NexChange spoke with Charles d'Haussy, head of FinTech for Invest Hong Kong (InvestHK), about the explosive growth of the fintech market in this Asian financial hub of roughly 7 million people.
The pledged support of the Hong Kong SAR (HKSAR) Government has been intrinsic to the growth of the market, teaming up with the private sector to build out its fintech ecosystem. In this first installment of our interview, d'Haussy talks about the five priorities that InvestHK has for fintech in Hong Kong.
"I think the fintech market today is not the same as where fintech was two years ago," d'Haussy says. "Two years ago we were talking about two or three startups that were supposed to change the world and make a name for themselves. Nowadays when we talk about fintech we talk more about collaboration between the big incumbents and the new technology companies."
Cyber Security "Finance is about trust," d'Haussy says. "Two parties are dealing and making a transaction and this transaction will not happen if there is no trust." With this in mind, d'Haussy says the focus on cyber security helps Hong Kong grow its assets in fintech, while ensuring that the market stays safe.
Blockchain d'Haussy notes that blockchain is helping to innovate a lot of the back-office services, where significant inefficiencies exist in banking and financial services. "When you look at blockchain I would say a lot of the action is coming from financial services because they have the problems and the budget to fix it," d'Haussy says. Hong Kong has a strong telecommunications industry and has attracted major cloud service companies from both the US and mainland China. "This is very important because it’s really helping to get the blockchain market moving forward," d'Haussy says.
Insurance Technology Hong Kong is home to a large insurance market, and like other insurers across the globe, the market here is playing catch-up with innovation. "It’s our responsibility that our insurance companies are surrounded by the best and brightest insurance technology practitioners from around the world," d'Haussy says. "So our job at InvestHK is to engage with these companies from the US, from Europe, from mainland China and explain the value proposition of Hong Kong so they will come here and start a business or expand a business in Hong Kong."
Regulation Technology "[Financial] compliance can be seen as a problem, but it can also be seen as an opportunity if you get things right and use technology to deliver on compliance requirements," d'Haussy says. Just as it does with insurtech, InvestHK is engaging with the "best and brightest" RegTech practitioners and researchers from across the globe "to make sure that we have in Hong Kong an early and strong practice in regulation technology," according to d'Haussy. InvestHK has one significant resource right in its own backyard to help in these efforts: Hong Kong University happens to have one of the best research schools in the world dedicated to technology regulation. "This gives InvestHK momentum in the field," d'Haussy says.
Wealth Management The wealth management market in Hong Kong has an estimated US $2.3 trillion in assets. Helping to spur along this growth in the wealth management industry, according to d'Haussy, is Hong Kong's straightforward regulatory framework. "We have very clear regulations for robo-advisors in Hong Kong so we see a lot of robo-advisors coming up," he says. "We also have very clear regulation for the distrubition side of wealth management which attracts companies who are building distribution platforms from mainland china and the US."
With 159 licensed banks, Hong Kong has become an attractive market for collaboration with fintech startups from around the globe that want to establish a business without many of the regulatory pressures they'd face by going it alone.
"Some companies will make a name for themselves in very specific verticals of the fintech industry, but a lot startups do not have appetites for a banking license or insurance license or wealth management license," d'Haussy says. "Most of them just want to help with the process, help with the back office, help with the user experience or distribute products in new ways. But they don’t necessarily want to get a license and get under all of this compliance framework."
Photo: Getty Images