HONG KONG -- November saw the commencement ceremony of a program for financial technology venture businesses held by multinational business consulting firm Accenture at Cyberport, a creative digital community in the western part of Hong Kong Island. The event gave investors the chance to listen to entrepreneurs talk about the technologies they are developing.
Senior officials and engineers from seven businesses from different parts of the world selected by Accenture were invited to take part in the 12-week program. Participants studied ways of improving their products and develop marketing routes under the guidance of 12 major financial institutions, including HSBC, Goldman Sachs and China Construction Bank.
Bimal Gandhi, CEO of digital security firm Uniken, which has developed a password-free personal authentication system, traveled to Hong Kong from the company's head office in New York on a weekly basis to attend the program. "We want to know what requirement our technology needs to meet from the global banks, how regulatory issues affect these banks' decision. The lab went beyond my expectation. The program here and the mentorship the banks provided was phenomenal," Gandhi said.
Uniken plans to open an office in Hong Kong early next year as a platform from which to access markets in Asia.
Hong Kong is trying to distance itself from its reputation as a wasteland for venture businesses. A panel set up in April by the Hong Kong government to look at support measures for fintech businesses is set to produce a report by the end of this year. Financial Secretary John Tsang said "I'm quite confident that Hong Kong will find its place as Asia's fintech capital, and one of the world's leading fintech centers."
The Hong Kong government's resolve to establish a fintech center reflects its past failures to nurture venture businesses. The biggest of which is widely regarded as the loss of DJI, the world's largest maker of small unmanned aerial vehicles.
DJI CEO Frank Wang launched the company in a dormitory at the Hong Kong University of Science and Technology in 2006 but decided to relocate it to Shenzhen, Guangdong Province, because of the lack of support from the Hong Kong government.
Shenzhen, which links Hong Kong to mainland China, was little more than a fishing village before the launch of reform policies by the Chinese government but has since grown to become the nation's "Hardware Silicon Valley" with a several high-tech companies basing themselves in the special economic area. It is expected that the city will overtake Hong Kong in terms of gross domestic product by the end of this year.
The Hong Kong government, on the other hand, has had trouble luring information technology companies to Cyberport, where it has invested 13 billion Hong Kong dollars ($1.7 billion) since late 1990s. The government project came in for a significant amount of criticism, with many claiming the only beneficiaries were real estate companies that built high-rise luxury condominiums around the area.
Fintech is seen as a trump card for Hong Kong's catch-up strategy.
Accenture estimates that investment in fintech in the Asia-Pacific region roughly quadrupled in the first nine months of 2015 from the whole of the previous year to $3.5 billion.
Many large U.S. and European financial institutions have headquarters for Asian operations in Hong Kong, where there also are a large number of venture capitalists and other investors. It is therefore relatively easy to raise funds in Hong Kong.
Hong Kong's proximity to mainland China, where internet-based account settlements are widely practiced through such businesses as Alibaba Group Holding's Alipay, also makes it an attractive location.
The number of fintech companies supported by Hong Kong Cyberport Management, wholly owned by the government, has increased to around 60.
Among them is Bitspark, a remittance platform that uses the bitcoin digital currency. Bitspark's Australian CEO George Harrap, founded the company in Hong Kong to take advantage of a two-year exemption from paying office rent from local financial authorities aiming to foster new technologies. Without government support, however, the highest office rents in the world make life difficult for new businesses.
The city also suffers from a serious imbalance in manpower resources. While Hong Kong has a large number of skilled financial services professionals, the recruitment of IT programmers is difficult, Harrap said.
The Hong Kong economy relies heavily on real estate and financial businesses. Whether fintech can force its way into such a rigid economic system remains to be seen. One thing that looks almost certain, however, is that competition among Asian cities seeking new models for growth is set to become more intense.