Hong Kong Fintech landscape
Fintech development in Hong Kong has rapidly transformed the financial services sector forever. Hong Kong has become one of the world’s largest international fintech hubs thanks to its diversity, resilience and dynamics over the past decade.
Hong Kong introduced a number of measures in the past few years to attract fintech start-ups with the launch of the Faster Payment System (FPS), which allows users to transfer money instantly to friends and family, as well as selected merchants. About 740,000 daily transactions worth more than HK$5.2 billion were conducted via FPS as of September 2021, only three years after its debut, thus demonstrating one of the ways it is innovating fintech in Hong Kong.
Hong Kong has also become a hotspot for blockchain and crypto-related businesses, with around one-third of Hong Kong’s residents estimated to have invested in, transferred, or exchanged cryptocurrencies for goods and services, according to a published survey by payments giant, Visa. This has come alongside development in virtual asset trading platforms.
The development of Commercial Data Interchange (CDI) is another initiative of the Hong Kong Monetary Authority (HKMA) to empower the Hong Kong fintech industry and improve data infrastructure so that more financial products and solutions can be innovated.
Artificial Intelligence (AI) is also being used as a helpful tool for investment and trading. It can help filter and make insightful recommendations based on assessments of a portfolio’s composition and historical success, making investing more accessible for everybody.
Captialising on this technology, StashAway, a Singapore-based firm founded in 2016 and operating in Hong Kong since 2021, is using AI to help its users to manage their investments for maximum profit and returns.
About StashAway
StashAway is a digital wealth management app that offers investment portfolios and wealth management solutions for both retail and professional investors. It operates in Singapore, Malaysia, the Middle East and North Africa, Hong Kong, and Thailand. StashAway Hong Kong is licensed by the Securities and Futures Commission (SFC) in Hong Kong for Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities.
Hong Kong’s longest-serving Financial Secretary, John Tsang, recently joined StashAway’s Advisory Committee, bringing a wealth of expertise that will greatly benefit the company’s development and its clients. As an advisor to StashAway, John provides a dependable voice to the management in terms of investing, having consistently been a strong advocate of education.
To celebrate his joining, John is planning to give away part of his exclusive Choi Yeah digital art collection to new StashAway clients who make an investment of at least $50,000 HKD in their first deposit. Owners of this digital art collection can also expect to receive additional seasonal gifts, and royalties from secondary digital art sales will go towards supporting local technology startups.
Several virtual banks now operate in Hong Kong
The first virtual bank license in Hong Kong was issued in 2019 by the Hong Kong Monetary Authority (HKMA). The regulatory body oversees the primary operations of these virtual banks in Hong Kong, stipulating that they must be concerned primarily with retail banking, accepting all interested clients without setting any minimum account balance and that they are also required to have a brick and mortar head office in Hong Kong, even if they don’t have branches.
Several virtual banks now operate in Hong Kong, including ZA bank, Airstar bank, DBS, Mox Bank, Statrys, Fusion bank, WeLab bank, Airwallex and more. However, digital payment solutions have existed in Hong Kong long before virtual banks came into effect.
Commercial Data Interchange (CDI) open banking
A key initiative of the HKMA is the Commercial Data Interchange (CDI). It’s a next-generation financial data infrastructure aimed at enabling more efficient financial intermediation in the banking system while enhancing financial inclusion in Hong Kong.
The development of the CDI will enable each bank and data provider to have a single connection, replacing multiple one-to-one connections between banks and sources of commercial data, such as utility companies. This will make data sharing more secure, efficient, and scalable.
Other key benefits include obtaining up-to-date and comprehensive information about their customers (e.g. SMEs), so banks can better understand their business prospects and conduct more comprehensive risk assessments in order to offer customers the most suitable banking services.
Customers, particularly SMEs, will be able to take more control of their digital footprint and use their own data to enhance their access to financial services, offering win-win solutions for both financial providers and their clients.
Virtual asset-trading platforms
A Virtual Asset (VA) is defined as a digital representation of value that is expressed as a unit of account or a store of economic value. It functions as a medium of exchange and can be transferred, stored, or traded electronically on dedicated trading platforms.
