Over the past few years, Hong Kong has gone through some serious digitization in the financial sector. This digital transformation has allowed the city to establish itself as a global finance hub.
This latest development has made Hong Kong a trendsetter for other cities. The government has played a crucial role for creating a conducive environment for digital transformation for the financial sector. However, digital transformation is something that always has a great amount of risk involved.
In 2017, the financial sector accounted for a fifth of Hong Kong’s total economy. However, to become a center of digital finance, the people will have to adapt to fintech completely. Doing so will help Hong Kong businesses in reducing their costs and increasing their customer satisfaction.
Fintech has the ability to boost economic growth and increase productivity. As a result, private investments have started to pour in. Furthermore, private investment grew by 125% between 2015 and 2017. This number was much greater than the international average.
Investments have started to take place in the form of payments, lending, data security, and insurance, thus ensuring a balanced ecosystem.
For the development of new infrastructure, Blockchain and Cyber Security are also being focused on. Consequently, the mature ecosystem has paved way for several startups to emerge, which are considered the forefront of creativity. Some new applications are also being noticed, which will completely change the financial services scene in Hong Kong.
The Hong Kong Monetary Authority and other government agencies have made a significant amount of efforts to promote fintech.
The authorities are working with great diligence to transition from conventional payment methods to e-wallets and mobile payments. The licensing of the stored value facilities started in 2016, and a Faster Payment System was launched. This was followed by the QR code in 2018, which has become common now.
Furthermore, Hong Kong is in the process of testing advanced banking models, which will be run by the latest technologies. The HKMA has licensed new banking systems that are virtual and free from the conventional branch-based banking methods.
This digital transformation will add to customer experience and also prove helpful to all underserved customers. Small and medium-sized enterprises aren’t the only ones to benefit from it. It will also prove beneficial to some retail customers.
The time is not far when all banks in Hong Kong will adopt this technology and build healthy connections with fintech startups. At this moment, license applications are being processed by the HKMA. Once this is done, virtual banking will very soon turn into a reality.
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