Invest Hong Kong (InvestHK) has unveiled the Global Fast Track Programme, a business-driven programme within Hong Kong Fintech Week (HKFW), Asia's annual flagship fintech event, to help local and global fintech enterprises leverage Hong Kong's proven resilience and fintech opportunities to scale business and accelerate innovation. The Fast Track programme plugs fintech enterprises directly into Hong Kong's diverse ecosystem of world-class regulators, business leaders, corporates and investors to propel their ventures across Hong Kong and elsewhere in the Guangdong- Hong Kong-Macao Greater Bay Area and Asia where digitisation and fintech adoption are surging.
Selected fintech ventures will pitch their innovative solutions to the Hong Kong Monetary Authority (HKMA) and senior executives of Corporate Champions including Hong Kong Exchanges and Clearing (HKEX), HKFW Strategic Partner AMTD Group, Allianz Global Investors, Chow Tai Fook Jewellery Group, Eureka Nova, Mizuho Bank, Hong Kong Trade Finance Platform Company, FORMS HK, Microsoft and more. Investors such as AngelHub, Cyberport, Hong Kong Science and Technology Parks Corporation (HKSTP) Ventures, Lingfeng Capital, MindWorks, QBN Capital and Vectr Fintech Partners are also on board with up to US$1 million of investment commitment on offer per project upon further due diligence, business discussions and approval through the protocol as required by respective investors. The programme is curated by the HKFW appointed event organiser Finnovasia.
Fast Track is now inviting companies from nine key fintech verticals (trade finance, capital markets, retail banking, commercial banking, insurance, regtech, wealthtech, payments and enterprise resource planning), to submit applications from now till August 31. About 10 companies per vertical with the most outstanding ideas will showcase their solutions for an opportunity to join an extensive tailored B2B matchmaking programme with the Corporate Champions and investors to explore further deals and investment partnerships. Over 10 selected finalists will then pitch virtually at the FintechHK Global Final for extra prizes at this year's HKFW from November 2 to 6. Fast Track also features the Mainland China Track stream to help Chinese fintech enterprises scale their business overseas via Hong Kong.
"The strength of the Fast Track programme is proof of Hong Kong's resilient, diverse and growing fintech ecosystem, which provides fintech enterprises with the ideal test ground and launchpad for growth in the post-COVID era," Associate Director-General of InvestHK Mr Charles Ng said.
The Head of Fintech at InvestHK, Mr King Leung, added, "The Fast Track programme is a business outcome-driven programme designed and focused purely on accelerating new opportunities for fintech enterprises. In addition to potential deals and investment, each eligible company can also apply for Hong Kong Special Administrative Region Government landing support from US$111,000 up to US$2.6 million, regardless of the pitching outcome. InvestHK assists worldwide fintech companies to fast-track their next success from Hong Kong."
While COVID-19 continues to create challenges for the global fintech sector, Hong Kong, with its unique geographical advantage, provides direct access to both Mainland China and Southeast Asia, two of the world's largest and fastest growing fintech markets offering significant long-term opportunities. As a result, pioneers in the fintech space and relevant regulators are eager to tap into this immediate potential by working hand in hand with the world's brightest and best fintech ventures.
The Chief Fintech Officer at the HKMA, Mr Nelson Chow, said, "Collaborating with the worldwide fintech community is key to propelling growth in fintech development. The Fast Track programme provides a unique opportunity to bring together international experts from the public and private sectors who can connect and explore innovative ideas and technology to enhance different financial solutions."
The Head of the Innovation Lab at HKEX, Mr Lukas Petrikas, said, "HKEX uses world-leading technology to power our busy capital markets. To keep making these markets more efficient, and even more relevant to changing economic conditions, we embrace this opportunity with the Fast Track programme to engage with the latest fintech developments and meet rising stars from around the world. The programme will help further enhance Hong Kong's competitiveness as an international financial centre."
Representatives of fellow Fast Track Corporate Champions gave further testimony on the huge opportunity that Fast Track delivers for start-ups and to their enterprises as key market movers in the fintech sector.
"The Fast Track programme this year at HKFW creates opportunities for serious players to connect deeply into the region through joining the local ecosystem networks, such as our AMTD SpiderNet, and tap into diversified pockets of investors and collaborative partners to capture the vast opportunities in the Greater Bay Area and surrounding region," the Chairman and CEO of AMTD Group, Mr Calvin Choi, said. AMTD Group has been the HKFW Sole Strategic Partner for three consecutive years and is a Corporate Champion for the Fast Track programme. "Given Hong Kong's solid foundation as a global financial centre and the faster pace of digitalisation resulting from the global pandemic, I'm confident that Hong Kong's fintech landscape can achieve significant growth and attain new heights."
