Chan: Balanced regulations key to fintech ecosystem

Hong Kong’s Finance Secretary Paul Chan Mo-po on Friday highlighted the importance of striking a balance between fintech innovation and risk mitigation in financial regulations to ensure a sustainable ecosystem.

Chan delivered a speech on the second day of the annual Digital Economy Summit, which was organized by the Hong Kong Special Administrative Region government and Cyberport.

“A healthy, sustainable ecosystem must have a strong immune system — that is, the ability to weed out the bad players, and insulate our financial system and stability from undue impact,” the finance chief noted.

“The crux to this is whether we could apply balanced, proportionate regulation that will properly and adequately mitigate pertinent risks, while leaving sufficient room for innovative products and services to break new ground,” he added.

Chan voiced confidence in the city's fintech sector, citing the significant surge in the number of fintech enterprises as proof of its growth.

The number of fintech firms in the financial hub increased from 180 to more than 800 this year in five-year period, offering innovative services including mobile payments, cross-border transfers, virtual asset trading and blockchain.

He said despite the COVID-19 pandemic, Hong Kong has continued to attract world-class talent and entrepreneurs to make the city their home, solidifying the city’s position as a “vibrant fintech ecosystem”.

Chan said the proactive approach taken by the government and public sector to spur fintech development includes seed funding programs, investor matching, incubation, and professional support services for fintech startups.

These efforts have created an environment in which fintech innovation can flourish, he added.

The SAR government, in its 2023-24 Budget, allocated more than HK$700 million ($89.2 million) to accelerate the development of the digital economy, along with over HK$9 million for a series of international initiatives.

The two-day summit, themed “Emerging with resilience: Fostering a smarter future”, aims to bring together entrepreneurs, policymakers, and academics worldwide to share their insights on topics such as smart cities, data innovation, fintech, Web3, artificial intelligence and big data, smart mobility, as well as new industrialization.