In this emerging industry, not all VA trading platforms are regulated. At the end of 2020, the Securities and Futures Commission (SFC) granted the first license to a virtual asset trading platform in Hong Kong with the hope of offering more protection to investors in this primarily unregulated virtual environment.
Taking it a step further, the HKMA and SFC recently published a joint circular on VA-related activities, as well as an HKMA circular, to provide regulatory guidance to authorised institutions (AIs) when dealing with VAs and virtual asset service providers. These policies reflect the authorities’ ongoing efforts to regulate the VA sector: keeping investor protection at the forefront, mitigating money-laundering and terrorism-funding risks, and addressing prudential risk in the case of AIs.
These frameworks are a leap forward in providing clarity and certainty for intermediaries involved – or interested – in distributing VA-related products or providing VA dealing services, outlining the principal requirements for intermediaries dealing with professional investors only.
StashAway, the digital wealth management App, uses AI to quickly assimilate new information more accurately and turn it into simple stats and data to inform investment predictions, and better predictions translate into better economic outcomes.
In Singapore, StashAway, already offers crypto as an add-on product to traditional portfolios and the company is currently in talks with Hong Kong regulators on offering crypto-related products to professional and retail investors.
Former Hong Kong financial secretary John Tsang joined StashAway as a member of its advisory committee, “Currently, there’s a lack of sensible investment options in Hong Kong, and not enough people are taking charge of their finances,” says Tsang, “StashAway is helping people in Hong Kong build long-term wealth while making it easy to learn about personal finances and investing.”
Hong Kong is leading the way as a fintech hub and incubator for digital finance innovations aimed at better financial literacy and equity for all. With regulators supporting this evolution, Hong Kong is well placed to role model the new face of finance for years to come. Join StashAway and many other companies who are using WeWork’s creatively structured layouts, locations, and deals to serve their Hong Kong business operations today. Please visit wework.hk to learn more.
StashAway interview
Stashaway talks to us about fintech in Hong Kong and Stashaway’s role within the thriving industry, as well as how WeWork supports his company’s business operations.
1. Do you think the fintech industry is important in HK?
Fintech is particularly important in Hong Kong which has historically been a key global financial center. While it’s quite apparent on a consumer level, such as payment, banking and investments, we have also seen the government and regulatory authorities prioritize this industry in many initiatives, such as Cyberport and HK Fintech Strategy 2025.
In Hong Kong’s context, fintech companies would have to win in trust and adoption. When it comes to money, trust is key. Anything to do with large amounts of money is highly sensitive. After trust comes adoption, and to enable trust and adoption, education is key.
2. What do you think of StashAway’s preserved role in the industry?
StashAway was founded to empower people to build long-term wealth through a digital platform that makes it simple, intelligent, and cost-effective. Currently, wealth management in Hong Kong has largely been limited to traditional providers, who often operate on, and are incentivised by high commission-based fees and high minimum investment amounts. StashAway breaks these barriers and makes investing accessible to all, with human client support available through our mobile and web app.
Find out more about us, and enjoy 6 months of a free management fee waiver for up to HK$200,000 using this link! For a limited time period, new clients who make an investment of at least $50,000 HKD in their first deposit and existing investors who top up $30,000 HKD are eligible to participate in Choi Yeah NFT on a first-come-first-served basis*. Owners of this NFT collection can also expect to receive additional seasonal gifts. Royalties from secondary NFT sales will go towards supporting local technology startups.
3. Tell us about StashAway’s relationship with WeWork?
Four out of five StashAway’s first offices started at WeWork: Singapore, Malaysia, Hong Kong, and Thailand. WeWork has certainly been a great home to the team globally!
4. How does your company benefit from WeWork’s services?
WeWork has an amazing community team that allows the StashAway team to raise brand awareness of StashAway through seminars, webinars, and networking events. The WeWork Community Team has been extremely forthcoming in collaborating with the StashAway team to educate the community on our mission, and how we can help people build long-term wealth.
StashAway frequently hosts financial wellness programs at WeWork, our signature financial education series that takes people through financial planning and investing basics to advanced concepts such as asset allocation. Reach out to the WeWork desk to find out more!
5. How does StashAway’s staff feel about working in the WeWork office?
The WeWork team has been the most hospitable, from helping us with setting up the office to fixing office-related issues that we may face from time to time. They’ve been with us every step of the way on our StashAway journey.