Hong Kong Towards a Leading Global FinTech Hub

10 11 Executive Summary Executive Summary HONG KONG Regulation Insufficient Insufficient Insufficient Insufficient Sufficient Sufficient Sufficient Sufficient Business Environment Government Support Talent Performances of Hong Kong and the Other Selected World Hubs We analyze Hong Kong and each of the selected hubs against the 10 key features to determine the sufficiency of resources and efforts of each hub in the four major areas that we identify to be vital for any fintech ecosystem. Below is a snapshot of Hong Kong’s sufficiency of resources and efforts in the four major areas: The sufficiency ratings of a hub provide a general understanding of its overall performance reflected by its strategic focus or direction, but they do not provide any direct indications of the efficiency of usage of available resources. While there is some room for improvement in all areas, Hong Kong’s dedication in fintech regulation, government support, and business environment are quite strong, but relatively weaker in the area of talent. Ten Opportunities for Strengthening Hong Kong’s Position as a Global Fintech Hub To bring Hong Kong’s status to the top tier among global fintech hubs, Hong Kong will need to strike a balance between promoting innovation and encouraging effective competition while protecting clients and investors via its regulatory regimes. We identify 10 opportunities in the areas of policy and regulation, innovation and technology, and talent cultivation and development, which policymakers can strategically leverage to increase Hong Kong’s fintech capabilities. 1. Establish a Hong Kong Fintech Ecosystem Committee (The Committee ) , which will become an effective platform to coordinate with different fintech stakeholders and the fintech community to streamline all necessary policies, procedures and resources for fintech development. 2. Establish a fintech infrastructure strategy to promote fintech development and financial inclusion. A widely adopted, secure, and privacy-respecting fintech infrastructure to reinforce Hong Kong’s position as an international fintech leader. 3. Transform Hong Kong into a regional fintech sandbox by attracting local and regional participants to develop their fintech products and solutions in Hong Kong’s sandbox environment. This would expand Hong Kong’s influence on regional fintech developments. 4. Develop the Commercial Data Interchange (CDI), one of the HKMA’s major initiatives named under its Fintech 2025 strategy. The goal is to improve the data landscape to enhance financial development, while at the same time protecting customers’ rights to consent and privacy. 5. Improve the effectiveness and impact of public funding on different stages of innovation. 6. Establish a centralized incubation funding system by consolidating the resources from public and private sectors. This would attract both local and Asia Pacific startups and activate the flow of R&D, fintech talent, and investments. 7. Review, evaluate and promote the tax deduction policy for eligible R&D activities to increase innovation in fintech R&D. 8. Create a compulsory internship scheme specific to fintech students to prepare students to meet future market demand. 9. Establish a stronger certification link between Continued Education Fund (CEF), Qualification Framework (QF), and the internship scheme so as to offer on-the-job training opportunities to the existing workforce to help meet current market demand. 10. Review and evaluate the overseas talent scheme and allow more flexibility, including remote work approval, for fintech companies to hire overseas fintech talent.