When finance and technology meet

Integrating finance with technology can bring out the best in both and provide the industry with greater impetus for growth. Having the best ingredients for the development of financial technology (Fintech) and leveraging its maturing ecosystem, pioneering infrastructures, conducive and forward-looking regulatory environment, as well as sizeable financial market, Hong Kong is well placed to develop diversified innovative technology solutions which can drive the industry forward. As Hong Kong has the advantage of “winning at the starting line” in the development of Fintech, the Financial Services and the Treasury Bureau (FSTB) is set to identify more Fintech opportunities and enrich our Fintech talent pool in collaboration with the industry, with a view to enabling Hong Kong to achieve its full potential.

Recently I visited the Cyberport to see for myself the practical application of various Fintech solutions. I was pleased to know that there were quite a lot of successful cases of innovation by local start-ups, some of which have even expanded their services to the Guangdong-Hong Kong-Macao Greater Bay Area, Southeast Asia, etc. This showcases the enormous development potential of our Fintech industry as well as its ability to reach out to the Mainland and international markets. During the visit, I announced the details of two new initiatives launched by the FSTB to support Fintech development, namely a new round of the Fintech Proof-of-Concept Subsidy Scheme and the Pilot Scheme on Training Subsidy for Fintech Practitioners:

1. Subsidising research and encouraging innovation – A new round of the Fintech Proof-of-Concept Subsidy Scheme
Last year, to subsidise Fintech start-ups to partner with financial institutions in testing and putting forward innovative and practical Fintech solutions, we allocated $10 million for launching the Fintech Proof-of-Concept Subsidy Scheme. The Cyberport was commissioned to administer the scheme, which attracted over 160 applications. Ninety projects were approved and completed, benefiting 75 Fintech companies and financial institutions. These projects cover areas such as Wealthtech, Regtech, Insurtech and also new applications including payment technology, ESG, cross-border data analysis and overseas remittance services, etc. Through collaboration and exchanges, participating financial institutions and Fintech companies have come up with many promising and practical ideas. An example is a local Regtech start-up processing hundreds of pages of IPO prospectus within a few minutes through their AI (artificial intelligence)’s natural language processing technology. It will then point out details that need to be verified, suggest verification methods, and provide information sources to speed up and simplify the process. Another example is a healthcare start-up teaming up with a bank to facilitate financing in the healthcare services sector through a digital platform. The bank can obtain real-time operational trading data of the medical institutions, assess the loan exposures and risks, thereby streamlining and expediting the financing process of businesses.

In the light of the overwhelming response from the industry, the Financial Secretary announced in the 2022-23 Budget that a funding of $10 million would be allocated for launching a new round of the scheme. To better address the actual needs of the industry, and with the operating experience of the first round of the scheme, we have proposed enhancements to the new round of the scheme in three areas, with a view to encouraging different types of institutions to take part in promoting innovation in our financial industry in Hong Kong:

Expanding the scope of eligible applicants: Last year, the scheme provided subsidies mainly to Fintech companies and financial institutions. This year, we will also accept applications jointly made by a financial institution and a research institution, such as a local university, self-financing institution, public research institute and private Fintech laboratory.

Allowing more flexibility in the mode of partnership: This year, we accept applications made by multiple firms/research institutions partnering with more than one financial institution for collaborating on a single project, thereby incentivising them to put forth innovative solutions that can address the pain points experienced by the wider Fintech and financial services sectors.

Increasing the maximum subsidy for eligible projects by at least 50%: We will increase the maximum subsidy for each approved project from $100,000 to $150,000. The grant may be up to $200,000 for projects involving cross-border applications, or applications in emerging areas, such as Regtech, technical solutions related to federated learning, open application programming interfaces (“APIs”) and environment, social and governance. For projects which have a broader impact on the industry as a whole and can provide solutions to address industry-wide bottleneck issues, the grant may be up to $400,000.

2. Enhancing skills and nurturing talent – the Pilot Scheme on Training Subsidy for Fintech Practitioners
With new Fintech products rolling out one after another, we need to build a Fintech talent pool for Hong Kong to cope with the future development of the industry. To this end, the Government has adopted a multi-pronged strategy, which includes providing training for financial professionals, with a view to nurturing cross-sectoral talent well versed in both “finance” and “technology”.

As the first batch of Fintech professional qualifications recognised under the Qualifications Framework for banking practitioners is expected to be rolled out this September, the FSTB, in collaboration with the Hong Kong Monetary Authority and the Hong Kong Institute of Bankers (HKIB), will launch a Pilot Scheme on Training Subsidy for Fintech Practitioners. Banking practitioners who have attained Fintech professional qualifications under the Enhanced Competency Framework can receive reimbursement of 80% of the tuition fees subject to a ceiling of $25,000, and around 1 500 places will be offered. I hope that with this scheme, Fintech practitioners will further strengthen and integrate these two important elements, i.e. finance and technology, and serve as a key link between them.

The above two schemes, which aim to bring state-of-art technologies and talent to our future Fintech ecosystem, will be launched in September. The Cyberport and the HKIB will later announce the application details through their websites. We will continue to maintain close co-operation with the Fintech industry and launch various measures to help the industry realise their enormous potential, providing impetus for further integration of finance and technology.

17 August 2022