As a financial hub, Hong Kong hasn’t traditionally been synonymous with creating transformative innovation. Indeed, a recent study by The Economist Intelligence Unit (EIU), Connecting Commerce: Business confidence in the digital environment, which was commissioned by Telstra, seems to bear out that notion.
The EIU study measured executives’ confidence in the strength of their local environment to support their organisation’s digital transformation. It ranked Hong Kong 37th overall out of the 45 cities surveyed, with executives raising concerns about the general level of support available for innovation and entrepreneurship, as well as the development of local ICT infrastructure.
And yet, those results may be due to heightened expectations – and signal a range of new opportunities for businesses.
Digital transformation is creating new opportunities.
Iain Reed, founder of EFA, a financial software start-up, and chairman of TiE Hong Kong, the local chapter of an entrepreneurs’ association, told the EIU that he ascribes the territory’s relatively low confidence levels to a mature market that demands excellence from its environment.
However, the relatively low readings from local executives are at odds with the digital buzz Mr Reed and others sense about Hong Kong. “The digital scene here has exploded in the past five years,” he told the EIU. When it comes to communities and forums, for example, “we’ve gone from nothing in digital to several events happening every night”.
A rising digital ecosystem.
The emergence of Hong Kong’s digital ecosystem is a phenomenon of the past three years. Despite the late start, the territory is quickly catching up, with organisations benefiting from government help. According to the Connecting Commerce study, the most helpful external resources for supporting digital transformation efforts in Hong Kong are:
- Government programs (cited by 39 per cent of respondents);
- Business associations and events (37 per cent); and
- Innovation labs and centres (27 per cent).
Beyond the government, organisations in Hong Kong are banding together to share best practices. In fact, according Forbes, the number of co-working spaces in thecity has risen from zero in 2010 to more than 50 in 2016. Start-ups are using these innovation centres mainly to obtain advice and ideasfrom their peers, as well as from universities and other large organisations which may be involved.
Finding the right talent.
The ability to network through shared working spaces also addresses a range of business challenges. In Hong Kong, key start-up concerns include finding skilled people, and advice on technology:
- Forty-four per cent of Connecting Commerce respondents say referrals to digital talent are amongst the most valuable benefits they’ve gained from support structures.
- Thirty-nine per cent value these structures for advice they receive on software, network, website or other specific technology issues.
According to the report, while local skills levels are high, universities are not able to keep up with demand. Fifty-nine per cent of respondents’ rate local educational institutions as effective in equipping people with the right digital skills, yet just 46 per cent share the same sentiments when it comes to the quantity of talent.
Moving beyond traditional services through transformative innovation.
Hong Kong’s financial services industry is giving rise to a range of new opportunities in the field of financial technology. In October 2016, Deloitte published a report ranking Hong Kong fifth among the top fintech hubs in the world. In September 2016, the Hong Kong Monetary Authority (HKMA) announced plans to launch a fintech innovation hub in the territory where new digital services can be trialled by banks and start-ups.
The territory is also looking to collaborate with regional economies in the interest of fostering better fintech developments. In October 2017, HKMA and the Monetary Authority of Singapore announced a partnership which includes joint innovation projects, referrals of innovative business, information sharing and exchange of expertise to facilitate financial innovation across both markets.
Hong Kong’s adoption of an investment and partnership model to boost innovation environments for fintech is a compelling model for cities – and organisations – around the world to consider.