2016 is the Year of Fintech in Hong Kong
Hong Kong is on the growing list of countries that see Fintech as strategically important for their regional economy and global competitiveness. This past week, in a speech delivered in New York City, Hong Kong Financial Secretary, John C Tsang provided an update on how Hong Kong expects to become a leader in disruptive finance.
Tsang started by pointing out that Hong Kong has consistently been recognized as the “freest economy in the world”. Taxes are are very competitive as one would expect. Corporations are taxed at 16.5%, income tax at 15%. There is no VAT, capital gains nor inheritance tax. Beyond the business-friendly ecosystem, Tsang declared Hong Kong poised to take advantage of disruptive finance;
“Hong Kong has what it takes to become a worldwide hub for Fintech.”
Hong Kong has created a “dedicated team to assist overseas Fintech start-ups, investors and R&D institutions in establishing a presence in [their] city.” Dozens of incubators and accelerators have already set up shop.
Hong Kong has also launched measures to boost Fintech research and development including dedicated workspace to support up to 150 Fintech startups. The government is also organizing training camps to help Fintech talent.
Regarding the regulatory approach, the Hong Kong Monetary Authority has created the Fintech Facilitation Office (FFO) to support the application and development Fintech. They have also created a Fintech Innovation Hub.
“Our financial regulators have established communication platforms with the local and international Fintech community, to better understand the views of Fintech users, developers as well as investors, and to facilitate collaboration among different parties.”
The concept of a Fintech Regulatory Sandbox may have been created by the British but it is being embraced by the world. Hong Kong has joined an increasing roster of nations that have recognized the need to streamline financial innovation by clearing a path around convoluted financial rules. The quickest way to kill financial innovation is to let regulations written for a different era undermine entrepreneurial creativity.
“The Sandbox is designed to facilitate financial institutions in Hong Kong to conduct trials of Fintech and other pioneering applications on a pilot basis, with some relaxation in the usual supervisory requirement. The real-life data and user experience gathered during the trials will provide valuable feedback for Fintech developers in refining their products or services before formal launch.”
Tsang went so far as to call 2016, “the year of Fintech” for Hong Kong;
“I am confident that Hong Kong’s Fintech business will soon be making global waves,” stated Tsang.
China is home to the largest alternative finance market in the world. Singapore has taken many steps towards becoming a regional Fintech powerhouse. Other Asian countries are gearing up to join the dramatic changes occurring in financial services today. As Hong Kong is typically listed as a Top 5 global financial center – their prominence is theirs to lose.