Hong Kong Towards a Leading Global FinTech Hub

14 15 Introduction Introduction [ Exhibit 3 ] : Top 10 Global Financial Centers in Fintech on Global Financial Centres Indexes (GFCI) 25 – 29 [ Exhibit 4 ] : Fast-rising Financial Centers in Fintech Ranking on the Global Financial Centres Index (GFCI) Since Hong Kong entered the Top 10 Fintech Rank of GFCI 26, it has remained one of the top-ranked global financial centers in fintech. Beijing, London, New York, San Francisco, Shanghai, and Singapore have also been among the top-ranked centers. Some financial centers, although not among the top in the overall GFCI ranking, are still highly focused on fintech development. San Diego made the largest leap and moved up 25 spots from 53 to 28 in the most recent two years’ of GFCI fintech ranking. Busan and Geneva also moved up 10 and 14 spots, respectively. The drive behind fintech development cannot rely on market players alone and needs to be a government mandate. Over the past decade, the Hong Kong government and regulators have promulgated a series of measures and initiatives that have positively impacted Hong Kong’s fintech and financial services capabilities. These include: (1) the Fintech Supervisory Sandbox (FSS) in 2016; (2) the seven Smart Banking Initiatives in 2017 ; 13,14 and (3) the issuance of virtual banking and insurance licenses. While Hong Kong has taken many steps to building a better fintech ecosystem, so have other financial hubs such as London, New York, Singapore and Tokyo. For example, the Financial Services Agency of Japan released policy priorities that promised a boost in fintech, 15 the Kalifa Review of UK Fintech outlined the UK’s national strategy and delivery model for the country’s fintech development, 16 and Singapore’s numerous fintech initiatives, including the launch of the digital infrastructure, Singapore Financial Data Exchange (SGFinDex) , for enabling the country’s financial inclusion. 17 Hong Kong not only needs to continue its fintech development to stay competitive with the world’s current top financial centers, it also needs to closely observe the other economies who are moving up in the rankings such as Seoul (South Korea), Sydney (Australia), Vancouver (Canada), and Zurich (Switzerland). Rank GFCI 25 GFCI 26 GFCI 27 GFCI 28 GFCI 29 1 London Beijing New York New York New York 2 New York Shanghai Beijing Singapore Singapore 3 Singapore New York Shanghai Shanghai Shanghai 4 Shanghai Guangzhou London London Hong Kong 5 San Francisco Shenzhen Singapore Hong Kong London 6 Tokyo London Shenzhen San Francisco Seoul 7 Shenzhen Hong Kong Hong Kong Beijing Beijing 8 Frankfurt Singapore Guangzhou Shenzhen Tokyo 9 Tel Aviv San Francisco San Francisco Tokyo Shenzhen 10 Paris Chicago Tokyo Zurich San Francisco Source: https://www.caproasia.com/wp-content/uploads/2021/03/2021-Global-Financial-Centres-Index-29- Report.pdf Center GFCI 28 Fintech Rank GFCI 29 Fintech Rank Change In Rank Abu Dhabi 35 29 up 6 Busan 37 27 up 10 Chengdu 32 25 up 7 Geneva 40 26 up 14 San Diego 53 28 up 25 Seoul 18 13 up 5 Sydney 21 15 up 6 Vancouver 20 14 up 6 Zurich 30 21 up 9 Source: https://www.caproasia.com/wp-content/uploads/2021/03/2021-Global-Financial-Centres-Index-29- Report.pdf 13. Hong Kong Monetary Authority. | Fintech Supervisory Sandbox (FSS). | https://www.hkma.gov.hk/eng/key- functions/international-financial-centre/fintech/fintech-supervisory-sandbox-fss/ 14. Hong Kong Monetary Authority. | Smart Banking. | https://www.hkma.gov.hk/eng/key-functions/banking/smart- banking/ 15. IFLR analyses. | Japan: 2020 strategy paper promises fintech boost. (4 February 2020). | https://www.iflr.com/ article/b1lmx6d5bm3r0z/japan-2020-strategy-paper-promises-fintech-boost 16. GOV.UK . | Policy Paper: The Kalifa Review of UK FinTech. (26 February 2021) | https://www.gov.uk/government/ publications/the-kalifa-review-of-uk-fintech 17. Monetary Authority of Singapore. | Media release: Digital Infrastructure to Enable More Effective Financial Planning by Singaporeans. (7 Dec 2020). | https://www.mas.gov.sg/news/media-releases/2020/digital- infrastructure-to-enable-more-effective-financial-planning-by-singaporeans 18. South China Morning Post. | Investment in Hong Kong fintechs more than doubled last year, well ahead of Singapore and Australia. (1 Mar 2018). | https://www.scmp.com/business/companies/article/2135144/hong- kong-fintech-outlay-doubles-5-year-tally-well-ahead 19. InvestHK. | Hong Kong Fintech Ecosystem Factsheet. (Jan 2021). | https://www.investhk.gov.hk/sites/default/ files/FintechHK%20Flyer_ENG_Jan%202021.pdf Hong Kong’s fintech sector has attracted many investors and capital flow, as indicated by the tripling of fintech investments in Hong Kong from US$107.5mn to US$376mn between 2015 and 2019. 18,19 With top-class financial professionals, technology services and ICT infrastructure, and a growing fintech adoption rate, Hong Kong has a solid foundation for fintech to flourish. With the appropriate government support complementing its natural attributes, Hong Kong’s fintech industry is almost guaranteed to help Hong Kong retain its competitiveness and even surpass other major financial centers in becoming a leading international fintech hub. The Hong Kong Fintech Ecosystem The Hong Kong fintech ecosystem includes a broad range of participants from different sectors and industries, from retail banking, investment management, insurance, fundraising to government, nonprofit, and education. The three major stakeholder groups are government, market, and education . 1. Government organizations include the two policy bureaus, namely the Financial Services and Treasury Bureau (FSTB) and the Innovation and Technology Bureau (ITB), the regulatory units, i.e., Hong Kong Monetary Authority (HKMA), Insurance Authority (IA), and Securities and Futures Commission (SFC), and other ecosystem partners such as the Hong Kong Applied Science and Technology Research Institute (ASTRI), Cyberport, the Hong Kong Science and Technology Park (HKSTP), and InvestHK.