Slow start due to low demand, high costs and lack of talent: experts
Starting late, Hong Kong's mobile phone payment industry has been catching up rapidly in the past two years. [Special coverage]
"Mobile payments have been available in Hong Kong since 2015. But they are not as popular as in the Chinese mainland," Eddie Wong, a Hong Kong resident, told the Global Times on Wednesday.
Apart from mobile payments, Hong Kong's online wealth management sector has also seen slow development, which industry experts said is mainly due to weak demand, high research and development costs and a lack of local talent.
Hong Kong already has convenient electronic payment tools like the Octopus cash card, making consumers in the city less motivated to switch to mobile phone payment tools, said Ding Chen, chairwoman of Chinese Asset Management Association of Hong Kong.
"Mobile phone payment brings efficiency for transactions in large cities where the products and services are dispersed. But in Hong Kong, a city with only 7 million people, daily payment is very convenient now with existing payment tools like credit cards and Octopus cards. The latter are widely used in almost every sector of life like public transportation services and retail stores," Ding told the Global Times on Wednesday.
Zhou Zhihan, general manager of Kaixin Financial, China Development Bank's Internet financial platform, agreed, saying that Hong Kong has only one online asset management platform because large numbers of small loan firms, finance companies and banks can meet local people's asset management needs.
Hong Kong is such a small market that its user base can' t support the costs of developing Internet finance products, said Li Ting, CEO of YF Financial and also a member of the Fintech Advisory Group under the Securities and Futures Commission of Hong Kong.
"The development of Internet finance requires large quantities of talent and resources with high fixed costs. The huge market in the mainland can cover these costs so that many mainland companies would like to invest in the sector. For example, Tencent is attracting hundreds of millions of users," Li told the Global Times on Wednesday.
However, the financial sector in Hong Kong has been aware of the potential of Internet finance, and financial institutions are exploring Internet finance solutions.
There has been a recent surge in start-ups in the sector, with about 160 entrants, although most are still very small, and there is an active accelerator scene, according to a report released by the Financial Services Development Council of Hong Kong in May.
Since the emergence of mobile payments in Hong Kong in 2015, more than 70 percent of smartphone users have downloaded mobile payment apps, domestic newspaper China Business Times reported, citing Hong Kong Internet finance firm TNG Wallet founder Alex Kong.
"Though most local people use Octopus cards, many of the supermarkets I patronized in Hong Kong this week already have Alipay or Apply Pay," a 26-year-old Beijing resident surnamed Li told the Global Times on Wednesday.
The Hong Kong Monetary Authority (HKMA) and the SFC have released a series of measures to encourage the development of Internet finance. For example, the Hong Kong government issued a Clearing and Settlement (Amendment) Systems Bill in January 2015, seeking to establish a regulatory regime for stored value facilities (SVF) and retail payment systems in the city, according to a statement on the government's website in 2015.
In September, the HKMA released and granted the first batch of SVF licenses for five stored-value service providers, including mainland's Alipay and WeChat Wallet, media reports said.
On May 24, Alipay announced the release of Alipay HK to provide non-cash payment for Hong Kong residents. More than 2,000 stores in Hong Kong, including Chow Tai Fook, Watsons and ParknShop, have Alipay payment equipment, with the number expected to reach 20,000 by the end of the year, domestic news portal nbd.com.cn reported in May.
Li said that Hong Kong has the potential to become a leading financial technology center, with advantages of financial strength, talented people as well as its favorable geographical location.
In addition, a sound credit system and sophisticated legal environment provide favorable conditions for the development of Hong Kong's Internet finance, Zhou said. "For example, property mortgages, valuation and auction processes are transparent, mandatory and efficient, which greatly guarantee lenders' legal rights," he explained.
