Hong Kong anticipates the continued growth of its fintech ecosystem

Hong Kong's fintech ecosystem is poised for continued growth in the coming years, with blockchain, digital assets, distributed ledger technology (DLT) and artificial intelligence playing a central role in shaping its future.

Hong Kong is home to more than 1,100 fintech companies, including 175 blockchain application or software firms and 111 digital asset and cryptocurrency companies, which marked 250% and 30% increases, respectively, since 2022, according to the Hong Kong Fintech Ecosystem report by InvestHK, a government department that oversees Foreign Direct Investments.

Participants of the Hong Kong Fintech Ecosystem. Source: InvestHK

According to the report, the Hong Kong fintech market's revenue is projected to reach $606 billion by 2032, with an anticipated annual growth rate of 28.5% from 2024 to 2032.

InvestHK, along with other Hong Kong authorities, surveyed 130 fintech companies operating in Hong Kong and identified talent shortage as the top concern in the region, which was cited by 58.8% of respondents, followed by access to capital at 43.9%.

These hurdles will be critical to sustaining Hong Kong's momentum to become the top financial hub.

More than 73% of the surveyed fintech companies operate in the AI subsector, which far exceeds the 41.5% that are focused on digital assets and cryptocurrency.

The InvestHK report highlighted Hong Kong's advantage in adopting China's "one country, two systems" policy, allowing it to maintain a free-market economy, unrestricted capital flow and strong global trade relations while benefiting from its proximity to mainland China.

As a result, the Hong Kong government was able to roll out several Web3 innovations, including a licensing regime, spot Bitcoin (BTC) and Ether (ETH) exchange-traded funds, the Hong Kong Monetary Authority's stablecoin sandbox and tokenized finance and AI integration.

Hong Kong Monetary Authority's five-step 'Fintech 2025' strategy. Source: HKMA

In 2021, the HKMA unveiled a strategy to establish itself as a financial hub by 2025. The strategy included encouraging fintech adoption among banks, increasing Hong Kong's readiness in issuing central bank digital currencies at both wholesale and retail levels, enhancing the city's existing data infrastructure and building new ones, increasing the supply of fintech talent and formulating supportive policies for the Hong Kong fintech ecosystem.

In 2021, the HKMA unveiled a strategy to establish itself as a financial hub by 2025. The strategy included encouraging fintech adoption among banks, increasing Hong Kong's readiness in issuing central bank digital currencies at both wholesale and retail levels, enhancing the city's existing data infrastructure and building new ones, increasing the supply of fintech talent and formulating supportive policies for the Hong Kong fintech生態系。