By: Michal Kaczmarski, Fintech Manager for Americas, InvestHK
With 2.5 trillion USD in assets managed annually, over 260 banks (including 75 out of 100 largest banks in the world) and a growing role as a Renminbi offshoring centre, Hong Kong emerged as a prime Financial Services hub.
In the past 3 years Hong Kong has also been making great strides to match its capabilities in Financial Services with the next big thing – Fintech.
Here are just a few recent examples showing Hong Kong’s progress in establishing itself as Asia’s prime Fintech hub:
There is currently over 130 Fintech startups that either have their headquarters or overseas offices in Hong Kong, predominantly across 5 subsectors: Cybersecurity, Blockchain, Regtech, Insurtech and Wealthtech. Nearly half of these startups are amongst top 100 largest Fintech companies worldwide, InvestHK and IDC Financial Insights data shows. Amongst them there are companies such as Payoneer, a New York-headquartered cross-border payments platform valued at $ 880m and WeLab, a Hong Kong-founded lending platform that collected $ 180m in 3 rounds of financing from a number of investors including Sequia Capital.
Apart from startups, Fintech stakeholders include a plethora of institutions including government related: InvestHK, Hong Kong Monetary Authority (HKMA), Insurance Authority (IA), Securities and Futures Commission (SFC)and industry driven: Bitcoin Association of Hong Kong, Hong Kong Venture Capital and Private Equity Association and recently launched FinTech Association of Hong Kong.
Hong Kong is also a home to a number of Fintech dedicated accelerators such as the DBS Accelerator, the SuperCharger Accelerator, Fintech Innovation Lab and SparkLabs. Startups expanding to Hong Kong can also launch their operations within a newly opened Fintech floor at Cyberport, a 26-hectare business park located in Telegraph Bay.
The city is also a host to a number of Fintech-dedicated events happening on a weekly basis, including major regional events such as HK Fintech Week (taking place between 23 and 27th of October, 2017) and Finovate Asia (taking place between November 7th and 8th).
Local Fintech startups can also benefit from a robust funding ecosystem which includes over 30 venture capital funds (and amongst them well-known names such as 500 Startups, Alibaba Entrepreneurs Fund and Warburg Pincus), as well as governmental support schemes such as HK $2bn fund to support Fintech announced in April 2017. Meanwhile local universities such as Chinese University of Hong Kong (CUHK) have been recently launching Fintech-dedicated programs to provide a talent pipeline to the growing sector.
There is no escape from regulations, where financial matters are at stake. Hong Kong is a no exception there. However, to streamline licensing process, Hong Kong authorities established facilitation offices within the SFC and the office of insurer, as well as Fintech Sandbox under the supervision of the HKMA, with eight banks gaining access to the sandbox, 18 applicants participating in it and in respect of 18 and 10 pilot trials being completed so far, followed by the full launch of the fintech products.
Additionally the HKMA has been working on the proof of concept (PoC) on central bank digital currency and is piloting another PoC – on trade finance. It also plans to launch Faster Payment System (FPS), an immediate payments solution, set to be live by 2018.
InvestHK, the governmental entity focusing on assisting overseas companies to expand in Asia via Hong Kong has also been increasingly working on supporting Fintech companies looking to launch their operations in the city. To date InvestHK assisted such Fintech companies as Algomi, a British software provider for fixed-income market data and Leverate, an Israeli solution provider for Forex brokerages. It also has a Fintech-dedicated team, as well as overseas officers dedicated to support Fintech companies by providing information on matters such as regulations, support schemes and working visas. If you wish to receive such free, confidential and customized services for your Fintech company, contact Michal Kaczmarski – Americas (email@example.com.
Fintech team of InvestHK will also be present at the State Digital Money Conference in LA on July 22nd. Stop by our booth to learn how we can assist you with your expansion to Asia!