Regtech Development in Hong Kong: Talent as a Fuel for Growth

Conclusion 38 37 CONCLUSION Regtech is considered an important technology within the macro environment of the banking and financial services industry, as it facilitates the transformation of regulatory compliance processes and risk management. Hong Kong has been a major global financial hub, but currently lags behind many peers in the successful adoption of regtech. The HKMA is, therefore, spearheading efforts to speed up Hong Kong’s regtech adoption, including carrying out studies to identify required manpower skills. However, finding the right talent with the multidisciplinary skills for successful regtech adoption is very challenging in Hong Kong. Barriers to Regtech Adoption in Hong Kong Although there is a generally positive environment in Hong Kong and several steps have been taken by various stakeholders, substantial barriers to regtech adoption remain. Some of them are: • Low ecosystem participation; • Lack of awareness of the potential value of regtech solutions; • Budgetary constraints; • Challenges of integration with current technology systems and infrastructure; and • Substantial shortage in manpower with the necessary skillsets Financial Institutions Lack Dedicated Regtech Training Facilities Another major challenge is that financial institutions in Hong Kong do not have dedicated regtech training and development facilities. A large proportion of them either have no training or only on-the- job style training. Given the multidisciplinary skills required for driving regtech adoption, the status quo is not enough to future-proof the talent pool of Hong Kong. The focus group studies carried out for this research have identified the shortage of skilled in-house talent as a major concern for adopting regtech in Hong Kong. The development costs for local regtech service providers are also relatively high due to a shortage of talent supply in the city. More Resources Needed to Foster Talent with Both Technical and Practical Skills Capacity building and talent development programs in Hong Kong must be designed with a balance of technical aspects and practical skill application. The government and regulators might consider allocating more resources for on-the-job training courses to meet the pressing demand for regtech talent in Hong Kong. The financial industry considers regtech to be an enabling technology that helps build strong brands. Some benefits of regtech include increased efficiency, improved service quality, and enhanced experiences for clients. Regtech offers immense opportunities for benefitting the financial industry, banks, regulators and the larger economy. However, the main challenge for regtech adoption is finding the right talent and sufficient talent. It requires people with interdisciplinary know-how, who can combine soft skills, finance expertise, and technology skills. These people are not easy to find or retain. If Hong Kong can leverage its existing strengths and find ways to attract and retain the right talent, this international city would benefit from its thriving fintech sector, strong support for tech businesses, well-established financial services, and supportive regulators, and become a successful regtech hub. This report offers some fruit for thought for the government, regulators, and the industry to steer Hong Kong's regtech talent development to the next level.