Hong Kong Towards a Leading Global FinTech Hub

82 83 Part II: Key Observations, Policy Implications and Recommended Actions for Hong Kong To establish the effective and highly coordinated fintech ecosystem that is essential to Hong Kong’s fintech development, the Committee needs to: I. Formulate a Comprehensive and Strategic Fintech Plan Fintech involves a multi-layered sector and various stakeholders across government bureaus and departments, financial regulators, and other industry regulatory bodies. Apart from the three main financial regulators in Hong Kong, namely the Hong Kong Monetary Authority (HKMA), Securities and Futures Commission (SFC), and Insurance Authority (IA), there are numerous government departments, organizations and industry associations currently participating in Hong Kong’s fintech development. These include the Financial Services and the Treasury Bureau (FSTB), Innovation and Technology Bureau (ITB), Hong Kong Trade Development Council (HKTDC), InvestHK, Cyberport, and the Hong Kong Science and Technology Parks Corporation (HKSTP), as well as other industry associations such as the Hong Kong Institute of Bankers (HKIB), the Hong Kong Association of Banks (HKAB) and the Fintech Association of Hong Kong (FTAHK). Each of these bodies has its own statutory terms of reference with individual organizational goals and agendas. On top of this, fintech is not an individual task, but is embedded in other government initiatives such as the Smart City Blueprint and Green Finance. Without a centralized, government-led strategic development plan, fintech would be a piecemeal development by different government units with different organization interests, objectives, and agendas to fulfill. Thus, one of the key roles of the Committee would be determining standards of coordination. A comprehensive and strategic fintech development plan would help facilitate cross- bureau and regulator coordination. The key mission would be to prioritize development areas, overcome cross-industry challenges such as financial inclusion, and adopt policies conducive to all players including traditional financial institutions, and fintech companies and innovators. In the long run, this plan could facilitate optimal utilization of public resources and help improve living standards of individuals by fostering a vibrant economy and inclusive society. Before formulating a strategy, understanding Hong Kong’s fintech landscape as compared with other fintech hubs is a must. Additional resources will be needed for those areas requiring further government support. The following tasks could be referenced by the government as part of the strategic fintech plan: • Identify Hong Kong’s strengths, weaknesses, opportunities, and threats compared with other fintech hubs and within the Greater Bay Area region; • Outline the visions, planning goals and building blocks 291 that will contribute to the overall development of fintech; • Clearly state objectives, corresponding policy actions, and detailed schedules for execution; • Set Key Performance Indicators (KPIs) to evaluate the plan’s effectiveness. These could include: the technology adoption rate in the banking sector; the fintech adoption rate among the general public and/or specific group of customers; fintech’s GDP contribution; investment to fintech from different private and public sources; and the current number of fintech talents, startups and corporations; • Provide a comprehensive overview of innovation systems and support needed for each development stage of the fintech ecosystem 292 in order to sustain a robust and vibrant fintech community; • Consider other issues related to fintech development such as law and regulations (e.g. personal data and identity-related laws and regulations) to adjust and revise the regulations and administrative process if necessary; • Enhance coordination among the different initiatives across government bureaus and departments, other public agency units, and the industry; • Outline how to mobilize different government bureaus and departments to execute fintech-related policy initiatives; • Collect feedback on government fintech policies and programs; • Determine how to execute the policy evaluation and improvement plan; • Formulate plan to capitalize technical support and existing resource to develop regional sandbox initiatives. II. Establishing Local and International Fintech Networks Another key role of the Committee is to establish local and international fintech networks. These networks would facilitate collaboration between all market participants and stakeholders in Hong Kong’s fintech ecosystem. Networks would help facilitate business and investment opportunities, find solutions to key issues, and promote best fintech practices in a sustainable, inclusive, and transparent manner. For example, professional business services and venture capital are important elements to maintain a healthy fintech ecosystem. The growing maturity of Hong Kong’s fintech community and the emerging laws, regulations, and ethical considerations for fintech activities have boosted the business services required by the industry. Collaborating with legal and audit firms, reviewing the services of tech giants, and providing technical support and training to the local fintech community are some of the important Committee tasks. 291. Referencing to HK 2030+ Strategic Plan. For details, please visit https://www.hk2030plus.hk/document/ 2030+Booklet_Eng.pdf 292. Concerning the development of innovation, one of the models have differentiated innovation stages including R&D, demonstration, pre commercial (large scale demonstration), supported commercial (under generic support schemes) and commercial stages. Each stage should be supported by government policy intervention to facilitate the availability of investment and the development of technological inputs. At the same time, the analysis of market needs are also essential for innovation development. For more details, please visit Tim Foxon, Zen Makuch, Macarena Mata and Peter Pearson (2004). | Innovation Systems and Policy-Making Processes for the Transition to Sustainability, pp.99-100. | http://userpage.fu-berlin.de/ffu/akumwelt/bc2003/ proceedings/096%20-%20112%20foxon.pdf