Executive Director of Chow Tai Fook Jewellery Group Mr Bobby Liu said, "Chow Tai Fook Jewellery Group constantly seeks to inject vitality in people, products and operations through our persistent investment in innovation and technology. Through the Fast Track programme, we hope to witness innovative fintech solutions that can curate remarkable customer experiences and unique and differentiated products."
The Head of Open Innovation at Eureka Nova, Mr Ben Wong, said, "Fast Track opens up commercial opportunities for start-ups and helps us identify fintech ventures to collaborate with that solve real-world problems. By collaborating with emerging fintech companies, we can leverage our partners like Mizuho Bank and Hong Kong's unique status as a global financial hub to drive regional and global exposure."
Senior Director and Financial Services Business Lead, Asia, at Microsoft Ms Connie Leung said, "Microsoft joins the Fast Track programme to elevate high-potential fintech start-ups through new technologies such as cloud, artificial intelligence and blockchain. This is a key step to further accelerate our financial sector on the digital transformation journey, in order to sustain our leadership position as a global financial hub."
The Managing Partner of Vectr Fintech Partners, Mr Mark Munoz, said, "Fast Track helps build a stronger fintech ecosystem by allowing us to better support founders on their mission, advise them of best practices, and ultimately back them on their journey to success. The fact that fintech touches our everyday lives in so many ways means that opportunities are boundless."
Learn more about the application process here:
Internationalization of the yuan began in earnest more than a decade ago, with the goal of eventually establishing it as a global reserve currency. At the time, Chinese policymakers sought a larger role for China's currency on the global stage in line with broader financial reform. Today, Beijing worries about the possibility of a full-blow financial war with the United States. In this case, dependency on the dollar for international payments is a vulnerability that China must address.
In the foreseeable future, India's payments market has nowhere to go but up, analysts say. In a new report, RedSeer Consultancy estimates that India's unique mobile payment users will grow fivefold to 800 million in 2025 from the current 160 million, while transaction volume will grow to Rs 7,092 lakh crore from 2,162 lakh crore. Rising mobile internet connectivity, increased availability of mobile point-of-sale devices and the advent of real-time payments are key drivers of the shift to digital payments in India.
South Korea is going cashless. Again. This time it's e-wallets and digital banks driving the trend, not credit cards. South Korea is already one of the world's most credit-card friendly countries. By some estimates, it has the world's highest credit card penetration rate. South Korea also has the world's highest internet connection speeds. These factors are much more integral to South Korea's Cashless 2.0 movement than covid-19, even if the pandemic is pushing more of the economy online.
Indonesia's e-commerce market is surging amid the pandemic, giving a big boost to digital wallets. Transactions at the four largest e-commerce sites in the country will double to US$29 billion from US$14 billion in 2019, according to a study by the Bank of Indonesia published in July. Digital wallets accounted for 90% of cashless payments in the first five months of the year, while bank cards handled the rest.
While Alipay and WeChat Pay maintain a duopoly over China's mobile payments market, that duopoly does not warrant the antitrust investigation reportedly in the works. To be sure, no competitor has emerged able to pose a credible challenge to the duopoly, but primarily for reasons out of the companies' control. Beijing's market barriers have been key enablers of Alipay and WeChat Pay's ability to dominate mobile payments. Together they control 94% of China's mobile payments market, Alipay 55% and WeChat Pay 39%, according to research firm Analysys.
The Philippines has not raced to go cashless. Efforts to digitize the financial system got underway nearly two decades ago, but have made limited inroads. Cash still accounts for 90% of transactions, according to the Better than Cash Alliance, and looked like it was going to remain dominant - until the pandemic. Within a few months, the payments landscape has changed dramatically in the Philippines, with digital payments emerging as a must-have.
It is not easy to stand out in India's crowded payments segment. Users are spoiled for choice. There's Google Pay, Walmart-backed PhonePe, Alibaba-backed Paytm, or Amazon Pay, and perhaps one day WhatsApp Pay - if Indian regulators ever let it operate in the subcontinent. In theory, the first payment provider that can build a super app that bundles together all the services users want in one place will be the biggest winner. But that has proven elusive. It might be enough to build the best digital financial services platform - and forget about the rest. Paytm's entry into the insurance sector follows this line of thought.
