While Hong Kong is under pressure to emulate China into evolving into a cashless society through ubiquitous adoption of e-wallets, the city is moving towards a future where multiple payment options are available.
“People have been talking about how in Mainland China you can’t do without a mobile phone because you can’t buy anything without it,” said Allen Yeung, government chief information officer of the Office of the Government Chief Information Officer (OGCIO), during the recent launch of the CSI Alliance at Cyberport.
“In Hong Kong, we are not yet there as such. However, we do not believe a cashless society [where P2P mobile e-wallets are predominantly used] is the best way to go. We believe a multi-payment-model approach, giving choices to our citizens, to be the best way,” he said.
Yeung was the guest speaker at the recent CSI Alliance launch ceremony, which marked the collaboration between Cyberport, Smart City Consortium (SCC) and IBM to deliver end-to-end support for local fintech ecosystem.
P2P payments made easy
According to Yeung, the advent of P2P mobile e-wallets in Hong Kong in 2016 – through the introduction of the Stored Value Facilities (SVF) Scheme – is one of the major fintech initiatives aimed at bringing greater convenience to the daily lives of Hong Kong residents.
He lauded the recent move of the Hong Kong Monetary Authority (HKMA) to further ease the adoption of P2P mobile e-wallets with the expected rollout of the Faster Payment System (FPS) in September. The FPS is designed to deliver full connectivity among digital retail payment systems being used in the city. “The FPS would integrate all the 13 SVFs plus the three banking licensees. So, the peer-to-peer transfer among different SVFs would become possible,” said Yeung. “Then, you don’t have to worry about downloading 13 different apps. Just take one that is the best for you and the rest would be taken care of by the FPS.”
To date, there are 16 SVF licensees in Hong Kong, many of them have started operating e-wallets in the last 18 months, including AliPay and WeChat Pay.
Based on HKMA’s quarterly statistics, there were 43.5 million SVF accounts in use in the city at the end of Q2 last year, with the total number of transactions reaching around 1.4 billion valued at almost HK$32 billion. Of the total transaction value, HK$18.9 billion was related to point-of-sale spending payment, HK$12.3 billion on online spending payment and HK$0.6 billion in P2P funds transfer.
Testing out new fintech ideas
Yeung is optimistic that the newly formed CSI Alliance between Cyberport, SCC and IBM will provide fertile ground for the development of innovative fintech services in Hong Kong.
“Actively trying out new technologies forms an essential part of the ecosystem,” he said. “We also believe that under the smart city blueprint that we need to continue pioneering, testing new ideas and also having a place such as a smart living lab,” he said.
Under the "Smart Region Living Lab" of the Smart City Blueprint, the HKMA, the Securities and Futures Commission (SFC) and the Insurance Authority (IA) have rolled out joint sandboxes to facilitate FinTech innovations.
“With the collaboration among the three regulators, the sandboxes are linked up so that there is a single point of entry for pilot trials of cross-sector fintech products. Without a doubt, their efforts will trigger additional FinTech innovations by the industry players,” Yeung said.
Local fintech sector needs PPPs to thrive
The GCIO added that private-public partnerships are a key success factor of both fintech and smart city development.
“I’m glad that Cyberport, SCC and IBM are joining hands. I’m confident that Hong Kong’s fintech sector will spare no time in capturing any opportunities brought by technology innovations,” he said.
At the launch ceremony, the founders of CSI Alliance said more can be done to support Hong Kong fledgling innovations, particularly in the financial sector.
“By leveraging each member’s network and resources, the CSI Alliance will further reinforce our strategic role to connect digital tech startups with enterprises to accelerate adoption,” said George Lam, chairman of Cyberport. “This platform will benefit our fintech community of over 250 startups and companies, as well as raise market awareness of the importance of fintech in transforming Hong Kong’s economy.”
Eric Yeung, president of SCC echoed the same sentiment. “Fostering Hong Kong innovation and sustainable economy require collaboration among different stakeholders to create the right ecosystem,” he said.
“One of the critical functions of the CSI Alliance is therefore to facilitate the exchange of ideas – including industry and solution expertise and offer advice to help startups grow. That collaboration extends to government, which has a key role to play in formulation related polices and standards,” SCC’s Yeung said.
SCC is a multi-sectoral professional network with over 200 corporate members advocating for Hong Kong’s smart city development. In the last two years, SCC has formed more than It has a business matching platform called LinkedSmart, which is designed to help startups with they are ready to go to market and are looking for investors. CSI Alliance will harness the power of this SCC platform to build the city’s fintech ecosystem.
Besides committing its portfolio of platforms – including advanced technology tools for AI and blockchain, IBM is also stepping up to help fintech startups at the business end, with sponsorships and introductions to potential investors and customers.
“We are here to give our full support to entrepreneurial efforts with our global reach and resources,” said Chen Liming, chairman, IBM China Group.
He added that IBM is keen to see Hong Kong’s young tech talents to embrace the adventure of entrepreneurship.
“The real driving force for startups is fresh talents and IBM is a proponent of nurturing young talent globally,” Chen said. “And we see exceptional talent in Hong Kong in many of our collaborations with local universities for many years. We hope to see many students from those programs joining the CSI Alliance as fresh entrepreneurs and pioneering into startups.”
In joining the CSI Alliance, IBM brings to the table its Global Entrepreneur Program (GEP) that will connect local fintech startups to the company’s enterprise client base, many of whom look to the startup community for new approaches to industry challenges.
The GEP also provides credits of up to US$120,000, providing startups with instant access to cloud-based tools and infrastructure needed to quickly launch their businesses, so that they can focus on coding, building, scaling and bringing innovations to market.
“With our recent commercial successes in fintech, IBM is in an ideal condition to integrate entrepreneurship and innovation in this sector,” Chen said. “IBM’s GEP is a gateway to a global ecosystem of top business leaders and investors, technical experts and enterprise clients and much more.”
Eyeing the global fintech market
During the panel discussion at the CSI Alliance launch ceremony, speakers shared their vision of local fintech startups being successful in the global market.
“We have more than 250 fintech startups in Cyberport. I think for them to reach the next level, we need to help them a little bit more in terms of market access and technology,” said Toa Charm, chief public mission officer at Cyberport.
Jason Ngan, chairman of the investment committee at SCC, agreed. “The aim of this alliance is to nurture, accelerate, support, and grow the whole journey of the startup.
“If we look the journey from concept, realization and development and launching it, of course, it must not only grow to serve the Hong Kong market alone,” he said.
Hong Kong-based fintech startups welcomed the CSI Alliance for broadening local sources of assistance – both technological and monetary.
“For us, our biggest challenge is funding and how to reach enterprise customers,” said Jason Cheng, co-founder, Deep Invest Technology. The company provides a platform – that uses deep learning-based sentiment analyses and scoring of millions of stock articles – to help finance professionals make smarter investment decisions.
Deep Invest has received seed funding from Cyberport and the company is a local recipient of IBM’s GEP initiative.
“Before you apply in a [startup] program, please think what kind of support your looking for. Know what your needs are. Because we focus on AI, machine learning and fintech, we applied in the Cyberport program and the IBM entrepreneurship program,” said Cheng.
“Different programs have different focus and strengths. For example, IBM is very strong in technology and B2B market. Some projects have very good relationships with investors and startup communities, as well as the private sector,” Cheng said.