Earlier this month in Hong Kong, the Office of the Hon Charles Mok, Legislative Councillor (IT), and the Office of the Hon Kenneth Leung, Legislative Councillor (Accountancy), joined hands and organized a seminar to discuss the opportunities and regulatory challenges that are surrounding financial innovation startups, or the so-called fintechs.
The event, sponsored by KPMG and prominent startup and Internet organizations, was intended to gather actors from various niches composing the market and hear their insights regarding the overall fintech industry.
The purpose was also to explore how Hong Kong's law and regulation needs to be shaped in order to meet with the city's latest ambition of becoming the next financial technology hub.
Aurélien Menant, co-founder and CEO at Gatecoin, was among the speakers, and even though his company, a bitcoin startup incubated by the Hong Kong Science and Technology Parks and Tsinghua University, was the only representative from the digital currency industry, Menant was really satisfied with the event.
He told Cointelegraph:
"It was amazing to see that the audience that was composed mostly of people from the traditional banking and finance space was actually very aware of bitcoin or blockchain technology."
According to Menant, both KPMG and Hong Kong's Legislative Councillor Charles Mok, want to see the local economy thrive and are supporting the startup ecosystem, and especially the fintech ones, in that sense.
With global investment in fintech ventures tripling to US$12.21 billion in 2014, it has become evident that the industry cannot be neglected.
"The good thing is that they actually recognize bitcoin and blockchain technology as one of the elements in this fintech revolution," Menant said.
Asia's next fintech hub?
Along with market players, the "Overcoming Challenges to Financial Innovation in Hong Kong" seminar panelists also included Andrew Wong Ho-yuen, Permanent Secretary for the Financial Services and the Treasury.
His bureau recently established a committee that carries the precise mission of helping shape a prosperous environment for fintechs and "advise the Government on how to develop Hong Kong into and promote Hong Kong as a Fintech hub."
Officially launched on March 30, the "Steering Group on Financial Technologies (Fintech)" committee is chaired by the Secretary for Financial Services and the Treasury, Professor K C Chan.
Professor Chan said in a release:
"Fintech can enhance operational efficiency and help foster new modes of development for the financial services industry. As an international financial centre with a highly developed information and communication technology sector, Hong Kong is an ideal place for developing Fintech.
"We will work closely with all stakeholders to look into the potential of the Fintech sector and possible measures to promote developments in this regard."
According to many of the speakers, Hong Kong, a traditional financial center, has valuable resources and the capacity to "[become] Asia's fintech hub." However, the city lags behind when it comes to Internet finance and innovative fintech business models.
Lack of clear regulations
Emmanuelle Norchet, general manager at Investable, an equity crowfunding platform, emphasized on Hong Kong's lack of regulation for her niche, and said that the city is “quite the last mover" compared to London and New York.
According to Legislative Councillor Charles Mok:
"The lack of clear regulation will effectively obstruct fintech development in Hong Kong, as it is very difficult for business to try something new in early stage if they can't be sure that it is legal.
"From the industry’s aspect, without clear regulations and guidelines they have no idea how to start a FinTech business, and it is risky to make attempts in innovative ways as negative news could easily harm the credibility of a company.
"I think the government tends to be highly risk-sensitive in handling investments, they might also be worried about the impact of FinTech on traditional finance big players, but the government should really learn to listen to the masses and cater for the internet finance needs."
The sentiment that Hong Kong needs a proper and well-balanced regulatory framework for fintech startups is unanimous.
Asking Gatecoin's Aurélien Menant about the most pressing issue that are facing bitcoin startups in Hong Kong, the founder said:
"Regulation is currently the most important challenge. We need to have a regulation strict enough to give credibility to the industry and protect the customers, yet balanced enough not to stifle innovation or discourage newcomers. The next challenge will be to find applications and interfaces allowing a mass adoption."