Airwallex is among a handful of fintech unicorns that have closed huge funding rounds in the middle of the coronavirus pandemic. In April, Airwallex raised US$160 million from investors as its valuation climbed to US$1.8 billion. Airwallex was established in Australia in 2015 and while now headquartered in Hong Kong, is still considered an Australian fintech. The company has sought to capitalize on demand for cheaper cross-border payments services among SMEs in its home market, where the major banks are notorious for charging high foreign-exchange fees. Airwallex says that its machine-learning technology enables fast, inexpensive and transparent global payments.
Japan has been trying to digitize financial services for years, given the high costs of maintaining a cash-based economy and the need for convenient payment options during the upcoming Olympics. The government's"Cashless Vision" initiative that seeks to increase non-cash transactions to 40% by 2025 began back in 2018, well before the covid-induced cashless drive that's sweeping across Asia. Going cashless to promote hygiene would probably seem superfluous in Japan, a country already known for its exacting hygiene standards.
AMTD is stepping up efforts to build a regional fintech ecosystem in Southeast Asia and plans to take a controlling stake in Singapore's FOMO Pay, a payments solution provider. The FOMO Pay deal follows AMTD's recent acquisitions of the leading insurtech PolicyPal, and CapBridge, Singapore’s first regulated securities exchange for digital assets and private companies.
China's payments market is so big that U.S. credit-card giants reckon it's better to arrive late to the party than never. Although China's fintech giants Ant Group and Tencent control about 90% of the US$27 trillion payments market, the remaining 10%, at US$2.7 trillion, is not exactly chump change. Among the U.S.'s big three card companies, Amex is the first to have its clearing license approved for China. That first mover's advantage, coupled with cooperation with numerous local banks and payments firms, could give Amex an edge over Visa and Mastercard.
China and the U.S. have both invested big in Indian fintech. Google Pay is one of the most popular digital wallets in the country, along with Walmart-backed PhonePe and Alibaba-backed Paytm. Facebook recently invested in India's Jio in a bid to build the subcontinent's first super app. There's just one problem: Indian regulators are concerned that foreign companies may dominate India's fintech market. WhatsApp Pay has yet to receive approval to launch in the subcontinent, two years after applying for a payments license. At the same time, New Delhi is cracking down on Chinese apps and enhancing scrutiny of Chinese investment amid rising geopolitical tensions with Beijing.
By now it's a familiar story: COVID-19 is driving cashless payments adoption in Southeast Asia. As one of the region's key economies and recipients of fintech investment, Vietnam is a market to watch. What's notable about Vietnam is that it's better poised for an economic recovery than almost any other country because of how well it has controlled the coronavirus pandemic. While the rest of the world was in recession, Vietnam's economy grew 0.36% in the second quarter, beating a 0.9% contraction forecast by economists surveyed by Bloomberg.
Ant Group, formerly Ant Financial, has big ambitions for Southeast Asia. By taking strategic stakes in ascendant fintech startups across the region, Ant hopes to gain a foothold in the region's most important economies and perhaps lay the foundation for a regional payments ecosystem. If Ant's bid for a Singapore digital wholesale bank license is successful, the Hangzhou-based company will be poised to serve SMEs in the city-state and could eventually expand to other key regional economies where the financial inclusion rate is lower.
Macau is the only place in China's territory where gambling is legal. Chinese regulators want all the gaming in one place where they can keep a watchful eye over it. That's why the regulators don't like online casinos. Those are much harder to monitor. Located offshore, primarily in Southeast Asia, they aren't subject to Chinese law, even though Beijing forbids its citizens from gambling online. For Chinese authorities, the primary concern is that Chinese people will use online casinos to circumvent China's strict capital controls, which limit overseas remittances to US$50,000 a year. In some cases, criminal activity is involved.
Southeast Asia's two most valuable tech startups are determined to reinvent themselves, transforming from ride-hailing giants into digital banks. Singapore's Grab is leading in every Southeast Asian market but one: Indonesia, which happens to be where its arch-rival Gojek is based. Having recently received investments from Facebook and PayPal, Gojek looks to have the edge in the region's largest economy. But Grab is determined to prevail there. That's why the Grab-backed digital wallet Ovo is reportedly planning to merge with Dana, which is backed by Chinese fintech giant Ant Financial. Together, Ovo and Dana might be able to give Gojek's fintech arm GoPay a run for its money.
