It’s a FinTech future for Hong Kong
IT expertise in demand as city gears up to be financial technology hub
Changing consumer behaviour and the development of new technology are two of the drivers behind the rise of global financial technology (FinTech) development, which is creating new business and career opportunities in Hong Kong.
At a time when banks and financial institutions offering traditional services are under increasing pressure to cut costs and exploit technology opportunities, access to cloud technology and open source software is making it easier for a wave of Hong Kong financial technology ventures to develop products and solutions the established financial industry is looking for.
FinTech can be applied to almost any area in the banking and financial services industry. And while banks in Hong Kong have long invested in technology, by tapping into FinTech developments, banks can help reduce time to market by adopting innovative concepts and game-changing products.
In his 2015-16 budget speech, financial secretary John Tsang Chun-wah said he had asked the Financial Services and the Treasury Bureau to set up a steering group to study how to develop the city into a FinTech hub, together with industries, research and development institutions and regulatory authorities.
Tsang has said previously the relentless tide of technology spares no one and it is imperative that Hong Kong’s financial services sector seize the opportunities offered by financial technology.
According to the Deloitte Digital Transaction Banking Report forecast, by 2025, the total spending power of end consumers in Australia, Hong Kong, Malaysia and Singapore will be about US$2.5 trillion. Significantly, the report predicts that 75 per cent of spending will come from Generation Y and Z digital natives and the digitally savvy Gen X.
Brett King, CEO and founder of New York-based Moven, an app developer that helps users make calculated spending decisions, says the financial services industry needs to think seriously about FinTech.
“Thanks to the ‘always online’ culture we live in and the proliferation of the smartphone, the use of technology has drastically changed the behaviour of consumers,” King told the Asian Financial Forum in Hong Kong in January. “To put it into perspective, there will be more changes in financial services in the next 10 years than in the previous 100 or 200 years. That’s what we call disruption.”
King added that until recently, the financial services industry had been fairly immune to these changes because of the way they were regulated. “But that affords no protection for the future,” cautioned King.
Other panelists at the forum largely agreed with King’s views on technological trends, but indicated that privacy and security topped their concerns. “Tech over Fin, or Fin over Tech, we need a balanced approach,” said Amy Choi, vice-president of Ping An Bank, who added that security is important for its customers.
According to FinTech specialists, the bulk of financial technology development has been taking place in Western countries with London and New York considered the hot spots. However, the trend seems to be changing.
“FinTech is on everybody’s radar these days,” says Jon Allaway, senior MD and group technology officer at Accenture’s financial services operating group. “Over the past two years, there has been a sizable pickup in Asian FinTech investment, with technology tailored for Asia businesses and growth.”
Last year, for example, Hong Kong was chosen by Accenture, in partnership with Cyberport and supported by a group of 10 leading financial institutions, to launch a FinTech Innovation Lab Asia-Pacific accelerator programme.
During the 12-week programme, representatives from organisations such as HSBC, UBS and Morgan Stanley worked with FinTech start-up founders to share insights into the banking sector and develop relationships with senior industry executives.
FinTech HK founder Janos Barberis says with the centre of economic gravity shifting from West to East, Hong Kong is the only place where the global advantage and China advantage converge in one city.
This makes it an ideal testing ground for the mainland’s financial market liberalisation and a unique platform for FinTech start-ups and entrepreneurs to develop, test, showcase and globally launch their products and services.
In addition, Barberis says Hong Kong has been fortunate to attract some of the world’s leading talent who understand tomorrow’s FinTech challenges and trends.
“There are many FinTech business opportunities in Asia, including alternative lending, the use of big data for credit scoring, implementing technology solutions for know your client [KYC], prepaid and virtual cards and wallets, security, [and] a host of mobile applications,” Barberis says.
However, Barberis advises that financial professionals need to have the right business environment and operating structure to turn their ideas into valid business models.
Puay Eng-Chuan, regional sales director with Financial Services Dimension Data Asia-Pacific, says the move to a new consumption model is driving demand for expertise to support new technology solutions. “New infrastructure such as data centres have to be built, so IT expertise is being sought in Asian markets to implement the changes,” Puay says.
Regulations need to allow institutions to adopt new consumption models and provide guidelines on technology risk mitigation under the any new regulatory regimes, Puay adds.
Dean Stallard, regional director of Hays in Hong Kong, says banks here are hiring candidates with technical skills and industry experience. “There is consequently a lot of competition for candidates with technical skills and industry experience,” he says.
Project specialists and project coordinators are in demand to help keep tasks on schedule and increase technical capabilities to ensure safe and enhanced mobile phone use.