Hong Kong is one of the most robust international financial centres and is ranked 4th in the Global Financial Centres Index. The International Monetary Fund (IMF) has reaffirmed the status of Hong Kong in the Financial Stability Assessment Report, and commends that Hong Kong has a resilient financial system, sound macroeconomic and prudential policies, and robust regulatory and supervisory frameworks. Its stock market has a market capitalisation of around HKD47.5 trillion and was ranked 3rd and 5th largest in Asia and in the world respectively in terms of market capitalisation by end-2020.

The banking and finance industry, particularly the banking sector, plays a pivotal role and serves as conduits of the economy. Although the city enjoyed a growth of 7.9% in the first three months of 2021 after bearing its worst contraction on record last year, people are still cautious on the outlook while paying close attention to how quickly Hong Kong, the Mainland, and the rest of the world can restore their momentum, particularly how fast the border of Hong Kong can open to welcome visitors from the Mainland.

Financial institutions have been employing technologies to automate operations. The adoption is accelerated by the pandemic. For a full digital transformation, customers should be the centre of the focus. In addition to automating back office operations, the general public may look for enhanced customer experience. Following the announcement of “FinTech 2025” strategy by the Hong Kong Monetary Authority in June 2021, the “All banks go FinTech” initiative aims to strengthen the all-round adoption of FinTech by banks in Hong Kong and encourage those institutions to fully digitalise operations from front-end to back-end.

The regulatory framework will catch up with technological developments. Previously, the Hong Kong Monetary Authority issued a white paper entitled “Transforming Risk Management and Compliance: Harnessing the Power of Regtech”. Regtech is the management of regulatory processes within the banking and finance industry through technology. The benefits brought forth by RegTech are multifaceted. It helps reduce costs, improve risk management, increase efficiency for operators, enhance supervision by regulators, and most important of all, strengthen the position of Hong Kong as an international financial centre and its edge in the competition arena.

The banking and finance industry has an important role to play in managing risks associated with climate change. Green and sustainable finance aims at moving funds towards sustainable development and managing related risks while expecting a decent rate of return and greater accountability. In Hong Kong, the amount was US$2.09 billion in 2020 and over one-third of the proceeds went to low-carbon buildings and the remaining portion was allocated to transport, waste, energy, and water, representing a diverse range of proceeds allocation.

In the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) announced in 2019, the Central Government supports the consolidation and enhancement of Hong Kong’s status as a major financial centre, a global offshore RMB hub, an international asset management centre as well as a risk management centre. Moreover, the National 14th Five-Year Plan continues to support Hong Kong to enhance its status as an international financial, transportation and trade centre, strengthen its status as a global offshore Renminbi business hub, an international asset management centre, and a risk management centre.

In order to stay ahead of the competition, financial institutions have to revisit the competencies of their workforce to check if there are any big skill gaps so that resources have to be allocated to narrow those gaps. Creativity, agility, adaptability, and cross-border networking skills are as important as those emerging skills like technological competencies.