Virtual banking and open data might sound like mere buzzwords in most parts of the world, but in Hong Kong, they are becoming a reality. Over the past few years, Hong Kong has embarked on a journey of digital transformation in the financial services sector to safeguard its role as a leading global financial centre. It is a trendsetter and an example for other cities in the region to follow, especially when it comes to government support in creating the right regulatory ecosystem for digital transformation. But the transformation journey is not without risk.
The financial services industry accounted for a fifth of Hong Kong’s economy in 2017. To transform into a digital financial centre, financial services players in the city must fully embrace fintech, not only to effectively lower costs, but also to achieve better customer satisfaction. As fintech has great potential to enhance financial sector productivity and, consequently, boost the economy, private investment has been pouring into this space since 2015, growing annually at 127 percent during 2015-2017—higher than the global average. Investments have been made in payments and lending, as well as in other areas, such as data and security, remittances and insurance, thereby creating a more balanced ecosystem.
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