Over the course of the next ten years, banking institutions are planning to play a major role in supporting Fintech projects and the adoption of all-digital platforms. A new report suggests that incumbents feel confident that they won’t be completely replaced or displaced by Fintechs.
The Hong Kong Institute for Monetary and Financial Research (HKIMR), the research division of the Hong Kong Academy of Finance, has published a detailed report on overall Fintech adoption and the latest technological advancements in the banking sector.
The report has been prepared after conducting a survey involving financial services industry participants. It was reportedly performed by the Hong Kong Monetary Authority (HKMA) Market Research Division, in order to get a better idea of the present state of Fintech adoption in Hong Kong’s banking sector.
The report aims to understand incumbents’ views on the latest Fintech platforms, and how they expect the industry to grow in the coming decade.
As first reported by Regulation Asia, the survey revealed that many traditional banks in the country consider Fintechs to be a collaboration opportunity instead of a threat. In fact, 86% claim they had adopted or were considering adopting Fintech solutions across a wide range of existing financial service platforms.
But a few banks said they were concerned about the lack of expertise or talent in the Fintech space, due to challenges related to recruiting qualified professionals and trying to properly train other employees.
The HKMA said it aims to perform a study this year on the current demand for skilled Fintech professionals, the mobility of such talent on a local and global level, and the potential of these new roles.
Incumbents feel that there are major challenges associated with ensuring information security, data privacy and protection on Fintech platforms. Regulations and banks’ traditional IT systems will also have to be changed significantly before Fintech solutions can be completely integrated with all financial systems.
Banks feel that their expertise and services will still be required in the coming years, and they expect to play a major role in responsibly supporting Fintech innovation and adoption. They argue that they can’t be displaced by new market entrants.
As confirmed from the survey, incumbents in Hong Kong consider Fintech development as an opportunity instead of a competitive threat.
“Risk management services have the greatest potential,” according to Edmond Lau, the senior executive director at HKMA.
“Preliminary results also show that increased cost efficiency and improved profitability are associated with more extensive fintech adoption by banks.”
The complete report may be accessed here.