In Hong Kong, skills shortages and challenges in securing investment have been identified as the top two most pressing issues by local fintech companies, hampering their ability to grow and scale, a new study by Google Hong Kong and financial consultancy Quinlan & Associates found.
The study, which polled 126 Hong Kong fintech companies and interviewed several C-suite executives in the sector, found that intense competition for talent in Hong Kong has resulted in the majority of fintech companies in the city facing a severe talent gap.
Skill sets in sales and product design were found to be in highest demand, with 64% and 56% of respondents indicating having a talent gap in product innovation and sales and marketing, respectively.
Talent gap in the Hong Kong fintech sector, Source: Smarter Digital City – Advancing Hong Kong’s Fintech Ecosystem, Google and Quinlan and Associates
Hong Kong has been facing an information communications and technology (ICT) talent shortage, a predicament that was exacerbated by COVID-19, travel bans and local talent migration.
In the banking industry, management teams have noted a contraction in the talent pool from the second half of 2021, with notable shortages in relationship management, technology, and environmental, social and governance (ESG), accounting firm KPMG said a January 2022 report.
Residents of Hong Kong have been leaving the city in droves over the past two years, amid COVID-19 restrictions, stringent border control and what they see as an erosion of democratic norms.
New figures released by the Census and Statistics Department earlier this month show that more than 100,000 residents have left the city over the past 12 months, contributing to a record 1.6% drop in the population.
Need for greater support
To address their human capital needs, Hong Kong fintech companies are soliciting third parties, turning to talent networks and search services to fill critical roles quickly, the Google and Quinlan & Associates study found.
Early-stage fintech companies were found to be more actively seeking out wage subsidies and/or grants (57%) as well as mentorship opportunities (21%) than their late-stage counterparts, which preferred relying on talent networks (77%) like WHub, and talent search services (61%).
Top third-party support to address the talent gap, Source: Smarter Digital City – Advancing Hong Kong’s Fintech Ecosystem, Google and Quinlan and Associates
Alongside talent, the study found that many Hong Kong fintech companies are facing a notable funding gap with 57% of respondents citing access to suitable investors as their primary issue.
Funding challenges, Source: Smarter Digital City – Advancing Hong Kong’s Fintech Ecosystem, Google and Quinlan and Associates
Hong Kong fintech companies expressed their desire to see greater policy support, notably in the forms of wage subsidies to ease the talent crunch, as well as financial subsidies and funding grants to narrow the funding gap. Such initiatives would be particularly beneficial to the industry’s growth, the report says.
Top third-party support, Source: Smarter Digital City – Advancing Hong Kong’s Fintech Ecosystem, Google and Quinlan and Associates
Another key hurdle expressed by Hong Kong fintech companies is the regulatory landscape, which many perceive as being costly, complex and time-consuming. Hong Kong’s regulatory set-up is making the city increasingly unappealing to fintech companies, with 60% of respondents sharing concerns over Hong Kong‘s international competitiveness as a fintech hub.
Recognizing the challenges faced by companies in the fintech sector, the Hong Kong Monetary Authority (HKMA) unveiled last year the Fintech 2025 strategy, a fintech development plan focusing on addressing some of the market’s limitations, including the skills shortage and regulatory uncertainty.
Among other initiatives, HKMA said it would collaborate with various strategic partners to groom all-round fintech talent, both students and practitioners, through various initiatives. These will include developing fintech-specific training programs and qualifications, as well as promoting joint projects between the industry and the academia.
The central bank also said it would establish a new Fintech Cross-Agency Co-ordination Group tasked with formulating supportive policies for the Hong Kong fintech ecosystem. It added that it would enhance its Fintech Supervisory Sandbox and explore, with the Innovation and Technology Commission, the possibility of providing funding support to qualified fintech projects.
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