HK, Singapore fintech is complementary

Oriol Caudevilla says Hong Kong will remain gateway to Chinese mainland because of geographic proximity, while Singapore will be gate to Southeast Asia

Following the staging in early November of the Hong Kong FinTech Week and the Singapore FinTech Festival - undoubtedly two of the most important fintech conferences in the world - it seems a perfect time to analyze what these two cities have in common. It is also a perfect time to remind our readers that, despite their rivalry in many areas, Hong Kong and Singapore's fintech scenes are complementary, not really exclusionary.

Indeed, there is a tendency among many Hong Kong people to compare Singapore with Hong Kong, usually as a way to praise the former while criticizing the latter. Hong Kong people habitually find fault in their own backyard only to cite Singapore as the model of perfection. The only apparent reason for this tendency is that Hong Kong and Singapore share many similarities in economic structure, reliance on finance and trade, as well as size of territory and population. In some ways, Singapore does better than the special administrative region - public housing - for example, whereas Hong Kong excels in other areas such as public transport, minimal government intervention, and has a higher ranking in the Global Livable Cities Index.

However, Hong Kong and Singapore also have substantive differences. Singapore is an independent country, while Hong Kong is an SAR of China, under the "one country, two systems" principle, meaning that, in Singapore, its leaders can independently formulate policies and implement them, while in Hong Kong, its officials have to take into account many more things. It does not mean that Hong Kong is worse when it comes to governance; it just means Hong Kong is different.

Focusing on fintech, we can clearly see that consumer behavior is changing because of the COVID-19 pandemic, thus turbocharging a financial technology revolution all over the world. Hong Kong, Macao (to a lesser but relevant extent) and the rest of the Guangdong-Hong Kong-Macao Greater Bay Area are indeed becoming fintech hubs, but that is also the case of other places in Asia, such as Singapore. Actually, for many analysts, Hong Kong and Singapore have entered a new phase of their rivalry: fintech.

Last year's Hong Kong FinTech Week showed us that Hong Kong has taken it a step further, by becoming ready to move toward a fascinating new era of fintech, while last year's Singapore FinTech Festival provided us with many interesting headlines and insights as well.

As to Singapore, even before the COVID-19 pandemic, in just two years (2017-19), the rate of fintech adoption among Singapore consumers almost tripled, according to the EY Global FinTech Adoption Index 2019: Singapore's adoption rate jumped from 23 percent to 67 percent between 2017 and 2019.

Actually, Singapore's move toward fintech is not new either. In 2014, Prime Minister Lee Hsien Loong announced plans to make the city-state the world's first "smart nation" by 2030, using technology to improve the economy and enhance the standard of living. In this sense, one of the three pillars of the Singapore Smart Nation Initiative is the digital economy. As part of the country's drive to efficiency and productivity, the Ministry for Communications and Information announced plans in May 2018 to digitize every business and every industry.

The Monetary Authority of Singapore, Singapore's central bank and financial regulator, is also helping to create a "smart financial center" where technology is used to increase efficiency and create more opportunities.

Singapore and Hong Kong have both been trying to become Asia's fintech center.

In some areas, Singapore is winning: the city-state is one of the most important Asian countries for the crypto sector because of its regulatory-friendly environment. However, in other areas, such as digital banking, Hong Kong seems to be ahead right now.

To sum up, to me, Hong Kong and Singapore's fintech scenes are equally powerful. I have always considered that, despite Hong Kong and Singapore being compared all the time and despite being considered eternal business rivals, both financial centers are actually complementary rather than exclusionary, since Hong Kong is and will remain the gateway to mainland, while Singapore is mostly the gate to Southeast Asia. In other words, because of is geographical proximity, ASEAN is the natural economic hinterland for Singapore fintech firms, whereas those fintech firms more interested in China's market will more likely choose Hong Kong.

The views do not necessarily reflect those of China Daily.