The Financial Services Development Council (FSDC), advisory body for the growth of Hong Kong’s financial service industry, has released two research reports that call for increased promotion and further advancement of distributed ledger technology (DLT) for FinTech in Hong Kong.
“Hong Kong with its large financial services sector has much to gain and also much to lose from DLT. At present, the territory’s exploration of blockchain is modest and uncoordinated, in fact with plenty of room to catch up with that of Singapore, the Mainland and other jurisdictions.”
One of the reports, titled “The Future of FinTech in Hong Kong,” examines how further development of FinTech could reshape the Hong Kong financial sector and perpetuate its position as one of the leading economic centers of the world. The second report, “Hong Kong – Building Trust Using Distributed Ledger Technology,” highlights key areas in which DLT and blockchain technology can improve the region, specifically financial services, business, and government.
The FinTech report assesses Hong Kong’s current position within the global FinTech market and makes recommendations for an overall strategy that will ultimately enhance the country’s development. The recommendations are broken down into five key areas: cybersecurity, payments and securities settlement, digital identity and Know-Your-Customer utility, wealth and insurance technology, and regulatory technology.
The DLT report briefly explains what the technology is and how it could potentially transform the Hong Kong financial service sector. It also highlights the current state of DLT and what a select number of jurisdictions are doing to explore it. Lastly, the report closes with suggestions of an initial framework for a DLT ecosystem and potential use-cases for Hong Kong’s “medium-term consideration.”
Listed by Forbes as the third best region to do business in, Hong Kong functions as one of the most competitive financial hubs in the world. Yet, overall, Hong Kong is just starting to gain familiarity with DLT and blockchain technology. In November 2016, ASTRI (Hong Kong’s Applied Science and Technology Research Institute) released its “Whitepaper on Distributed Ledger Technology” which highlighted three areas currently developing Proofs-of-Concept, specifically for mortgage loan applications, trade finance, and digital identity management. However, according to Laura M Cha, chairman of the FSDC, Hong Kong needs to ramp up efforts to implement FinTech and DLT in order to attract businesses in the future.
“As the global FinTech and DLT ecology is maturing, Hong Kong needs to catch up in the race and demonstrate to local and international FinTech firms that Hong Kong offers opportunities for developing their businesses. The two reports set out both the broad directions and the focused areas to build a thriving FinTech sector.”