Hong Kong should be more open-minded about fintech

The recent couple of months have witnessed several significant events in the electronic commerce domain. On Nov 11, the online “11/11 Shopping Festival” originated by Alibaba has, again, broken its own record of daily turnover, with total trading volume reaching 102.7 billion yuan ($14.9 billion, or HK$115.4 billion) — an astonishing increase of 32 percent compared to the same period last year. Less than three weeks later, the traditional level of online shopping after Thanksgiving “Cyber Monday” also set a record-high turnover of $3.45 billion — 12.1 percent higher than last year. And just a fortnight later, the Indian-initiated “12/12 Online Shopping Festival” which is now globally popular cannot be underestimated either.

The substantial increase in turnover on these shopping festivals is definitely due to the increasing convenience of mobile shopping. It is estimated that the market for mobile payments in the world in 2016 was $620 billion. This is 37.8 percent more than in 2015; the Chinese mainland has undeniably contributed very much to this growth. As noted by Alibaba’s Jack Ma, in the next three decades, online, offline and logistics will be integrated into the development of electronic commerce. This will lead the world into a new era of retailing; and this, together with new finance, new technologies, new resources, and new manufacturing, will bring revolutionary changes to all industries.

What Ma said really impressed me, especially when I have personally experienced how convenient it is to travel with only a smartphone on the mainland. From booking a minicab to paying for a meal, from shopping in the mall to buying a movie ticket, all you have to do is to tap on a screen. At one time, I even witnessed my friend receive a message warning about his illegal parking just minutes after he had incorrectly parked his car! As I marvel at the efficiency and convenience of people’s daily lives on the mainland, I regret Hong Kong’s inadequate development in this field.

In comparison to the mainland’s e-commerce, Hong Kong has been constantly denounced as lagging behind in financial technology (fintech). Being the leader of digital payment for so many years, Hong Kong seems to be satisfied with its Octopus system, regardless of the rapid development of fintech on the outside. And Hong Kong people are quite conservative about adjusting to a new system of payment. This can be seen in the internationally popular Apple Pay and Android Pay which have not yet won many fans among Hong Kong people. People’s behavior cannot be changed in one single day. It will depend very much on the government showing some leadership in this regard.

I believe the biggest problem in people’s minds relates to security issues regarding payments. Hong Kong, in my opinion, has everything needed The author is the president of the Chinese Manufacturers’ Association of Hong Kong.

Being the leader of digital payment for so many years, Hong Kong seems to be satisfied with its Octopus system, regardless of the rapid development of fintech on the outside. And Hong Kong people are quite conservative about adjusting to a new system of payment.

to become a leading city in fintech, as we have a well-rounded legal system and also above-average technological facilities. Although aware of the importance of information technology, the authorities have yet to introduce enough measures to develop fintech. The much politicized atmosphere has delayed many beneficial policies proposed by the government.

Fortunately, earlier this year the Hong Kong Monetary Authority (HKMA) finally issued Stored Value Facilities (SVF) licenses to applicants, including Alibaba’s Alipay, Tencent’s WeChat Pay, HKT’s Tap&Go, TNG Wallet, Octopus’ O! ePay. The license is only granted if all the minimum criteria set by HKMA are fulfilled. This has placed most mobile payments under HKMA regulations.

Personally, I am quite optimistic about Hong Kong’s future development of fintech. Hong Kong is traditionally a bellwether in finance, being not only Asia’s but also the world’s financial center shoulder to shoulder with New York and London. But with Brexit occurring in June and Trump’s election victory in November, 2016 brought so much uncertainty. In many ways Hong Kong stands out in that it has a less chaotic environment financially.

In January, Hong Kong is set to host the Next Money Fintech Finals 2017. This is considered a global fintech event that fosters the reinvention of finance through design, innovation, and entrepreneurship. It is a good opportunity to show the SAR’s support to this emerging industry. This could be emphasized in the next Policy Address.