Over the next ten years, banks expect to continue to play a key role in fintech innovation and adoption, and are confident they will not be displaced by new competitors.
The HKIMR (Hong Kong Institute for Monetary and Financial Research) – the research arm and subsidiary of the Hong Kong Academy of Finance – has released a report on fintech adoption and innovation in the banking industry.
The report is based on an industry-wide survey, carried out by the HKMA (Hong Kong Monetary Authority) Market Research Division, to assess the current status of fintech adoption in the Hong Kong banking industry and to understand banks’ views on the prospect of fintech development in the next ten years.
The survey found that banks view fintech more as an opportunity than a threat, with 86 percent saying they have either adopted or plan to adopt fintech solutions across all types of financial services.
However, banks also expressed concerns about fintech talent shortages, citing difficulties in both recruiting talent and training existing practitioners. The HKMA plans to conduct a study this year on the demand for fintech talent, the mobility of such talent locally and internationally, and the prospects of these professions.
Among the other challenges with fintech adoption cited by banks were difficulties in ensuring information security, data privacy and protection, the evolving regulatory landscape, and banks’ legacy IT systems.
Over the next ten years, banks expect to continue to play a key role in fintech innovation and adoption, and are confident they will not be displaced by new competitors due to technological enhancements in their own business models and an ability to maintain core banking services.
“It is encouraging to note from the survey results that banks see fintech development more as an opportunity than a threat to their business operations, now and in the next five years, with risk management services having the greatest potential,” said HKMA senior executive director Edmond Lau, in response to the findings.
“Preliminary results also show that increased cost efficiency and improved profitability are associated with more extensive fintech adoption by banks.”
The full report is available here.
The report is the first in a series of Applied Research reports on topics relevant to the financial industry and regulators in Hong Kong.