Hong Kong failing on fintech, says influential government advisor

An influential government think tank has warned Hong Kong needs to improve its fintech game.

Hong Kong’s heavyweight government advisory says the government needs to up its game on fintech.

Hong Kong must radically upscale its fintech ambitions and introduce far-reaching regulatory reform if it wants to be a global fintech hub. 

In a new report, the powerful government advisor, the Financial Services Development Council, said Hong Kong is falling behind its peers and must play to its strengths if it wants to grow its fintech scene. 

“Hong Kong, despite its large financial sector… has only a modest showing in the FinTech space,” the report said.

“Hong Kong is very strong in ‘Fin’, but not strong in ‘Tech’. 

“Does this matter? Yes… because over the coming decade or so it may dramatically alter today’s financial services.”

Hong Kong suffers disadvantages such as its small market, the dominance of incumbents, and a less-than-storied history of technological innovation, the report noted. But rather than overcoming these weaknesses, regulators have sat on their hands allowing Singapore and arguably Australia to overtake Hong Kong as the Asia-Pacific regional fintech capital it concluded.

“Hong Kong is a latecomer and, to have any chance of competing with and if possible overtaking other centres, it must focus. 

“Hong Kong should not try to be a FinTech generalist but should focus on key areas within FinTech and build its reputation and expertise based on its strongest advantages.”

The report recommended the government create a fintech office aimed at boosting and organising the fintech sector from the top-down. 

It should also build on Hong Kong’s comparative advantages such as its proximity to China and the global trust in its regulatory institutions. 

Financial services make up 18 percent of Hong Kong’s GDP and provide 6 percent of its jobs.