According to the figures from KPMG, Hong Kong ranks fourth in FinTech funding on a global basis. In fact, the first part of FinTech is finance and Hong Kong is clearly already a global leader. Hong Kong often ranks among the top three financial centres in the world. However, the strength of the Hong Kong financial sector lies with the traditional sectors: banking and insurance. Hong Kong is not very strong in areas most affected by FinTech like start-ups, computer programming, P2P, asset management and payment system. For Hong Kong to become more relevant in FinTech, I believe much work needs to be done.
It is not surprising that the US leads FinTech. After all FinTech is based on the latest technology like artificial intelligence and cryptology. US is the undisputed leader in technology. Unfortunately Hong Kong has been under-investing in this area. Hong Kong’s spending in R&D is among the lowest in the world. In the past Hong Kong paid more attention to finance and commerce and ignored basic science and research. As a result it is hard for Hong Kong to generate original ideas. Worst, Hong Kong simply do not have enough programmers to meet the needs of FinTech. I always find it strange that the Hong Kong University of Science and Technology is much better known for its EMBA program than science and technology. While Stanford and MIT are also well known for their business schools, they are equally famous for their computer science, basic science and research capability. Unless Hong Kong universities can allocate more resources to science and technology, Hong Kong’s role in FinTech may be limited to capital providers.
One of the major hindrance of Hong Kong to develop technology is the antiquated education system. Major Technological breakthrough comes from creativity. Think outside the box. This is exactly the opposite of what Hong Kong education system is providing: lots of memorisation and learning. Material that they will never use in their career. The education system in Hong Kong was very good at training professionals like accountants and lawyers, who have to follow a book. However, what the world needs are people with creative thoughts, willingness to challenge the status quo. These are the solely missing in the Hong Kong education system.
FinTech requires programmers and software engineers. Some of the best and cheapest programmers are from India. UK and Singapore did well in FinTech because of the sizeable population of Indians. Many of my friends in technology complained that it is very hard to get visas for tech workers from south east Asia. The visa rule most be relaxed to bring in the tech workers from overseas.
Hong Kong needs to be more proactive in supporting start-ups. In this area InvestHK has been extremely instrumental in helping many foreigners to set up offices in Hong Kong. InvestHK has organised events so that start-ups and venture capitalists can meet. But I think Hong Kong companies need to be much more willing to adopt new technologies in their businesses. Many companies in Hong Kong, family owned, has been running the to same way for many many years. They have adopted the if it works, why changes? Many companies make money from real estate, so there is a lack of incentive to adopt new technology. After all, if you own a few buildings in Hong Kong, why bother with technology. Many industries like retail and restaurants have been running in the same way for many many years. I really believed that the rich tycoons need to do more to help Hong Kong to transform into a more advanced economy. Again, in this aspect China can be our role model. China leads the world in payment systems and mobile banking. Chinese companies know they need to embrace digital age to remain relevant. Such motivation has been lacking in Hong Kong.