Chinese investment into Indian fintechs is set to slow following New Delhi's decision to restrict foreign investment from countries with which it shares a land border and more carefully scrutinize new portfolio investors from mainland China and Hong Kong. India's immediate reason to target foreign investment is to forestall opportunistic takeovers during the coronavirus pandemic, which has infected about 152,000 and caused more than 4,000 deaths in the subcontinent.
A unicorn cannot thrive on ride hailing alone. That's why Indonesia's Gojek is betting on fintech to bolster its fortunes. Its arch-rival Grab is taking a similar road. Starting with payments, the ride-hailing giants aim to transform themselves into bonafide financial services providers, monetizing customer data by using it to create different digital banking products. Despite the pandemic, Gojek managed to raise another US$1.2 billion in March to support its expansion efforts. Gojek then acquired the Indonesian payments startup Moka and established a tie-up with the fintech Pluang, which offers digital gold investments.
Tencent has paid US$300 million for a 5% stake in Australia's Afterpay in a bid to strengthen its global fintech services and expand into smart retail. Afterpay allows shoppers to pay in four installments for purchases online or in retail stores. It claims to have 7.3 million users globally.
Malaysia was gradually moving in a cashless direction long before the coronavirus pandemic hit the country, forcing it into lockdown from mid-March until early May. The virus just may have accelerated Malaysia's cashless push though, as people out of necessity opted for contactless payments instead of those involving contact. Now, digital wallets are offering new incentives to consumers and merchants, while policymakers are tightening regulations around the use of cash. Malaysia's cashless vision appears to have gotten an unexpected boost from the pandemic.
Internet giants outside of China are trying to create a super app like WeChat, which users rely on widely to chat, buy goods on and offline, and bank. The payments application is the stickiest: Once WeChat became a preferred digital wallet, it had a captive audience for a much wider selection of banking services. For Facebook, which is shut out of China, India offers the chance to build a super app. There are more users of both Facebook and its messaging app WhatsApp in India than anywhere else on earth. Facebook has moved one step closer to that goal following its US$5.7 billion investment for a 9.9% stake in India's telecoms giant Jio, a subsidiary of the juggernaut Reliance Industries.
A growing number of global fintechs are eager to tap China's growing remittances business, the world's second largest after India. Given China's strict controls of money flows, the right local partner is important for gaining access to the market. Otherwise, regulatory hurdles are tough to surmount. In April, Singapore-based digital cross-border payments platform Nium announced it would partner with Geoswift, a counterpart headquartered in Hong Kong that specializes in clearing payments in and out of the Chinese mainland.
The economic downturn fomented by the coronavirus pandemic has been a rude awakening for cash-burning fintech startups. They and their backers are finding that there's a price to pay for championing breakneck growth over profitability. In contrast, fintechs with solid balance sheets, like London-based digital money transfer firm TransferWise (profitable for three years in a row), are poised to pursue targeted expansion. Tapping resilient demand for its cross-border payments services, TransferWise recently inked a partnership with China's Alipay and expanded to the United Arab Emirates.
Libra is the most visible profile prong of Facebook's fintech offensive, but it may not be the most important. Not for now, anyway. U.S. officials and regulators remain circumspect about Facebook's digital currency project. Facebook has a long way to go before it wins their trust. In Asia, Facebook has a seemingly simpler task: Roll out the digital wallet of WhatsApp to monetize its large regional user base, concentrated in India and Indonesia. That's proving to be difficult too though.
In every crisis, there are opportunities. While many investors are tightening their belts during the coronavirus pandemic, some are opening their wallets. Now is the time to double down on certain investments. Take Australia's Airwallex as an example. The Melbourne-based cross-border payments platform closed a mammoth US$160 million (A$250 million) funding round in April, bringing its valuation to US$1.8 billion from US$1 billion. Less than half of the capital was raised in January, according to Australian Financial Review. Airwallex managed to raise the rest amid the pandemic's surge.
Across Asia, the cashless drive had been gaining momentum long before COVID-19 broke out in late 2019. In less than a decade, China, the region's largest and the world's No. 2 economy, has transformed from a cash-dominant into a cash-light economy. Its neighbors have been following suit.
A 2019 McKinsey study found that digital payments in Asia are growing at a roughly 15% annual clip, more than 2.5 times the typical economic growth rate in the region. Overall, cashless payments have been underpinning the rise of digital banking across APAC.
