image: Edited by Fintech News Hong Kong, based on images by pvproductions and TravelScape via Freepik