“I have come across applications involving chat bots powered by AI to improve call center services level without adding additional human cost,” So says. The government is starting to notice these developments and seeking to collaborate with the private sector. The Hong Kong Financial Services Development Council released The Future of FinTech in Hong Kong report last month, pointing out that as financial services contributes 18 per cent of Hong Kong’s GDP and 6 per cent of its employment, it would be prudent to develop the industry. The council also recognised the city’s weaknesses in developing fintech, pointing out market saturation, outdated financial regulations, minimal public sector co-ordination, lack of expertise in tech innovation and high costs. “From a long-term development standpoint, Hong Kong is very strong in ‘Fin’, but not strong in ‘tech’. And there is competition as other centres move rapidly ahead with their own fintech initiatives,” the report said.
Many of these fintech solutions, including those in cyber-security, payments and securities settlement, digital identification, data analytics, automation, and AI, along with technology for regulatory compliance, are suited to technology-savvy B2B service providers. The increased number of start-up accelerator programmes in the city and across the world, along with venture capital firms, will play a crucial role in developing this. The Hong Kong Venture Capital and Private Equity Association estimated last month that the global deal flow in fintech grew by more than 10 percent in 2016, with 43 percent of global funding coming out of Asia.
An advantage for B2B start-ups is that they bypass costs in marketing and client acquisition faced by consumer-facing products while seeing more openness with corporations ready to deal with them. “For B2B, start-ups can provide more tailor-made solutions and hopefully it can leverage from one tailor-made solution to another customer within the same industry,” So says.
As Hong Kong has a significant financial sector with regional headquarters operations, it can act as a fintech market for B2B services, and as a launching pilot for mainland Chinese fintech companies looking for international expansion. While some point to difficulties that start-ups face in finding office space, bypassing regulations, overcoming protections for traditional businesses, or even setting up bank accounts, So is bullish about Hong Kong.
“Setting and running a business in Hong Kong is super easy and has never been an obstacle for start-ups,” So says. “Hong Kong has been open and easy to operate in for any new business and that will continue. We like ideas with the technology behind them to allow better ideas, processes, solutions and ultimately better experiences for everyone.”