Singapore and Hong Kong’s decades-old tussle for position as Asia’s premier financial centre has evolved a uniquely modern twist. Both cities have been investing hundreds of millions of dollars to take the lead in the field of financial technology (fintech).
However, these rivals are not competing on a level playing field. Their respective ‘fintech weeks’ illustrate how perhaps mismatched their rivalry has become. Over the past couple of years, both cities have held similar conferences, at similar times. Organisers of this year’s Hong Kong fintech week expect over 3,000 executives; while the week-long Singapore fintech Festival in 2017 had more than 30,000 participants.
How can Hong Kong turn this around?
Hong Kong’s government needs to broaden its horizons with mutually beneficial international collaborations. Norman Chan, chief executive of the Hong Kong Monetary Authority, has confirmed fintech initiatives with the Office of Financial Development Service of Shenzhen, China.
Compare this to the efforts of MAS which is signing 16 co-operation agreements with other governments aimed to stimulate information on fintech issues.
Every fledgling industry needs the support of the government, especially in terms of research and development grants. Hong Kong chief executive Carrie Lam has pledged to boost the innovation and technology sector with initiatives, including a $900,000 award for developing fintech products and solutions for financial institutions in both Hong Kong and China’s Shenzhen.
However, once again Singapore has taken funding to the next level, with MAS implementing a $20 million grant to support adopting and integrating artificial intelligence and financial data analytics. Additionally, Singapore’s central bank and the Massachusetts Institute of Technology will collaborate on fintech research and development, enabling Singaporeans to work with world-renowned researchers.
In such a fast moving industry, the need to innovate is critical. Consultants at KPMG recently reviewed Hong Kong’s banking industry, noting how Hong Kong’s government is striving to foster an ecosystem more conducive to fintech innovation, including blockchain transactions.
But while Hong Kong works to implement regulations, Singapore seeks to advance its standing by innovating and experimenting with formats. Project Ubin is a collaborative project with the industry to explore the use of distributed ledger technology for clearing and settlement of payments and securities, potentially making financial transactions and processes more transparent, resilient and cheaper.
Singapore’s eventual goal is to develop simpler to use and more efficient alternatives to today’s systems based on digital central bank issued tokens. MAS also plans to work with the International Finance Corporation to establish the Asean Financial Innovation Network.
Singapore benefits from its pragmatic approaches to economic development supporting the development of its financial services sector in particular via rapid legislation, a knack for innovation and heightened responsiveness to global trends.
With Singapore leading the way – in not only regional terms but on a global level – Hong Kong clearly has some catching up to do. It is vital that Hong Kong receives legislative support, as well as increased industry investment to close the gap. The incentive is obvious. According to research firm CB Insights, fintech investments in Asia are expected to set a new record this year, topping last year's $5.7 billion
This opinion has been edited
¬ Haymarket Media Limited. All rights reserved.