Hong Kong Fintech: Companies, Regulations, & Initiatives that Shape the Scene
Using technology to improve financial services is now commonplace, helping companies and consumers to manage financial transactions with ease. Specialised software and algorithms use computers and smartphones to improve and automate the delivery and use of financial services.
Asia is a major player in the fintech industry, with Digital Internet World reporting that China’s fintech industry attracted $42 billion in investments. The three most highly-valued fintech start-ups in the world (Ant Financial, JD Digits, and Du Xiaoman Finance) are all based in China.
Neighbouring Hong Kong is home to 600 fintech companies and start-ups and ranks as one of the top 10 fintech locations of the future. Pioneering one of the world’s first smart contactless payment systems, the Octopus card, Hong Kong is central to global fintech operations. The city has a sophisticated and smart banking system and high penetration and adoption of fintech.
In 2020, research by Fintech News on Hong Kong fintech market size stated that its largest component was digital payment solutions, valued at $16,431M, then personal finance, listed at $1,491M, and alternative financing at $190M. So, who are the leading Hong Kong fintech companies?
Major Companies in Hong Kong Fintech Ecosystem
The future of fintech in Hong Kong is looking bright, leading Asia through a revolution in virtual banking. Perfectly positioned, Hong Kong is a launchpad for fintech companies seeking to innovate. Hong Kong fintech trends include digital insurance, banking, mortgage and global asset advisory services, and more. Here are our top picks within the current Hong Kong fintech hub.
Our Top 5 companies in the Hong Kong fintech industry include:
1. Bowtie – Founded in 2018, Bowtie is the first company to provide a fully digital insurance experience, where customers can obtain quotations and underwriting and claims services online. Cleverly built with technology and medical expertise, it offers health insurance plans under the Voluntary Health Insurance Scheme (VHIS) directly to customers. In April 2020 it announced a partnership with 3 Hong Kong (a mobile division of Hutchison Telecommunications HK) to launch 3Care, a mobile insurance platform for its subscribers. It also partnered with delivery company Deliveroo HK to offer insurance to riders and their families.
2. ZA Bank – Launched in March 2020, this is Hong Kong’s first virtual bank that quickly acquired over 180,000 users. They intend to provide a full suite of services 24/7. Fast-moving, in May 2020, ZA Bank expanded its services with ‘ZA Life’ and ‘ZA Insure’. It has also partnered with Fiserv to deploy its VisionPLUS global payment software.
3. One Degree Hong Kong – This is a wholly-owned subsidiary of AI Financial Technology (OneDegree) and in April 2020 they launched their first offering in medical coverage for pets, aptly named ‘Pawfect Care’. They are currently on track to launch cyber insurance and medical coverage for humans over the coming year.
4. Roots – This property and mortgage advisory platform works by analysing user behaviour, requirements and financial situations, to streamline the home purchase process. With a simple online application, homebuyers can obtain accurate mortgage offers from multiple banks. Simplifying the process of buying a new home has never been easier.
5. Diginex – This is a blockchain financial services and technology company, which partners with institutional investors, corporations, and governments to make digital assets more accessible and business processes more efficient and secure. It provides investment tools to manage digital assets, capital markets, insured custody, and exchange and markets, as well as end-to-end blockchain solutions for corporations and governments.
Fintech Talent Pool
The Hong Kong fintech talent pool is rich and its growth is supported on a governmental level. During the pandemic, the HKSAR Government provided USD$ 49 billion in funding support, including innovation, technology and overseas expansion support. The Hong Kong University of Science and Technology and EY’s 2020 report stated that 90% of fintech companies are investing in more than one type of digital technology, specifically investments in data analytics, artificial intelligence, big data, mobile tech and open API architecture. In support, the Hong Kong government launched the Technology Talent Admission Scheme (TechTAS). TechTAS, allowing eligible companies to admit overseas and Mainland Chinese technology talent to undertake R&D projects.
Fintech Regulation in Hong Kong
With a world-class regulatory system and strong capital market, Hong Kong is poised to lead the Hong Kong fintech ecosystem. While there is no specific framework that particularly govern fintech companies, businesses still need to comply with financial laws and regulations as a whole. There are a set of financial activities that fall under “regulated activities” categories, which require a license to operate from Hong Kong’s regulatory body.
Hong Kong vs Singapore Fintech Landscape
Long-time friendly competitors, both Hong Kong and Singapore are well known as top financial centres undergoing technological transformation. They both boast an array of innovative IT solutions and an enviable fintech talent pool. Hong Kong has an advantage, in that it is well-placed to remain as the primary financial gateway for China’s evolving market. Singapore is already an established hub for global trade and finance, fostering innovation and boasting a well-educated, technologically adept workforce. Whether operating in Singapore or Hong Kong, fintech has changed personal and corporate finance exponentially, with the transformation of payment, budgeting, investment, and portfolio services looking set to continue.