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When it comes to the fintech market in East Asia, Mainland China is the one that traditionally draws the most limelight — and for good reasons too. In 2017, Mainland China was single handedly responsible for nearly half of the world’s digital payments. The market’s CAGR, too, is projected to reach 19.2% between now and 2024. And while there is no doubt that Mainland China is a true juggernaut in the arena, Hong Kong, too, is putting its name on the map.
Financial services have traditionally been a lucrative business for Hong Kong. So lucrative, in fact, that it accounts for 18% of Hong Kong’s Gross Domestic Product. On top of that, Hong Kong is responsible for US$2.5 trillion in assets managed annually, as well as over 70% of the global RMB SWIFT settlement.
Perhaps one of the most exciting developments in recent years, however, is in banking. Hong Kong is currently home to more than 160 licensed banks, but added eight more virtual banking licences to the mix earlier this year. This allows banks to offer an even wider range of financial products and services not only to customers of local and traditional banks but also to those in mainland China and around the world.
The excitement for fintech has spilled over into the local start-up ecosystem also. Hong Kong has more than 600 fintech companies, with 44% of them having been around for three years or more. And since Hong Kong is a global financial hub, half of all fintech start-ups in Hong Kong either see the city as a base for global expansion, or they have plans to operate or expand to the Greater Bay Area. Investors are equally enthusiastic, with US$152 million in fintech investments in the first half of 2019 alone, thus bringing the total investment in Hong Kong-based companies to US$1.1 billion between 2014 and 2018.
Speaking of jobs being created, we recently conducted a comprehensive survey, titled Hiring in Fintech, with over 100 clients and candidates to find out some of the key sentiments when it comes to Hong Kong’s fintech scene. The following are some of our key findings.
By now, most agree that fintech is going to be a positive force of change — and according to our survey, 91% of respondents agree with that sentiment. In fact, within fintech, 34% of respondents see cashless transactions as being one of the biggest opportunities in the market. While the enthusiasm for fintech is certainly high, 95% of financial institutions we spoke to also said that Hong Kong faces a talent shortage in the fintech space.
There are many reasons to account for the demand-supply mismatch. Firstly, respondents feel that Hong Kong has taken too long to adopt certain emerging technologies. As such, professionals here tend to lack the exposure and academic training for emerging technologies or banking operations.
Secondly, our survey found that a key talent recruitment challenge is that of experience shortfall. Even though 60% of fintech employers surveyed would prefer domestically cultivated talent, 47% of them still feel that there is a shortage of talent with proven skills. Perhaps that explains why, when it comes to recruitment, about 22% of them still prefer to hire foreigners.
Just having the technical skills are not quite enough, at least for fintech employers in Hong Kong. While most respondents cite technological background as being very important, a strong business sense and the ability to learn quickly are equally critical also. These requirements are part of the reason why, even though talent might showcase good technical know-how on paper, they are still relatively hard to come by.
Aside from talent shortage, Hong Kong’s fintech scene has a high turnover rate as well. Numbers from our survey reveal that 36% of respondents have changed jobs within the last 12 months. One of the top reasons for candidates to change jobs might be that of salary. About 34% of respondents say that they expect salary increments of 12–20% when changing jobs.
Money, however, is just one part of the equation. When looking for prospective employers, Hong Kong’s fintech talent in the field are looking at benefits too. Some of the most sought-after ones include flexible working hours (62%), medical benefits (61%), as well as additional training and development courses (53%). In terms of the employer, candidates especially look out for a viable career path, good technological capabilities, as well as a good company culture fit.
With Hong Kong currently in the early stages of a fintech boom, it is more important than ever for employers to offer attractive packages to attract and retain the very best talent in the industry. “Hong Kong is one of the world’s most influential and active financial centres, located at the intersection of China, Asia and the rest of the world. As such, it’s only fitting that in recent years, a broad and diverse fintech community has been established here,” said Natalie Lau, Managing Consultant at Michael Page Hong Kong. “Furthermore, Hong Kong’s fintech ecosystem is expected to grow significantly in the next three years. This will be spurred by initiatives from Hong Kong’s regulators ramping up efforts to attract fintech investments into the region.”
Looking ahead, the Hong Kong Monetary Authority (HKMA) is putting its weight behind various fintech initiatives. At the recent Hong Kong FinTech Week 2019, HKMA announced a joint research project between itself and Bank of Thailand to study the application of central bank digital currency to cross-border payments, the launch of the first Innovation Hub of Bank of International Settlements, as well as the signing of a Memorandum of Understanding between the subsidiaries of Hong Kong Interbank Clearing Limited and Institute of Digital Currency of the People’s Bank of China to connect the digital trade finance platforms between Hong Kong and Mainland China. And since 34% of our survey respondents cited government policy as being the most crucial factor to the development of fintech in Hong Kong, these initiatives are certainly steps in the right direction.
