Hong Kong Towards a Leading Global FinTech Hub

48 49 Business Environment Part I: Examination of Seven Fintech Hubs The value of global investment in fintech dramatically increased between 2010 and 2019, with a decrease in 2020 due to coronavirus outbreak measures that affected many economic sectors worldwide. 134 The global fintech market is expected to have continuous growth and reach a market value of approximately US$305bn by 2025. 135 Higher usage in digitization, including the promotion of disruptive fintech solutions and digital transformation of traditional financial institutions, and more cross-border, collaborative activities are expected to be key drivers of growth. Fintech hubs will continue to strive to attract fintech investments from around the world. III. BUSINESS ENVIRONMENT Value in billion U.S. dollars 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 9 18.9 45.4 67.1 63.4 59.2 145.9 105.3 168 6 4 200 150 100 50 0 Total Value of Investments into Fintech Companies Worldwide from 2010 to 2020 (In billion U.S. dollars) Sources: KPMG; PitchBook @ Statista Additional Information: Worldwide; 2010 to 2020 [ Exhibit 14 ] : Total Investments into Fintech Companies Globally 2010-2020, US$ billion An attractive fintech business environment not only represents potentially substantial benefit to the economy, but would also facilitate knowledge exchange between local and international businesses. Ease of starting a business, trading, and fundraising; access to sizable and resilient markets; and the ability to serve as a springboard for the global growth of fintech companies are some of the major factors an international fintech hub needs to address. 134. Statista. | Total investments into fintech companies globally 2010-2020 (Mar 2021). | https://www.statista.com/ statistics/719385/investments-into-fintech-companies-globally/ 135. CISION. | FinTech Industry Report 2020-2025 - Trends, Developments and Growth Deviations Arising from the COVID-19 Pandemic (June 2020). | https://www.prnewswire.com/news-releases/fintech-industry-report-2020- 2025---trends-developments-and-growth-deviations-arising-from-the-covid-19-pandemic-301080282.html A vibrant fintech hub with a well-established, world-class financial and technology infrastructure will find it easier to attract fintech companies from around the world. Digital engagements and synergy should be present across different fintech organizations regardless of their size, scale, maturity, and area of expertise. In addition, having a well-organized, resourceful, and cooperative fintech community increases a city’s attractiveness to businesses. Hosting international and regional events regularly facilitates networking, collaboration, business opportunities and ultimately strengthens both local and global fintech communities. Collaborations of all kinds, either within fintech sectors or involving fintech and other sectors (e.g., between traditional financial institutions and fintech startups, or between the fintech and lifestyle ecosystems) is one measure of a hub’s community strength. The number of fintech companies, number of unicorns, and the depth and range of fintech activities are also indicators of the robustness of a fintech community. Institutionally speaking, having a business-friendly tax system or providing tax incentives for startups and R&D activities would be positive ways to attract foreign fintech companies. Simultaneously, fintech awareness and acceptance in society is also of high importance. The willingness of people to use fintech products and solutions can create market demand. Given the innovative nature of fintech, intellectual property should be well protected by law. Above all, a clear and transparent legal framework is essential for a balanced regulatory environment that would provide a strong foundation to maintain a free market as well as with a high quality of regulatory effectiveness to instill confidence in investors and business-makers. The Selected Hubs’ Business Environments as Perceived by Global Standards Exhibit 15 summarizes how the countries of the hubs are ranked in terms of their business environments in different global indexes. Overall, all of these countries rank within a close range from each other and are among the top globally, although Zurich and Singapore stand out as being more well-positioned than the others. For example, in the Global Innovation Index 2020 , the range goes from Switzerland ranked 1 st to Japan at 16 th , which in a field of 131 means they are all relatively strong compared with the other economies in the survey. In the Ease of Doing Business Index 2020, which surveys 190 economies, Singapore ranks highest in the group at 2 nd , followed by the US and the UK at 6 th and 11 th respectively. The range of rankings for each hub indicates that they may be stronger or weaker in one aspect or another, but each hub has its own unique features that attract foreign fintech businesses. We will discuss the strengths of each hub in more detail below.