FinTech – short for financial technology – is the use of digital technology to support the provision of banking and financial services. Developments in this area have revolutionised the way consumers think about how such services can best serve them and the wider question of how technology can be integrated into everyday life. Hong Kong, like the UK, is a leading financial centre and an important hub for FinTech innovation. The city is home to more than 600 FinTech companies and start-ups and a gateway to the Mainland Chinese market. This article outlines the pertinent issues in today’s FinTech industry in Hong Kong.

The Covid-19 Pandemic 

The Covid-19 pandemic has led to the broader recognition of the need to digitalise the economy and a profound change in the consumer’s mindset towards FinTech-driven solutions. Since the start of 2020, Hong Kong has seen the increased use of cashless transactions in addition to online banking, investment and insurance services. There is, too, greater integration of artificial intelligence into financial services, often in the form of automation and robo-advisers (digital platforms providing automated advice). The trend of automation will likely continue, especially in relation to personalised products and services.

Moreover, in 2020, the Hong Kong Government implemented the FinTech Anti-epidemic Scheme for Talent Development. The programme provides financial assistance to enable local FinTech companies to create new job opportunities.

The ‘FinTech 2025’ Strategy

In June 2021, the Hong Kong Monetary Authority (HKMA) unveiled its ‘FinTech 2025’ strategy, which aimed to facilitate the financial industry’s comprehensive adoption of technology in the city by 2025. The strategy focuses on facilitating the digitalisation of banking operations, future-proofing the city for Central Bank Digital Currencies (CBDCs), creating high-performing data infrastructure, expanding the FinTech-savvy workforce, and providing funding support and a conducive environment for FinTech firms. 

The Regulation of Virtual Assets 

In May 2021, the Financial Services and the Treasury Bureau published the consultation conclusions on the introduction of a compulsory regulatory framework for platforms offering trading of securities-type virtual assets or tokens, i.e., crypto currencies. The Securities and Futures Commission (SFC) will regulate the regime. The upcoming legislative reforms will depart from the opt-in model as previously adopted and provide better protection for investors against money-laundering and terrorist financing risks.

The Efforts in CBDCs

CBDCs are a form of digital money, representing a central bank’s direct liability. In 2020, the HKMA and the Bank of Thailand published their research project on wholesale CBDCs, which may potentially address longstanding issues associated with cross-border payments. The HKMA has an ongoing project with the Bank for International Settlements Innovation Hub Hong Kong Centre for Project Aurum, which examines the technical aspects of issuing retail CBDCs locally, i.e., e-HKD and their potential architecture. The HKMA will also continue its collaborative efforts with the People’s Bank of China’s e-RMB trial in Hong Kong.

The Wider World

In the next few years, Hong Kong and Singapore will no doubt continue their friendly competition to be the leading FinTech hub in Asia. Both jurisdictions have made significant strides in regulatory initiatives such as expedited approval procedures for virtual insurance companies and FinTech patents, respectively adopted by the Insurance Authority in Hong Kong in 2017 and Singapore’s Intellectual Property Office in 2018. Hong Kong and Singapore also have innovative regulatory frameworks for robo-advisory services and initial coin offerings (the launching of a new digital asset). 

Another crucial development is the Hong Kong-UK FinTech Bridge Agreement signed by Hong Kong and the UK in 2017. The agreement comprises frequent government dialogue, further regulatory co-operation agreements and trade and investment initiatives. While the press has raised legitimate concerns about whether the agreement has been fully utilised, it is important to note that FinTech firms in Hong Kong and the UK are still trying to find their footing during this pandemic. It is hoped that, as both economies transition into the post-pandemic period, such firms will feel more confident about expanding their business overseas through the FinTech Bridge. 

The Road Ahead

As a city that is outward-looking and drives innovation in Asia and beyond, Hong Kong has for the last decade or so embraced FinTech’s ability to continually alter and contribute to the financial sector. However, policymakers and regulators nevertheless face various challenges when dealing with innovative FinTech products. Only time will tell whether such challenges will be turned into opportunities, and ultimately bring new impetus to the development of FinTech in the city.


Catrina Lam

Catrina Lam was Called to the Hong Kong Bar in 1999. She is a member of the Des Voeux Chambers. Catrina was a former Middle Temple Scholar and has been serving as the Secretary for The Middle Temple Society in Hong Kong since 2009. She was appointed an Honorary Member of the Middle Temple in 2018. 


Cordelia Yeung

Cordelia Yeung was Called to the Hong Kong Bar in 2018. She is a member of Alan Leong, S.C.’s Chambers. She is developing a broad civil practice with a focus on commercial and family matters. Cordelia was a former Middle Temple Scholar and has been assisting The Middle Temple Society in Hong Kong since 2019.

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