ASIA FINTECH RACE

Competition especially between HK and S’pore has led to fragmented regulatory landscape, says Asifma

HONG KONG

ASIA’S competitiveness in financial technology (fintech) is being undermined by the rivalry among the region’s financial centres that has created regulatory complexity and uncertainty, a financial lobby group has warned.

Governments across Asia — most notably Hong Kong and Singapore — had launched a raft of initiatives to grab a slice of the US$100 billion (RM426.4 billion) invested in fintech globally but the regulatory hotch-potch was making it tough for firms to scale up, said the Asia Securities Industry and Financial Markets Association (Asifma) in a report yesterday.

“The regulatory landscape is very fragmented and a lot of the initiatives, though well-intentioned, are not necessarily well thought through,” said chief executive officer Mark Austen.

The lobby group, which represents global banks and asset managers such as Goldman Sachs and BlackRock, has called on Asian regulators to coordinate better and to adopt a consistent set of best practices for fostering fintech in the region.

“By not cooperating on fintech, Asian financial centres are putting themselves at a real disadvantage relative to the rest of the world: that traditional competitive dynamic and rivalry between the likes of Hong Kong and Singapore may actually in this case be a disadvantage,” said Hannah Cassidy, partner at Herbert Smith Freehills, here, which contributed to the report.

Investors poured US$19 billion worldwide into fintech — including peer-to-peer lenders, distributed ledger technology and crowdfunding platforms — last year alone and thousands of fintech start-ups continued to proliferate, according to a February report by global regulatory body the International Organisation of Securities Commissions (IOSCO).

Hong Kong, Singapore, Australia, Japan, South Korea and Malaysia have launched a range of special programmes to attract and foster fintech ventures, from incubators and grants, to temporary licence waiver schemes, with competition fiercest between Hong Kong and Singapore.

While all these markets operate well-defined licensing and supervisory regimes for traditional financial firms including banks, brokers, insurance companies and funds, regulators are still struggling to establish clear and consistent regimes for fintech firms because they often operate innovative business models.

The lack of regulatory clarity has meant some aspiring fintech firms have struggled to gain licences in markets like here, Reuters reported last year.

“We are open to cooperation with regional and global regulators on fintech,” said the Hong Kong Securities and Futures Commission in a statement. Reuters