The race to be crowned as Asia’s financial technology hub has gained momentum with the launch of an industry association in Hong Kong, despite some efforts to play down the competition between jurisdictions.
The non-profit entity is backed by some of the largest consulting firms, including EY, KPMG and PwC, and other interested parties, such as HSBC. It is part of a campaign involving the financial sector, regulators and economic development agencies to support Hong Kong as a thought leader and prominent solutions provider in the fintech sector.
The Fintech Association of Hong Kong (FAHK) is basing its activities around 12 committees focused on the key areas of fintech, and a chief executive is to be named in due course.
James McKeogh, a partner at KPMG, told AsianInvestor that the committees were working on a development agenda and that the first fruits of it could be expected in two to three months. He added that the industry recognised the advantages of working together for the common good, rather than trying develop competing systems.
But try telling that to the various countries making moves in this area. Fintech platforms have also been set up in Indonesia, Malaysia and Singapore, noted Maaike Steinebach, managing director for Hong Kong at Commonwealth Bank of Australia. Taiwan, too, has been making moves down this path.
What makes Hong Kong’s different, she told AsianInvestor at the FAHK launch, is that it will be non-profit and driven by member consensus and not by any one organisation’s commercial imperatives.
Yet Singapore's fintech initiative, for instance, appears to be developing along similar lines. The Monetary Authority of Singapore late last month announced a agreement it had signed with the International Finance Corporation, the private-sector arm of the World Bank Group, to encourage fintech development.
Meanwhile, McKeogh said the FAHK was open to working with associations from other countries. But the fact that the association is being set up with the name Hong Kong rather than Asia suggests that will not be a priority.
Mobile tech key to debate
The crux of the debate about fintech in Asia is mobile technology and how it is changing consumer behaviour, said independent fintech consultant Matthew Dooley, who helped set up HSBC’s first online payments system 20 years ago. He told AsianInvestor he saw Asia as a proving ground for many of the ideas that would eventually be adopted globally.
Payments systems such as Alibaba’s Alipay and stored-value facilities such as Hong Kong’s Octopus card system, are examples where Asia has led the way. The scope of the FAHK also covers areas that will be of interest to asset managers and investors, such as big data, robotics and regulatory compliance, said Dooley.
As reported, Asian funds industry experts predict that the funds industry will undergo a considerable shift over the next 10 years as a result of this confluence. At a bare minimum, many plain-vanilla types of equity investing could become automated, while the rise of online payments is expected to revolutionise fund distribution.
Indeed, Steinebach told AsianInvestor she saw FAHK agenda priorities as including artificial intelligence, financial literacy and promoting talent and diversity. She added that Hong Kong’s success as a fintech hub would depend on women being equally represented in the deliberations over how the sector is developed and implemented.
Regulation is also a key factor in the association’s remit and Henri Arslanian, director of consulting at PwC in Hong Kong, said the relationship between industry and regulator on this issue was closer than many people think. Arslanian is on the fintech advisory committee of Hong Kong’s Securities and Futures Commission (SFC).
The SFC last month launched a consultation on guidelines on online distribution and advisory platforms. It has also established the Fintech Contact Point to enhance communication with businesses involved in the development and application of fintech in the city. And the Hong Kong Monetary Authority has established a Fintech Facilitation Office to foster the healthy development of the fintech ecosystem in Hong Kong.
Read about how fintech will revolutionise asset management in the latest (June/July) edition of AsianInvestor magazine.