The Impact of Fintech Innovations on the Hong Kong Banking Industry

The Hong Kong banking sector is embracing Fintech vigorously. The survey results indicate that on the whole incumbent banks considering Fintech as a complement and enabling technology, which facilitates them to improve efficiency and to meet the demand for under-served customers, out-number significantly those seeing it as a threat and a replacement for their existing businesses. Given vast interests and growing adoption of Fintech by banks, the impact of Fintech is being increasingly felt, with most banks surveyed previously considering themselves unaffected now realise that they could not be immune. Either proactively or passively, most incumbent banks have taken a pragmatic approach and have made tangible efforts to adopt Fintech in their business operations. As of today, a wide range of Fintech innovations have been adopted generally in banks' operations, albeit by various degrees. In particular, innovations relating to “mobile banking”, “open banking (APIs)”, “customer identification and authentication”, “machine learning and predictive analytics” and “cloud computing” have been rather commonly applied, with over 40% to up to two thirds of the incumbent banks revealing that these have been partially adopted in their institutions; and most respondents intend to apply more of them to either a limited or full extent. For “robo-advisory”, “regtech solution”, “distributed ledger (e.g. blockchain)” and “smart contracts”, while related applications have been less widely used, most respondents either are using or plan to apply them in the future. In general, the applications of Fintech amongst foreign banks have been less widespread than retail banks, with the exception of the use of “machine learning and predictive analytics” and “robo-advisory”. As for virtual banks, they have shown keen interest in almost all identified solutions