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For traditional banks, fintech newcomers offer opportunities, not threats

  • Far from cannibalising traditional banks, the fintech boom has brought to the industry innovative ideas and technology. The next fintech wave should see greater collaboration between big banks and niche fintech players, to the benefit of all

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Is Hong Kong’s financial district ready for the next wave of fintech? Photo: Reuters

Over the past two decades, technology has altered many industries – music, retail and transport to name but a few. Yet, during this period of technological disruption, financial services have continued to grow.

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Banking has always been about technology. The 1970s brought us ATMs and credit cards, the 1980s, debit cards, and the 1990s, internet banking and e-commerce. The pace of technological change has accelerated over the past decade or so, with the explosive growth of smartphones and the connectivity they bring, laying the groundwork for the development of mobile banking.

Smartphones seldom leave our grip these days, so the distance between customers and banks has been all but eliminated. Customers have come to expect personalised, interactive and instant services for every part of their lives, at their fingertips and at any time.

This altered landscape is the catalyst for a new generation of financial-technology start-ups offering tailored services to specific market segments on digital platforms. The tech giants have also been making bold moves in financial services.
This innovation has been encouraged by policymakers. In Singapore, Australia and Britain, regulators are fostering advancements in fintech by setting up sandboxes to test scenarios.
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The Hong Kong Monetary Authority has launched a series of initiatives such as opening up its fintech supervisory sandbox to technology firms, the open Application Programming Interface, which allows banks to tap into a global community, and the Faster Payment System, a real-time payment platform. It has also issued licences for virtual banking.
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