Latest video – focus on FinTech trends in Hong Kong and China
In our latest video our Hong Kong and China Financial Regulation experts, Annabella Fu van Bijnen and Sumit Indwar, address the following questions on 3 core topics relevant if you’re a fintech operating in, or looking at fintech investment opportunities in, Hong Kong or China.
Here is a brief summary of the discussion:
Virtual Banking in Hong Kong
- Will the arrival of Virtual Banking in Hong Kong change the Banking Landscape?
Yes – the HKMA has expressed a desire to embrace innovate new banking models. They are looking to open up the market to large Fintech firms without financial services experience which will bring a lot more competition in the banking space.
- Does the virtual bank initiative represent a step forward in Fintech development by regulators in Hong Kong?
Yes - HKMA is ready to embrace new and interesting ways in which financial service can be provided. There is a real desire to use new technologies to access the unbanked in Hong Kong.
- Will virtual banks be competitors to traditional banks?
Yes – there is quite a focus on virtual banks need to service retail banking. It will be interesting to see if Generation Z will be attracted to these new tech friendly business services.
Cybrsecurity in China
- What is the purposes of cybersecurity law in the PRC and what is the current status?
The law has actually been around for 18 months but the supporting legislation is still being drafted so a lot of the components are still unknown. It will take some time for the full facts to come through.
- How does the Cybersecurity Law in the PRC differ from other legislation in Asia?
It’s an all-encompassing piece embracing the national interest and the protection of China’s cyber sovereignty but also touches on data privacy and protection, the use of hardware and software and touches on all types of systems whatever kind of presence you have in China.
- Who will be affected by the Cypersecurity law and what will be their biggest challenge in preparing for it?
It hits everyone – anyone who has a computer system and network in China. The degree of impact will differ across industries and types of players – finance could be exposed to more impact from the law.
Upcoming regulatory trends in the fintech space
- How is the Hong Kong and PRC regulatory landscape changing?
It’s an exciting time for Hong Kong with recent regulatory developments and initiatives showing that the major regulators are determined to make Hong Kong a real center for financial innovation. At the same time these is a need to allow for cautious regulation of new business models including the potential formal regulation of crypto-exchanges which would be a first in the world.
It’s quite a different picture in China where more than anywhere else in the world tech companies have moved into fintech space with so much ease that financial institutions must be feeling left out. They were allowed to prosper for some time before the Government stepped in with various bans. China still does embrace Fintech fully but regulation tends to come after the event when there is volume.
- What regulatory trends do you foresee in the next 12-18 months?
Hong Kong will continue to innovate with continued welcoming of new business to Hong Kong but with the need for new regulation to properly look after those business and consumers.
In China they are going to need to react to what’s happening in the market. Given that the financial sector is going to be full open to foreigners in the next 3 years the market is going to mature with a wave of investment against the backdrop of the implementation of the Cypersecurity law.
Both jurisdictions are coming at it from different directions but are definitely embracing new technology.