Asia may be at an inflection point for cashless payments as the coronavirus rages globally and hygiene concerns about the use of physical currency are growing.
WeChat Pay has for several years been trying to develop its business outside of China. The first step is usually to partner with local merchants, making WeChat Pay available at points of sale where Chinese tourists shop. The second step is to target the local market. Thus far, WeChat has been more successful capturing Chinese tourists' wallet share overseas than in becoming a trusted local digital banking provider.
The novel coronavirus outbreak could slow WeChat Pay's global expansion considerably in the short term. Put simply, what happens if your international payments business primarily depends on Chinese tourists and suddenly there are none?
On March 26th, Chinese internet giant Tencent’s messaging app WeChat launched a test version of a virtual credit payment product called Fenfu (分付). Fenfu, which literally means "installment payment," allows users unable to get a credit card from a bank to spend money first and later pay it back with WeChat. There is no fee for using Fenfu, which is focused on offline consumption. The virtual credit payment product does not support WeChat transfer and red envelope function.
The leading enabler of digital commerce across the Middle East and Africa region, Network International, made an agreement with Tencent Holdings Limited in February 2020 that will enable millions of Chinese tourists to transact through Network International’s extensive UAE merchant network with their WeChat mobile wallets.
The largest merchant acquirer in the United Arab Emirates, Network will perform as a settlement partner or acquirer as well as solution provider in order to enable mobile-based transactions via WeChat Pay at points of sale as well as for online purchases.
The novel coronavirus outbreak has crimped business activity across China, bringing the world's second largest economy to a virtual standstill. Yet amidst those unprecedented conditions, China's fintech giants have been busy developing digital solutions to mitigate COVID-19's impact. Some of the solutions are aimed squarely at the consumer economy, while others support government efforts to track people's health status.
Cambodian and Thai regulators recently announced the launch of an interoperable payment QR code for use between Cambodia and Thailand. Cambodian tourists who visit Thailand may now use their mobile banking app to pay in Cambodian riel when shopping at stores that display a Thai QR Payment sign, while the same functionality will be extended to Thai tourists in Cambodia by Q3 this year.
A collaboration between the Siam Commercial Bank (SCB) and five Cambodian commercial banks, the interoperable QR code was developed upon domestic electronic transfer system PromptPay which runs on Vocalink infrastructure. ACLEDA Bank PCL, Cambodia Commercial Bank (CCB) and the Foreign Trade Bank of Cambodia (FTB) are sponsoring banks of the collaboration, which mean that other banks would be required to work with the three in order to provide the service.
The India digital payments market makes for a fascinating contrast to China's. Unlike China, India has allowed foreign tech giants to compete on a mostly level playing field against its homegrown firms. In fact, Chinese tech giants are strategic investors in some of those Indian fintechs. Competition in the surging Indian payments market - Credit Suisse reckons it will grow fivefold to US$1 trillion by 2023 - is fierce. Google Pay is the market leader followed by Walmart-backed PhonePe according to research firm Razorpay. India's own Softbank-backed Paytm has fallen behind. AmazonPay is also vying for market share.
Entering into this fray is WhatsApp Pay, the digital wallet of the global messaging giant. WhatsApp Pay is aiming to do what in India what WeChat did in China: Segue from chatting and photo sharing into digital banking on the back of a popular messaging app. The difference is that WhatsApp Pay has a lot more competition. The only major digital wallet WeChat faced was Alipay. Interestingly though, WhatsApp has about as many users in India - 400 million as WeChat had when it expanded into digital banking in 2014. Today, WeChat has more than 1 billion users, mostly in China.
Ant Financial's international expansion runs on two separate tracks. The first is a concerted push into emerging markets, especially in South Asia. In these countries, Ant is laying the groundwork to become a primary provider of digital financial services to the local market. In many cases, incumbents and digital infrastructure are both weak. Ant sees opportunities to leverage both its banking and technology acumen in countries such as Bangladesh, Pakistan and Nepal.
It's a very different story in Western Europe. There, Ant is making gradual inroads. The Chinese fintech giant says it wants to serve the local market, but its products are designed for Chinese consumers and businesses. European incumbents, meanwhile, are often entrenched. There's no easy way around that. Growing in Western Europe through acquisitions in local companies makes more sense than going it alone. With that in mind, Ant recently took a minority stake in Swedish payments platform Klarna, the most valuable fintech startup in Europe alongside the UK's Revolut. Klarna is currently valued at US$5.5 billion and says that it has 80 million customers globally.