Realising the Potential of Blockchain in Advancing Hong Kong’s Financial Services Industry
18 Mar 2024
Hong Kong’s financial services industry serves as a crucial pillar of the city’s economy, solidifying its position as a prominent international financial centre. As the industry continues to evolve, it is imperative to explore innovative technologies that can drive its development and uphold the city’s competitive edge. In line with this vision, Hong Kong is actively shaping up its competitiveness as an international innovation and technology hub, supported explicitly by the “Outline of the 14th Five-Year Plan for National Economic and Social Development of the People’s Republic of China and the Long-Range Objectives Through the Year 2035” (“the 14th FYP”).1
Aligned with the goals of the 14th FYP, it is crucial to explore innovative technologies that can drive the industry’s development and maintain Hong Kong’s competitive edge. One such technology with significant potential is blockchain, which has the capability to revolutionise various aspects across different industries.
Blockchain technology has a wide range of applications in both consumer-oriented services and business-to-business (B2B) interactions that extend beyond its association with cryptocurrencies. Progressive adoption of blockchain technology would therefore enable Hong Kong to develop a thriving and sustainable digital economy. Among these applications, blockchain technology and related components such as smart contracts present promising opportunities in the B2B realm, facilitating data sharing, identity and credentials verification, etc. Noting Hong Kong’s competitive advantages as an international financial centre with a robust B2B infrastructure, blockchain technology presents a plethora of innovative solutions that can potentially transform traditional financial systems by increasing efficiency and lowering transaction costs.
Noting the Government’s ongoing efforts in adopting technology, the Financial Services Development Council (FSDC) has formed a dedicated Working Group comprising industry experts with a view to exploring the significant potential of blockchain technology in advancing Hong Kong’s financial services industry, particularly in the context of B2B interactions.
While the report covers various use cases of blockchain technology in Hong Kong and the global financial services industry, the report’s primary focus is to examine how the Government and regulatory measures facilitate the adoption of blockchain-enabled applications and promote the development of Web3 in the city. Active engagement and participation of both the Government and industry in the blockchain ecosystem would be essential to transforming and strengthening the financial services industry.
1 Xinhua (March 2021). Outline of the 14th Five-Year Plan for National Economic and Social Development of the People’s Republic of China and the Long-Range Objectives Through the Year 2035.