It’s possible that Hong Kong’s fintech talent will come home now that the government is offering incentives to stem the city’s persistent brain drain. The Covid-19 pandemic, which has killed about 10,000 people in the city, is largely believed to be blamed for the departure during the past 18 months. The city has the greatest death rate from the virus anywhere in the world.
In the past month, Southeast Asia has revealed that the Hong Kong government is actively incentivizing qualified employees. They relocate to the city by lowering immigration requirements and offering bonuses. According to Christopher Hui Ching-yu, minister of financial services and treasury, the government aims to reduce immigration regulations. It is for qualifying individuals and provides cash subsidies of up to HK$10 million ($1.3 million) for select fintech operations.
The Hong Kong Association of Banks expressed concern about the lack of qualified workers in the city. It includes the necessity to solve the zero-Covid requirements immediately back in January. Data from the Census and Statistics Department of Hong Kong shows that the city’s population decreased from 7.41 million to 7.29 million. It is between mid-2021 and mid-2022 that roughly 1% of Hong Kong’s total population of 7.5 million left the city alone in February.
According to the most recent HSBC Expat Explorer Survey, ex-pats currently place Hong Kong only 40th out of 46 cities worldwide. It is barely above the Philippines and Russia, while Singapore, Hong Kong’s southeast Asian rival, is in the top 10 in terms of overall habitability.
The global recruiter Manpower found that in the fourth quarter of 2022, 85% of banking and financial operations in Hong Kong reported a lack of highly trained workers. It marks the highest level of talent scarcity in the sector in at least 16 years. And a recent Google study found that 64% of Hong Kong’s fintech industry is experiencing a “serious skill vacuum,” with 80% of respondents stating they would welcome more supporting regulations from the government.
There are rumors that the flight of highly paid banking workers is slowing. The fact that the Hong Kong government’s offer of financial help is explained. Also, a loosening of COVID limitations is unlikely to occur before November. People are supposedly moving back because they don’t like where they could live now. London, for example, is listed as too expensive, and Singapore is less congenial to their way of life.
“Down But Not Out”
The chairman of InvestHK’s fintech division, King Leung, has said that Hong Kong’s doors are always open to talented people. According to him, the city’s economic growth aspirations are reflected in the wide range of talent-related regulations, incentives, and admission schemes that are presently available.
Mr. Leung claims that the most recent results of InvestHK’s yearly surveys reveal the number of businesses operating in Hong Kong. It is operating with parent companies overseas or in mainland China increased to 9049. Despite the numbers showing large numbers of citizens departing the city. Furthermore, there were 3,755 new businesses created, setting a new benchmark. According to Mr. Leung, this shows that Hong Kong is still a desirable location for new and existing enterprises alike.
Mr. Leung notes that the city is a global entryway to the Guangdong-Hong Kong-Macao Greater Bay Area and boasts one of the most robust fintech ecosystems in Asia. “Hong Kong provides an immensely attractive springboard for fintech talent and start-ups with the ambition to expand.” Despite this, the abundant opportunities keep luring top individuals, and the thriving corporate environment keeps supporting growth.
There is also the issue of the Hong Kong financial technology industry having to deal with outdated banking infrastructure. According to Craig Bennett, Asia-Pacific general director of banking software supplier Temenos, maintaining legacy systems is costly and the skills are scarce. So, the resource issues in Hong Kong further increase the desire for banks in the region to migrate to new technology platforms. He says, “We appreciate government attempts to make Hong Kong a lucrative market for international talent.” The company will keep investing locally to satisfy rising demand.
In addition, Hong Kong still needs to be on the lookout for regional competition. Despite encouraging indicators of a rise in the number of brilliant individuals working there. KPMG and digital investment adviser Endowus released a report this month showing Singapore’s rising fintech ambitions, with funding for wealth management technologies increasing seven-fold over the past five years.
Hong Kong’s fintech industry is counting on a relaxation of the government’s “dynamic zero-Covid approach”. It is used to solve its myriad of challenges and restore the city’s status as a financial capital.