Hyperfinance research uncovers key concerns around FinTech adoption in Hong Kong and Singapore

10 Apr 2017

New research by international law firm, Simmons & Simmons shows how many large financial institutions are struggling to innovate fast enough. Hyperfinance, the firm’s flagship research programme, investigates what large banks and asset managers need to do to succeed in accelerating their digital innovation and overcome the challenges they face.

The research programme surveyed 200 senior level respondents (30% at C-suite level) across five financial centres, including from 50 institutions in Hong Kong and Singapore.

Institutions in Hong Kong and Singapore report very high levels of interest in FinTech, with focus on both external and internal investment. 92% of respondents in the two markets expect to collaborate with a FinTech firm in the next 18 months.

Key concerns for institutions in Hong Kong and Singapore:

M&A and Regulatory risk

  • Almost two thirds (62%) of respondents report building in-house expertise to improve digital and FinTech capability in recent years, while less than half (47%) consider consortia projects with other institutions to be effective in improving digital/FinTech innovation.
  • The acquiring of FinTech firms or startups was a favoured approach by 100% of Singapore respondents and only 50% of Hong Kong respondents.
  • 78% of respondents would need much stronger assurances of FinTech firms' credibility in order to ‘hand over’ the regulatory compliance function, and more than 50% view transfer of large volumes of data to FinTech companies as a potential threat.

Cybersecurity and the cloud

  • 67% of Hong Kong respondents intend to increase their adoption of cloud-based services in the next 12 to 18 months, the highest figure globally.
  • At the same time, 70% of respondents in Hong Kong and Singapore report that cybersecurity is the most significant risk associated with partnering with FinTech firms.

Commenting on the results, Ian Wood, Partner at Simmons & Simmons, says: “It is clear from the research that large financial institutions view collaboration with the FinTech start-up community as essential for innovation. However, in order to fully realise these opportunities work is required on both sides to structure investments so that innovation is not inhibited and to ensure the protection of customer data and comply with regulations.”

Commenting further Melissa Chim, consultant at Simmons & Simmons says “Our Hyperfinance research demonstrates that cybersecurity concerns remain a major barrier to effective collaboration by FinTech firms and financial institutions. This significant challenge can be dealt with, by acknowledging that investors and regulators will expect business, legal and compliance rather than IT to be articulate on the cyber due diligence on a Fintech collaboration and the institution’s cybersecurity programme, and to adopt a dynamic approach to cyber-testing, as cybercrime is constantly evolving to avoid static safeguards. Tackling these issues is crucial, for both FinTech firms and institutions, in order to unlock the considerable potential of FinTech for the finance industry.”

Click here for more information | Download the full report here.

Hyperfinance in the media

The Asset
Fund Selector Asia
Ignites Asia
Computer World Hong Kong
Finews Asia
Australasian Lawyer
Fintech Innovation
Finextra

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