OPINION – Macau needs a scheme like the HKMA’s Fintech 2025 Strategy to properly support its Fintech Development

As I mentioned in “Opportunities for Macau for 2021” (Macau Business, December 28), Macau’s future focus will be on finance. In that article, I made reference to a series of financial-related initiatives that may bring many opportunities to the Special Administrative Region in 2021 and in the coming years.

I mentioned Macau trying to diversify its economy by creating a new stock exchange (a NASDAQ-like market denominated in yuan, facilitating fundraising by technology companies from the Bay Area economic hub). I also explained that Macau should leverage its position as a trade and commercial services platform between China and the Portuguese-speaking countries, as well as its involvement in the Guangdong-Hong Kong-Macau Greater Bay Area and the ‘Belt and Road’ initiative.

Last but not least, I made reference to another interesting initiative, the development of ‘enclave economies´, such as the cooperation demonstration zone located in Zhongshan, or the Traditional Chinese Medicine Science and Technology Industrial Park in Hengqin.

The key element that will help Macau succeed with all these initiatives, and therefore achieve its goals, is China’s “Outline of the 14th Five-Year Plan (2021-25) for National Economic and Social Development of the People’s Republic of China and the Long-Range Objectives Through the Year 2035” — also known as the 14th Five-Year Plan —.

The 14th Five-Year Plan, in its Chapter 31, focuses on proactively and progressively taking forward the development of the Guangdong-Hong Kong-Macau Greater Bay Area (GBA).

However, I made in my article no specific reference to the area of FinTech. In my opinion, Macau needs to develop its FinTech scene much more intensely if the Special Administrative Regions wants to fully take advantage of all the opportunities offered by the GBA in the context of China´s 14th Five-Year Plan.

Even though all the initiatives above mentioned are very relevant and will certainly bring many benefits to Macau and will help it move its shift toward finance, in order for the Special Administrative Region to become a FinTech stronghold in the Greater Bay Area (GBA), it needs to develop a clear strategy that helps Macau build a much stronger FinTech ecosystem.

Macau´s shift towards finance will not be complete until the moment the region manages to create and maintain a strong Fintech and start-up ecosystem. This ecosystem cannot certainly be, at least for the time being, as strong as those of Hong Kong and Shenzhen, but it can be strong, nonetheless.

In this sense, Macau should follow the example set by Hong Kong and the Hong Kong Monetary Authority (HKMA), albeit, as I said, it is not fair to compare one of the world’s most important financial centers, Hong Kong, with Macau, whose shift into finance is still very recent, so we cannot expect Macau’s FinTech ecosystem to rival with that of Hong Kong. 

Last June 8, the Hong Kong Monetary Authority (HKMA) unveiled “Fintech 2025”, its new strategy aimed to drive Hong Kong’s FinTech development these coming years. Said strategy was outlined by Mr. Eddie Yue, Chief Executive of the HKMA, in his opening remarks for a fintech seminar organized by the Hong Kong Association of Banks.

Fintech 2025 aims to encourage the financial sector to adopt technology comprehensively by 2025, and also, as per Mr. Yue´s words, “to promote the provision of fair and efficient financial services for the benefit of Hong Kong citizens and the economy”.

The Strategy is based on 5 pillars, i.e.:

  1. All banks go fintech: The HKMA will continue to promote the all-round adoption of fintech by HK banks and encourage them to fully digitalize their operations, from front-end to back-end. The HKMA will issue further supervisory guidance and continue to “walk the talk” by digitalizing its supervision through the use of advanced technologies.
  2. Future-proofing Hong Kong for Central Bank Digital Currencies (CBDCs): The HKMA will strengthen its research work to increase HK’s readiness in issuing CBDCs at both wholesale and retail levels.

It has been working with the Bank for International Settlements (BIS Innovation Hub HK Centre) to do research on retail CBDCs and will begin a study on the eHKD to understand its use cases, benefits, and risks.

It will also continue to collaborate with the People’s Bank of China in supporting testing of the digital yuan in HK (in this sense, for further information, please refer to my article “Digital yuan good for HK’s international financial hub status”, China Daily HK Edition, May 26).

3. Creating the next-generation data infrastructure: HKMA will take the lead in enhancing the city’s existing data infrastructure and building new ones, including, among others, DLT-based credit data sharing platform, to facilitate consent-based data sharing.

4. Expanding the fintech-savvy workforce. The HKMA aims to collaborate with various strategic partners to groom all-round fintech talent, both students and practitioners, through various initiatives, including developing fintech-specific training programs and qualifications.

5. Nurturing the ecosystem with funding and policies. 

According to Mr. Yue, “Fintech is, without doubt, a key growth engine for the financial industry in the post-pandemic era, and now is the right time to double down on our efforts to grasp the opportunities. “Fintech 2025” sets out our vision in this regard. I urge all stakeholders to join forces with the HKMA. Together, we can take our city’s fintech ecosystem to new heights.”

Moreover, the timing for unveiling such a strategy seems perfect. On the one hand, consumer behavior is changing due to the COVID-19 pandemic, thus turbocharging a financial technology (FinTech) revolution all over the world. On the other hand, Hong Kong, after two bumpy years, is in a perfect position to tap even more into all the opportunities offered by FinTech, thus becoming even more and more important in this area.

Given that both Hong Kong and Macau -to a lesser but very relevant extent- can undoubtedly play a vital role in China’s FinTech scene, and also given the fact that Hong Kong’s and Macau’s FinTech industry has the potential to develop much faster now that it can leverage its involvement in the Greater Bay Area (GBA) blueprint, it would be the right time for Macau´s authorities to develop a blueprint similar to the HKMA’s FinTech 2025 Strategy, 

To sum up, the GBA becoming a reality will bring many opportunities to Macau now that the Special Administrative Region is refocusing towards finance, but in order for Macau to fully tap into all these opportunities, it should develop a much stronger FinTech ecosystem. Hong Kong´s FinTech 2025 Strategy is a good example that Macau should follow.

The author works as a FinTech Advisor and Researcher. He holds an MBA and a doctorate in Hong Kong real estate law and economics. He has worked as a business analyst for a Hong Kong publicly listed company and has given seminars on Central Bank Digital Currencies and Blockchain in many international conferences and universities.