Hong Kong Towards a Leading Global FinTech Hub

19 18 Introduction Government Support Talent Business Environment Regulation The four areas are not completely separate. Activities by different participants within the ecosystem could fall under one or more of the above-mentioned domains. For example, the government has funded more than 20 programs through different agencies for the purposes of R&D, hiring, business development, fundraising, and overseas expansion purposes, etc., 20 so these funding activities undertaken by the government could impact the fintech landscape in multiple areas, including government support, business environment, and talent . Fintech participants are also frequently engaged in research and development activities. Research in fintech is not limited to any one of the four areas. Quite the contrary, research is needed in any and all of the four domains. We consider research to be the backbone of the innovation process that drives fintech growth. Due to the nature of fintech, applied research is particularly important. The four types of activities that are instrumental to determining the healthiness of the fintech ecosystem are regulation, government support, business environment , and talent . Fintech participants interact with each other to allow different activities to take place. More collaboration and communication between different participants (i.e., the more overlap between the four factors) reflect a dynamic and mature ecosystem. The fifth type of activity is research and development – particularly applied research, which is a backbone to the innovation process in fintech. [ Exhibit 6 ] : Four Major Types of Fintech Activities Study Background As global and local conditions are constantly changing, new initiatives and developments are required in the fast-growing fintech industry. From 2020 to 2021, we conducted extensive desk research and met with key stakeholders including industry representatives and regulators of the Hong Kong fintech ecosystem to collect opinions and insights to identify key areas where Hong Kong should focus to become a successful global fintech hub. By examining the range of activities in other international hubs, we collected useful references to assist Hong Kong in designing its own strategic plan to become one of the strongest global fintech hubs. Our main purpose is not to compare the other fintech hubs’ performances with Hong Kong, but to gain a better understanding of how Hong Kong might learn from the different approaches and experiences of other fintech hubs. Therefore, our focus will be on specific policies or activities of the selected hubs. We highlight any notable action or non-action that has contributed to success or failure in certain areas. While we have categorized the hubs’ actions into four areas, it is important to note the areas are highly interrelated and further comprehensive analysis is recommended. Methodology Through our desk research and rounds of discussions with industry representatives and regulators, we used a systematic approach to: 1. Identify key areas that have contributed to a fintech hub’s competitive potential; 2. Select the fintech hubs to be included in this report; 3. Examine each selected hub’s fintech focus, activities under the four key indicative areas, and where they have had the most success in implementation; 4. Analyze Hong Kong’s current fintech ecosystem to identify its competitive advantage and any opportunities in the local and global environments for Hong Kong’s fintech ecosystem to grow; 5. Formulate recommendations for Hong Kong to become a leading global fintech hub Study Background Extensive Desktop Research Strategic recommendations for Hong Kong In-depth discussion with key stakeholders eg. industry representatives and regulators Key areas that reflect a fintech hub’s competitiveness Regulation Government Support Business Environment Talent [ Exhibit 7 ] : Methodology of the Study 20. InvestHK. | Funding Sources . | https://www.hongkong-fintech.hk/en/why-hong-kong/funding-sources/index.html