Development of financial technologies
Challenges faced by Fintech companies
Mr CHAN Chun-ying noted that there were currently over 550 Fintech companies in Hong Kong. He enquired whether the Administration had information on the number of Fintech companies in Hong Kong which had ceased operation and examined the difficulties such companies had encountered.
DS(FS) said that InvestHK’s dedicated Fintech team had rendered assistance to over 480 Fintech companies since its establishment in September 2016. According to the Fintech ecosystem study conducted by InvestHK in 2018, around 51% of these companies had operated in Hong Kong for over three years. This reflected that a mature Fintech ecosystem had been established in Hong Kong. As regards the challenges faced by Fintech companies in Hong Kong, InvestHK’s study revealed that, in general, Fintech companies encountered problems such as recruiting talents, seeking funds and finding clients. InvestHK had been taking various measures to assist Fintech companies in resolving the problems. For instance, Fintech companies should find it easier to open bank accounts in Hong Kong with the facilitation measures of the Hong Kong Monetary Authority (“HKMA”) and InvestHK. The Administration’s measures for nurturing local talents and attracting overseas talents were also set out in paragraphs 23 to 25 of the paper provided by the Administration.
Development of Fintech in Hong Kong
Mr CHAN Chun-ying sought details of the work of the Global Financial Innovation Network (“GFIN”), and the feedback of local Fintech companies on its work.
DS(FS) advised that GFIN, established in January 2019, was a network of financial regulators and related organizations which aimed to provide a more efficient way for innovative firms to interact with regulators, and create a co-operative framework for regulators to exchange views on innovation related topics and share their experience and approaches in tackling Fintech issues. GFIN had launched a pilot programme for the Fintech industry to test innovative financial products, services or business models across jurisdictions.
On the further development of the know-your-customer utility (“KYCU”), Mr CHAN Chun-ying enquired how the development of the electronic identity (“eID”) system could enhance KYCU of FIs, and whether the Innovation and Technology Bureau (“ITB”) and the Office of the Government Chief Information Officer (“OGCIO”) had discussed the interface between eID system and KYCU.
DS(FS) explained that ITB and OGCIO would, in developing the eID system, provide flexibility for supporting future services to be provided by public and private organizations, including facilitating FIs to perform the KYC procedures. She added that while eID would be launched in mid-2020, OGCIO would release in the second half of 2019 some eID’s application programming interfaces with a view to helping public and private organizations to develop applications utilizing eID before its launch.
Strategies for the development of Fintech
With a view to promoting further mutual financial markets access between Hong Kong and the Mainland, Mr CHAN Chun-ying enquired whether financial regulators would consider extending their sandboxes to the Guangdong-Hong Kong-Macao Greater Bay Area (“the Bay Area”), and if so, whether sandbox applications would be tested in Hong Kong or cities in the Bay Area. Dr Elizabeth QUAT concurred that financial regulators should consider extending their sandboxes to the Bay Area.
DS(FS) responded that the Administration adopted an open attitude regarding the extension of financial regulators’ sandboxes to the Bay Area, and would liaise with the relevant Mainland authorities on the matter when the opportunity arose.
Work of the Financial Services Development Council
The annual budget of the Financial Services Development Council
Mr CHAN Chun-ying enquired about the division of work between FSDC and training institutions (e.g. the Hong Kong Institute of Bankers, the Vocational Training Council, etc.) regarding human capital development in the financial services industry, and asked if measures were in place to avoid overlapping of efforts among the various parties. Mr CHAN enquired if the expenses incurred by FSDC’s directors in conducting promotional activities overseas were included in the $4.5 million earmarked for market promotion in its budget for 2019-2020, whether FSDC considered the total budget of $32 million for 2019-2020 sufficient to support its various functions and how it could seek additional funding from the Government if necessary.
C/FSDC responded that to avoid possible overlapping of work on human capital development, FSDC had been collaborating with local tertiary institutions as far as possible. In its talks and seminars, FSDC would cover latest job roles, in addition to the traditional ones, in order to provide its audience with a different perspective of career choices in the financial services industry. As regards participation in overseas promotional activities, C/FSDC said that FSDC’s directors and committee members were from the financial services industry. For some FSDC’s overseas promotional activities, FSDC might ride on the corporate resources of its directors and committee members. FSDC would review its resources in light of operational experience after its incorporation, and consider seeking additional funding from the Government if necessary.